PP&L TRANSITION BOND CO INC, S-3/A, 1999-07-15

PP&L TRANSITION BOND CO INC
S-3/A, 1999-07-15
ASSET-BACKED SECURITIES

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As filed with the Securities and Exchange Commission on July 15, 1999
=====================================================================

Registration No. 333-75369
___________________________________________________________________________

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________

AMENDMENT NUMBER 2 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, GENA 9-2, Room 3
Allentown, Pennsylvania 18101
(610)774-7934

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

James E. Abel
Two North Ninth Street, GENA 9-2, Room 3
Allentown, Pennsylvania 18101
(610) 774-7934

(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. |_|

<TABLE>
<CAPTION>
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
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Transition Bonds Issuable $ 2,570,000,000 100% $2,570,000,000 $ 714,460(1)
in Series
------------------------------------------------------------------------------------------------------------
(1) Estimated solely for the purpose of calculating the registration fee.
</TABLE>

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.

[FLAG]
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 [1999-1]
PP&L Transition Bond Company LLC

PP&L, Inc., servicer

The following securities are being offered in this prospectus supplement*:

Principal Underwriting Discounts
Class Amount Price and Commissions
----- --------- --------- ----------------------
Class A-1 Bonds $________ _________% _______________%
Class A-2 Bonds $________ _________% _______________%
Class A-3 Bonds $________ _________% _______________%
Class A-4 Bonds $________ _________% _______________%
Class A-5 Bonds $________ _________% _______________%
Class A-6 Bonds $________ _________% _______________%
Class A-7 Bonds $________ _________% _______________%
Class A-8 Bonds $________ _________% _______________%

Net Expected Final Final
Class Proceeds Payment Date Maturity Date
----- -------- -------------- -------------
Class A-1 Bonds $________ _____________ _____________
Class A-2 Bonds $________ _____________ _____________
Class A-3 Bonds $________ _____________ _____________
Class A-4 Bonds $________ _____________ _____________
Class A-5 Bonds $________ _____________ _____________
Class A-6 Bonds $________ _____________ _____________
Class A-7 Bonds $________ _____________ _____________
Class A-8 Bonds $________ _____________ _____________

- -------------------
(*) These securities will be referred to as the series [1999-1] bonds in
this prospectus supplement.

Interest and principal on the series [1999-1] bonds will be payable
quarterly, on the 25th day of March, June and September and on the 26th day
of December or the first business day after these dates, beginning December
26, 1999.

Consider carefully the risk factors beginning on page 13 of the prospectus.

The series [1999-1] 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 [1999-1]
bonds, and there is no assurance that one will develop.

Morgan Stanley Dean Witter
Credit Suisse First Boston
Merrill Lynch & Co.
Salomon Smith Barney

Banc One Capital Markets, Inc.
Chase Securities, Inc.
First Union Capital Markets Group
Mellon Capital Management Corporation

Janney Montgomery Scott Inc.
Pryor, McClendon, Counts & Company, Inc.

The date of this prospectus supplement is __________, 1999.

This prospectus supplement does not contain complete information
about the offering of the series [1999-1] 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
[1999-1] 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 [1999-1] BONDS............................................. S-13
General.......................................................... S-13
Interest......................................................... S-14
Principal........................................................ S-14
Optional Redemption of the Series [1999-1] Bonds................. S-17
The Overcollateralization and Capital Amount..................... S-17
Other Credit Enhancement......................................... S-19
DESCRIPTION OF INTANGIBLE TRANSITION PROPERTY......................... S-20
Customer Class Descriptions........................................... S-20
PP&L Will Assess Intangible Transition Charges on
Particular Customers........................................... S-20
PP&L's Intangible Transition Charges............................. S-21
PP&L May Obtain Adjustments to the Intangible Transition Charges...... S-24
DESCRIPTION OF PP&L'S BUSINESS........................................ S-24
PP&L's Operations..................................................... S-24
Information Which Is Available to the Series [1999-1]
Bondholders.................................................... S-25
UNDERWRITING THE SERIES [1999-1] BONDS................................ S-26
RATINGS FOR THE SERIES [1999-1] BONDS................................. S-27

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 [1999-1] Bonds. The specific terms of the [1999-1] Bonds are
contained in this Prospectus Supplement. You should rely only on
information on the Series [1999-1] 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 [1999-1] Bonds provides information
concerning the amounts and the payment terms of each class of
Series [1999-1] Bonds.

o Description of Intangible Transition Property provides information
concerning the asset that is the collateral for the Series
[1999-1] 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 [1999-1]
bonds. You will find a detailed description of the terms of the offering
of the series [1999-1] 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 14 of the prospectus.

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

Issuer's Address: Two North Ninth Street, GENA 9-2,
Room 3; Allentown, PA 18101

Issuer's Telephone Number: (610) 774-7934

Seller of the Intangible Tran-
sition Property to the Issuer: CEP Securities, an indirect wholly
owned subsidiary of PP&L.

Seller's Address: 3960 Howard Hughes Parkway,
Suite 630 North; Las Vegas, NV 89109

Seller's Telephone Number: (702) 866-2202

Servicer of the Intangible
Transition Property: PP&L, an electric utility serving
approximately 1.3 million customers
in central and eastern Pennsylvania.

TRUSTEE: The Bank of New York

Closing Date: On or about August __, 1999

Minimum Denominations: $1,000

The Terms of the Series [1999-1] Bonds

Class A-1 Bonds Class A-2 Bonds
--------------- ---------------
Principal Amount: $__________ $__________

Bond Rate Per Annum: _____% _____%

Interest Accrual Method: 30/360 30/360

Payment Dates: March 25, June 25, March 25, June 25,
September 25 and September 25 and
December 26 December 26

First Payment Date: December 26, 1999 December 26, 1999

Expected Final Payment Date: ____________ ____________

Final Maturity Date: ____________ ____________

Cusip Number: ____________ ____________

Anticipated Ratings
(Moody's/S&P/Fitch IBCA): ____________ ____________

Class A-3 Bonds Class A-4 Bonds
--------------- ---------------
Principal Amount: $__________ $__________

Bond Rate Per Annum: _____% _____%

Interest Accrual Method: 30/360 30/360

Payment Dates: March 25, June 25, March 25, June 25,
September 25 and September 25 and
December 26 December 26

First Payment Date: December 26, 1999 December 26, 1999

Expected Final Payment Date: ____________ ____________

Final Maturity Date: ____________ ____________

Cusip Number: ____________ ____________
Anticipated Ratings
(Moody's/S&P/Fitch IBCA): ____________ ____________

Class A-5 Bonds Class A-6 Bonds
--------------- ---------------
Principal Amount: $__________ $__________

Bond Rate Per Annum: _____% _____%

Interest Accrual Method: 30/360 30/360

Payment Dates: March 25, June 25, March 25, June 25,
September 25 and September 25 and
December 26 December 26

First Payment Date: December 26, 1999 December 26, 1999

Expected Final Payment Date: ____________ ____________

Final Maturity Date: ____________ ____________

Cusip Number: ____________ ____________
Anticipated Ratings
(Moody's/S&P/Fitch IBCA): ____________ ____________

Class A-7 Bonds Class A-8 Bonds
--------------- ---------------
Principal Amount: $__________ $__________

Bond Rate Per Annum: _____% _____%

Interest Accrual Method: 30/360 30/360

Payment Dates: March 25, June 25, March 25, June 25,
September 25 and September 25 and
December 26 December 26

First Payment Date: December 26, 1999 December 26, 1999

Expected Final Payment Date: ____________ ____________

Final Maturity Date: ____________ ____________

Cusip Number: ____________ ____________
Anticipated Ratings
(Moody's/S&P/Fitch IBCA): ____________ ____________

The Collateral

PP&L Transition Bond Company LLC 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

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.

Those amounts will be recovered 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. 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 [1999-1] bonds, CEP
Securities will sell intangible transition property to PP&L Transition Bond
Company LLC to support the issuance of up to $2.57 billion in principal
amount of transition bonds. PP&L, as servicer of the intangible transition
property, will collect the intangible transition charges from customers on
behalf of PP&L Transition Bond Company LLC. 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.

In order to facilitate the possible issuance of the transition bonds in
multiple series on different issuance dates, PP&L arranged for the
formation of CEP Securities Co. LLC as a bankruptcy remote special purpose
entity for the purpose of holding any remaining intangible transition
property not sold to PP&L Transition Bond Company LLC on or before the
issuance of the first series of transition bonds. PP&L, CEP Securities Co.
LLC and two other affiliates of PP&L entered into a contribution agreement
in order to provide for the assignment of the intangible transition
property to CEP Securities Co. LLC in accordance with the Competition Act.
See "The Contribution Agreement" in the prospectus.

Payment Sources

On each payment date, the trustee will pay amounts owed on the series
[1999-1] 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 [1999-1] 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 [1999-1]
bonds. This is because intangible transition charges and adjustments of
those charges are generally based on the total principal amount of all
transition bonds outstanding. In addition, the issuance of any additional
series of transition bonds would be subject to confirmation by the
applicable rating agencies that this issuance would not result in a
reduction or withdrawal of the current ratings on the outstanding series
[1999-1] bonds. See "The Indenture" in the prospectus.

Interest Payments

On each payment date, PP&L Transition Bond Company LLC will pay interest on
each class of the series [1999-1] bonds as follows:

Interest accrues on the outstanding principal amount of the series [1999-1]
bonds on a quarterly basis. Interest payments for all classes of the series
[1999-1] bonds will be made on a pari passu basis. The series [1999-1]
bonds will accrue interest on any interest payments which were not made on
a timely basis.

Interest means, for any payment date for the series [1999-1] bonds, the
sum, without duplication, of:

o an amount equal to the amount of interest accrued at the applicable
interest rates from the prior payment date with respect to the series
[1999-1] bonds;

o any unpaid interest plus any interest accrued on this unpaid
interest;

o if the transition bonds have been declared due and payable, all
accrued and unpaid interest thereon; and

o if the series [1999-1] bonds are to be redeemed, the amount of
interest that will accrue on the series [1999-1] bonds to the
redemption date.

For the December 26, 1999 payment date, interest will accrue from the
closing date.

Principal Payments

On each payment date, the amount required to be paid as principal on the
transition bonds, including the series [1999-1] 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, holders of each class of series [1999-1]
bonds will be entitled to receive payments of principal in a sequential
manner, to the extent funds are available, as follows:

1. To the holders of the Series [1999-1] Bonds Class A-1, until this
class is paid in full;

2. To the holders of the Series [1999-1] Bonds Class A-2, until this
class is paid in full;

3. To the holders of the Series [1999-1] Bonds Class A-3, until this
class is paid in full;

4. To the holders of the Series [1999-1] Bonds Class A-4, until this
class is paid in full;

5. To the holders of the Series [1999-1] Bonds Class A-5, until this
class is paid in full;

6. To the holders of the Series [1999-1] Bonds Class A-6, until this
class is paid in full; 7.To the holders of the Series [1999-1] Bonds
Class A-7, until this class is paid in full; and

8. To the holders of the Series [1999-1] Bonds Class A-8, until this
class is paid in full.

Optional Redemption

PP&L Transition Bond Company LLC may redeem the series [1999-1] bonds, at
its option, on any payment date if the outstanding principal balance of the
series [1999-1] bonds (after giving effect to payments that would otherwise
be made on that payment date) is less than five percent of the initial
principal balance of the series [1999-1] bonds. In the case of redemption,
PP&L Transition Bond Company LLC will pay the outstanding principal amount
of the series [1999-1] bonds together with accrued but unpaid interest as
of the redemption date. The trustee will give notice of the redemption to
series [1999-1] bondholders not less than five days nor more than 45 days
prior to the redemption date. The series [1999-1] bonds will not be
redeemed in any other circumstances.

Particular Credit Enhancement Features

Credit enhancement for the series [1999-1] bonds includes the following:

o PP&L, as servicer of the intangible transition property on behalf
of PP&L Transition Bond Company LLC, 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 for PP&L Transition Bond Company LLC

1) to make timely payments on the series [1999-1] bonds,

2) to pay fees, costs and charges associated with the transition
bonds, and

3) to fund any of the subaccounts to its required level.

The following table summarizes the adjustment frequency of the intangible
transition charges with respect to the series [1999-1 bonds]:

Adjustment Date
---------------
Annual Adjustments 1/1/00-1/1/08
Quarterly Adjustme 7/1/08 and 10/1/08
Monthly Adjustment 1/1/09-5 /1/09

If the last class of the series [1999-1] bonds is not paid at its final
maturity date, the intangible transition charges will continue to be
charged but not for service rendered after December 31, 2009. In that case,
the final adjustment date will be December 1, 2009. See "The PUC Order and
the Intangible Transition Charges" in the 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 funding level for the
overcollateralization subaccount is 0.5% of the initial principal
amount of the series [1999-1] bonds, which will be funded ratably
over the life of the transition bonds.

2) Capital Subaccount - An amount equal to 0.5% of the principal
amount of the series [1999-1] bonds will be deposited in the
capital subaccount on the closing date.

3) Reserve Subaccount - Any excess amount of intangible transition
charge collections and investment earnings not released to PP&L
Transition Bond Company LLC will be held in the reserve subaccount.

The credit enhancement for the series [1999-1] bonds is intended to protect
you against losses or delays in scheduled payments on your series [1999-1]
bonds.

THE SERIES [1999-1] BONDS

The Series [1999-1] Bonds will be issued under and secured
pursuant to the Indenture as supplemented. The following summary describes
the material terms of the Series [1999-1] Bonds.

General

The Series [1999-1] 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
----- ----------------- -------------- ------------- ----------
A-1 $_____________ _____________ _____________ [_____________%]
(_______) (_______)

A-2 $_____________ _____________ _____________ [_____________%]
(_______) (_______)

A-3 $_____________ _____________ _____________ [_____________%]
(_______) (_______)

A-4 $_____________ _____________ _____________ [_____________%]
(_______) (_______)

A-5 $_____________ _____________ _____________ [_____________%]
(_______) (_______)

A-6 $_____________ _____________ _____________ [_____________%]
(_______) (_______)

A-7 $_____________ _____________ _____________ [_____________%]
(_______) (_______)

A-8 $_____________ _____________ _____________ [_____________%]
(_______) (_______)

How PP&L Transition Bond Company LLC Will Make Series [1999-1]
Bond Payments. PP&L Transition Bond Company LLC will pay interest and
principal relating to the Series [1999-1] Bonds through DTC or, if the
Series [1999-1] Bonds are no longer in book-entry form, at the offices of
The Bank of New York at 101 Barclay Street, Floor 12 East, New York, NY
10286, Attention: Asset Backed Finance Unit. PP&L Transition Bond Company
LLC 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-
1] are in book-entry form. Otherwise, PP&L Transition Bond Company LLC
will make payments by check mailed first-class, postage prepaid to a Series
[1999-1] Bondholder's address as it appears as of the record date on the
register maintained by the Trustee. After prior notice to the Series [1999-
1] Bondholders, PP&L Transition Bond Company LLC will pay the final
installment of principal and premium, if any, only upon presentation and
surrender of the Series [1999-1] Bonds at a place specified in the notice.
A beneficial owner of a Series [1999-1] Bond will receive payments from the
securities intermediary through whom it holds the Series [1999-1] Bonds.

Interest

Interest on each Class of the Series [1999-1] Bonds will accrue
beginning on the Series Issuance Date at the respective Bond Rates
indicated above. For each Class of the Series [1999-1] Bonds, interest is
payable on each Payment Date, commencing December 26, 1999, to the persons
in whose names the Series [1999-1] Bonds of each Class are registered at
the close of business on the preceding record date.

On each Payment Date, each Class of Series [1999-1] Bonds will be
entitled to receive payments of interest on a pari-passu basis among all
classes. 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 [1999-1]
Bonds will be entitled to receive payments of principal in a sequential
manner, to the extent funds are available, as follows:

1. To the holders of the Series [1999-1] Bonds Class A-1, until this
class is retired in full;

2. To the holders of the Series [1999-1] Bonds Class A-2, until this
class is retired in full;

3. To the holders of the Series [1999-1] Bonds Class A-3, until this
class is retired in full;

4. To the holders of the Series [1999-1] Bonds Class A-4, until this
class is retired in full;

5. To the holders of the Series [1999-1] Bonds Class A-5, until this
class is retired in full;

6. To the holders of the Series [1999-1] Bonds Class A-6, until this
class is retired in full;

7. To the holders of the Series [1999-1] Bonds Class A-7, until this
class is retired in full; and

8. To the holders of the Series [1999-1] Bonds Class A-8, until this
class is retired in full.

However, 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
[1999-1] Bonds will be due and payable on the Final Maturity Date for the
Class.

In the event of an acceleration of payments following a default
on the Series [1999-1] Bonds, principal payments on each Class of Series
[1999-1] Bonds will be made on a pro-rata basis based on the respective
amount of the outstanding principal for each Class as of the prior Payment
Date.

The Expected Amortization Schedule for the Series [1999-1] Bonds.
The following table sets forth the Principal Balance that is scheduled to
remain outstanding on each Payment Date for each Class of the Series [1999-
1] Bonds after giving effect to the payments made on that date. In
preparing the table, it has been assumed, among other things, that:

1. the Series [1999-1] Bonds are issued on August , 1999,

2. payments on the Series [1999-1] Bonds are made on each Payment Date,
commencing on December 26, 1999,

3. the quarterly Servicing Fee for the Series [1999-1] Bonds equals
$312,500,

4. the quarterly fee paid to the Trustee under the Indenture for the
Series [1999-1] Bonds equals $ ;

5. the quarterly fees paid to the Independent Managers equals $1,250;

6. the quarterly fee paid to the Administrator under the Administration
Agreement for the Series [1999-1] Bonds equals $25,000;

7. there are no net earnings on amounts on deposit in the Collection
Account;

8. management fees, trustee fees, administration fees, operating
expenses, including all other fees, costs and charges of the Issuer
and amounts owed by the Issuer to the Trustee and to the Servicer,
are paid in the amount of $_____ in the aggregate for all Series on
each Payment Date; and

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

<TABLE>
<CAPTION>
TABLE 2
Expected Amortization Schedule

Outstanding Class Principal Balance
Payment Date Class A-1 Class A-2 Class A-3 Class A-4 Class A-5 Class A-6 Class A-7 Class A-8
------------ --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>

12/26/99
3/25/00
6/25/00
9/25/00
12/26/00
3/25/01
6/25/01
9/25/01
12/26/01
3/25/02
6/25/02
9/25/02
12/26/02
3/25/03
6/25/03
9/25/03
12/26/03
3/25/04
6/25/04
9/25/04
12/26/04
3/25/05
6/25/05
9/25/05
12/26/05
3/25/06
6/25/06
9/25/06
12/26/06
3/25/07
6/25/07
9/25/07
12/26/07
3/25/08
6/25/08
9/25/08
12/26/08
</TABLE>

Series [1999-1] Bond Principal Payments May Be Made Later than
Scheduled. There can be no assurance that the principal balance of any
Class of the Series [1999-1] 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
[1999-1] Bonds will not be in default if not paid on the dates specified in
Table 2.

Optional Redemption of the Series [1999-1] Bonds

The Issuer may redeem the Series [1999-1] Bonds, at its option, on any
Payment Date if the outstanding principal balance of the Series [1999-1]
Bonds (after giving effect to payments that would otherwise be made on that
Payment Date) is less than five percent of the initial principal balance of
the Series [1999-1] Bonds. In the case of redemption, the Issuer will pay
the outstanding principal amount of the Series [1999-1] Bonds together with
accrued but unpaid interest as of the redemption date. The Trustee will
give notice of the redemption to Series [1999-1] Bondholders not less than
five days nor more than 45 days prior to the redemption date. The Series
[1999-1] Bonds will not be redeemed in any other circumstances.

The Overcollateralization and Capital Amount

The Overcollateralization Subaccount. The Overcollateralization
Amount for the Series [1999-1] Bonds is $12.85 million. As shown in Table
3, the Intangible Transition Charges related to the Series [1999-1] 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 [1999-1] Bonds. The Scheduled Overcollateralization Levels,
as of the date of this Prospectus Supplement, for each Payment Date for all
outstanding Series of Transition Bonds, including the Series [1999-1]
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
------------ ---------------------------

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 [1999-1] 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 [1999-1] Bonds which are described above under
"Summary of Terms - Prospectus Supplement."

The Capital Subaccount. Upon the issuance of the Series [1999-1]
Bonds, PP&L will deposit the Required Capital Amount for the Series [1999-
1] 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 [1999-1] 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 $100,000. An amount in the Capital
Subaccount equal to $100,000 will be set aside to cover other operating
expenses not funded from ITC Collections. The Required Capital Amount has
been set at a level sufficient to obtain the ratings on the Series [1999-1]
Bonds which are described above under "Summary of Terms - Prospectus
Supplement."

Other Credit Enhancement

The Reserve Subaccount for the Series [1999-1] Bonds. ITC Collections
plus investment earnings on the Collection Account, except for investment
earnings on the Capital Subaccount which will be released to the Issuer if
not needed on that Payment Date, will be available on each Payment Date to
pay:

1. the fees and expenses of the Trustee and the Servicer and other fees,
costs and charges associated with the transition bonds including
operating expenses of the Issuer,

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

3. any amount required to replenish the Capital Subaccount, and

4. 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. Any ITC Collections and investment
earnings in excess of the amounts described, with the exception of
investment earnings on the Capital Subaccount, will be allocated to the
Reserve Subaccount. If on any Payment Date, amounts available in the
General Subaccount are not sufficient to make scheduled payments to the
Series [1999-1] Bondholders and to pay the fees, costs and charges
specified in the Indenture, the Trustee will draw on any amounts in the
Reserve Subaccount.

[Any others to be provided at issuance.]

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

Issuance of Other Series

The Issuer may issue other Series of Transition Bonds without the
prior approval of the Transition Bondholders. Those Series may include
terms and provisions which are unique to those particular series. A new
Series of Transition Bonds may not be issued if it would result in the
credit ratings on the Series [1999-1] Bonds being reduced or withdrawn.
See "Risk Factors Other Risks Associated With an Investment in the
Transition Bonds", "The Transition Bonds" and "The Indenture" 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, 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 associated with the transition
bonds, or to assign, sell or otherwise transfer
intangible transition property.

In General, each Customer Class is responsible for a fixed percentage of
the Intangible Transition Charges. The Intangible Transition Charges will
be applied to each Rate Schedule within each Customer Class, and will be
adjusted by Customer Class. See "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. See "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 electric delivery 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 the Customers in each of PP&L's Customer Classes and
Rate Schedules. Each Customer must pay Intangible Transition Charges on
all electricity delivered by PP&L, even if the Customer elects to purchase
electricity from another supplier or 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 and receives electric distribution service
from PP&L or a Successor Servicer, it must pay Intangible Transition
Charges, even if some other entity is providing the Customer with
electricity generation service.

Intangible Transition Charges will be allocated among PP&L's
Customer Classes and Rate Schedules based on the relative
generation-related charges borne by each Customer Class and each Rate
Schedule through the electric rates specified in PP&L's electricity rate
tariff which became effective on January 1, 1999. 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. That amount will be expressed as a charge or charges for each
Rate Schedule. 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 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 as
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; approximately $________ per month for an average Customer in the
Small Commercial and Industrial Customer Class; and 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, per kilowatt hour components. The Average ITC Rate
tabulated below generally reflects the Rate Schedule ITC Collections
divided by Rate Schedule usage in kwh. The average monthly bill for each
PP&L Customer Class during 1998 was $70.69, $422.22 and $48,176.10,
respectively. 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 [1999-1] Bonds:

TABLE 4

Projected Average Intangible Transition Charges for the Period From August
, 1999 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 PUC's Intangible Transition Charge Adjustment Process. The
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 [1999-1] Bonds. In addition, the
PUC Order provides that, commencing twelve months prior to the Expected
Final Payment Date for the last Series or Class of Transition Bonds,
adjustments may be made quarterly or monthly. The final Adjustment Date
for the Series [1999-1] Bonds will be July 1, 2009. See "The Servicing
Agreement The PUC's Intangible Transition Cost Adjustment Process" in the
Prospectus.

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' 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 $120 million on revenue of $ 968
million for the quarter ended March 31, 1999 as compared with net income of
$ 109 million on revenue of $ 861 million for the quarter ended March 31,
1998.

Actual electricity 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
usage, adjusted for weather effects, by all Customer Classes from 1994
through 1998 was 1.6%. 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 year 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 PP&L expects to complete by the
end of 1999. Although no assurance can be given, PP&L expects that the
delinquency or write-off experience with respect to ITC Collections will be
substantially the same as its delinquency and write-off history. See "The
Servicer of the Intangible Transition Charges PP&L's Customer Classes and
Rate Schedules" in the Prospectus.

Information That Is Available to the Series [1999-1] 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 with respect to any Series at the
beginning of the fiscal year following the issuance of Transition Bonds of
that 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
after 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 [1999-1] 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 [1999-1] Bonds set forth opposite
each Underwriter's name below:

Name Class[ ] Total
---- -------- -----
Morgan Stanley & Co. Incorporated ......
Credit Suisse First Boston .............
Merrill Lynch & Co. ....................
Salomon Smith Barney ...................

Banc One Capital Markets, Inc. .........
Chase Securities, Inc. .................
First Union Capital Markets Group ......
Mellon Capital Management Corporation ..

Janney Montgomery Scott Inc. ...........
Pryor, McClendon, Counts & Company, Inc.

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

The Underwriters' Sales Price for the Series [1999-1] Bonds. The
Underwriters propose to offer the Series [1999-1] 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 [1999-1] Class ____ Bonds, ____ percent of
the principal amount of the Series [1999-1] Class ____ Bonds and ____
percent of the principal amount of the Series [1999-1] 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 [1999-1] Class ____ Bonds, ____ percent of the
principal amount of the Series [1999-1] Class ____ Bonds and ____ percent
of the principal amount of the Series [1999-1] Class ____ Bonds. After the
Series [1999-1] 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 [1999-1] Bonds. The Series [1999-1] Bonds are a new issue of
securities with no established trading market. The Series [1999-1] Bonds
will not be listed on any securities exchange. The Underwriters have
advised the Issuer that they intend to make a market in the Series [1999-1]
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 [1999-1] Bonds.

Various Types of Underwriter Transactions Which May Affect the
Price of the Series [1999-1] Bonds. The Underwriters may engage in
overallotment transactions, stabilizing transactions, syndicate covering
transactions and penalty bids with respect to the Series [1999-1] 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 [1999-1] Bonds so long as
the stabilizing bids do not exceed a specified maximum. Syndicate covering
transactions involve purchases of the Series [1999-1] 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 [1999-1] 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 [1999-1] 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 [1999-1] 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 Underwriters
against some liabilities, including liabilities under the Securities Act.

RATINGS FOR THE SERIES [1999-1] BONDS

It is a condition of any Underwriter's obligation to purchase the
Series [1999-1] Bonds that each Class of the Series [1999-1] be rated "AAA"
by S&P, "Aaa " by Moody's and "AAA" by Fitch IBCA.

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 [1999-1] Bond,
and, accordingly, there can be no assurance that the ratings assigned to
any Class of Series [1999-1] 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 [1999-1] Bonds is revised or withdrawn, the
liquidity of the Class of Series [1999-1] 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 [1999-1] Bonds
other than payment in full of each Class of Series [1999-1] Bonds by the
applicable Final Maturity Date.

Prospectus

PP&L Transition Bond Company, LLC, Issuer

PP&L, Inc., Servicer

Transition Bonds

[TEXT BOX]
Consider carefully the risk factors beginning on page 13 of this
Prospectus.

These securities are backed by an intangible asset and issued by an issuer
that has no assets other than the property described in this Prospectus.
These securities are not obligations of PP&L or any affiliate other than
the issuer.

This Prospectus may be used to offer and sell a series of transition bonds
only if accompanied by the Prospectus Supplement for that series.

The Issuer

o may periodically issue transition bonds in one or more series,
each with one or more classes;

o will own:

o intangible transition property, which is the right, created
by Pennsylvania's Competition Act, to collect intangible
transition charges in amounts designed to be sufficient to
repay the transition bonds, to pay other expenses specified
in the Indenture and to fund or replenish the trust accounts;
and

o other property described in this Prospectus.

The Transition Bonds

o will be payable only from assets of the Issuer;

o will be supported by trust accounts held by the trustee for the
transition bonds, and, if so stated in the applicable prospectus
supplement, other credit enhancement; and

o will be issued in series, each of which the issuer may issue
without the consent of 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 . . . . . . . . . . . 15
Servicing Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
The Risks Associated With Potential Bankruptcy Proceedings . . . . . . 20
Other Risks Associated With An Investment In The Transition Bonds . . . 23

FORWARD-LOOKING INFORMATION . . . . . . . . . . . . . . . . . . . . . . . 27

PP&L . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

THE COMPETITION ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

The Competition Act's General Effect on the Electric Utility Industry
in Pennsylvania . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Recovery of Stranded Costs for PP&L and Other Pennsylvania Utilities . 32
PP&L and Other Utilities May Securitize Stranded Costs . . . . . . . . 33
Only a Pennsylvania Utility May Sue for Nonpayment of Intangible
Transition Charges . . . . . . . . . . . . . . . . . . . . . . . . . 35

PP&L'S RESTRUCTURING PLAN . . . . . . . . . . . . . . . . . . . . . . . . 35
The History of PP&L's Restructuring Plan . . . . . . . . . . . . . . . 35
The PUC Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
How the Electricity Generation Service Provider of Last Resort
Will Be Determined . . . . . . . . . . . . . . . . . . . . . . . . . 40
Other Provisions of PP&L's Restructuring Plan . . . . . . . . . . . . . 41

THE PUC ORDER AND THE INTANGIBLE TRANSITION CHARGES . . . . . . . . . . . 41
The PUC Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
PP&L's Intangible Transition Charges . . . . . . . . . . . . . . . . . 44
Customers Within PP&L's Service Territory May Choose How Their
Electricity Consumption is Billed . . . . . . . . . . . . . . . . . . 46
PP&L's Universal Service Program for Low-Income Customers . . . . . . . 48

PRIOR LEGAL CHALLENGES TO THE COMPETITION ACT OR THE PUC ORDER . . . . . 48
Litigation Relevant to the Competition Act . . . . . . . . . . . . . . 48
Legislative Activity . . . . . . . . . . . . . . . . . . . . . . . . . 50
Potential Unexpected Regulatory Action by the PUC . . . . . . . . . . . 52

THE SERVICER OF THE INTANGIBLE TRANSITION PROPERTY . . . . . . . . . . . 53
PP&L . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
PP&L Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
PP&L's Customer Classes and Rate Schedules . . . . . . . . . . . . . . 54
How PP&L Forecasts the Number of Customers and the Amount of
Electricity Usage . . . . . . . . . . . . . . . . . . . . . . . . . . 67
PP&L's Billing Process . . . . . . . . . . . . . . . . . . . . . . . . 70
PP&L Maintains Limited Information on its Customers' Creditworthiness . 71
PP&L's Procedures for Collecting Intangible Transition Charges from
Electric Generation Suppliers and Other Third Party Billers . . . . . . 74
PP&L's Efforts to Deal With the Year 2000 Computer Issue . . . . . . . 75

PP&L TRANSITION BOND COMPANY LLC, THE ISSUER . . . . . . . . . . . . . . 78

HOW THE ISSUER WILL USE THE PROCEEDS OF THE TRANSITION BONDS . . . . . . 81

INCORPORATION OF DOCUMENTS BY REFERENCE . . . . . . . . . . . . . . . . . 81

THE TRANSITION BONDS . . . . . . . . . . . . . . . . . . . . . . . . . . 82
General Terms of the Transition Bonds . . . . . . . . . . . . . . . . . 82
Payments of Interest and Principal on the Transition Bonds . . . . . . 83
Redemption of the Transition Bonds . . . . . . . . . . . . . . . . . . 83
Credit Enhancement for the Transition Bonds . . . . . . . . . . . . . . 84
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 . . . . . . . . . . . . . . . . . . . . . . . . 92
PP&L's Representations and Warranties . . . . . . . . . . . . . . . . . 92
PP&L's Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
PP&L's Obligation to Indemnify the Issuer and the Trustee and to
Take Legal Action . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Successors to PP&L . . . . . . . . . . . . . . . . . . . . . . . . . . 103
The Treatment of the Assignment of Intangible Transition Property . . . 104

THE SALE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
CEP Securities' Sale and Assignment of Intangible Transition Property
and Rights Under the Contribution Agreement . . . . . . . . . . . . . 104

THE SERVICING AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . 106
PP&L's Servicing Procedures . . . . . . . . . . . . . . . . . . . . . . 106
Potential Limitations to Collecting Intangible Transition Charges . . . 108
The PUC's Intangible Transition Charge Adjustment Process . . . . . . . 109
PP&L May Obtain a Letter of Credit to Ensure Remittances on Each
Remittance Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
PP&L's Compensation for Its Role as Servicer and Its Release of
Other Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
PP&L's Duties as Servicer . . . . . . . . . . . . . . . . . . . . . . . 111
P&L's Representations and Warranties as Servicer . . . . . . . . . . . 111
PP&L, as Servicer, Will Indemnify the Issuer and Other Related
Entities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
PP&L, as Servicer, Will Provide Statements to the Issuer and
to the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
PP&L to Provide Compliance Reports Concerning the Servicing
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
Matters Regarding PP&L as Servicer . . . . . . . . . . . . . . . . . . 114
Events Constituting a Default by PP&L in Its Role as Servicer . . . . . 116
The Trustee's Rights If PP&L Defaults in Its Role as Servicer . . . . . 117
The Obligations of a Servicer That Succeeds PP&L . . . . . . . . . . . 117

THE INDENTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
The Security for the Transition Bonds . . . . . . . . . . . . . . . . . 118
Transition Bonds May Be Issued in Various Series or Classes . . . . . . 118
The Collection Account for the Transition Bonds . . . . . . . . . . . . 120
How Funds in the General Subaccount Will Be Allocated . . . . . . . . . 125
Reports to Holders of the Transition Bonds . . . . . . . . . . . . . . 127
The Issuer and the Trustee May Modify the Indenture . . . . . . . . . . 128
What Constitutes an Event of Default on the Transition Bonds . . . . . 132
Covenants of the Issuer . . . . . . . . . . . . . . . . . . . . . . . . 135
Access to the List of Holders of the Transition Bonds . . . . . . . . . 137
The Issuer Must File an Annual Compliance Statement . . . . . . . . . . 138
The Trustee Must Provide an Annual Report to All Transition
Bondholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138
What Will Trigger Satisfaction and Discharge of the Indenture . . . . . 138
The Issuer's Legal Defeasance and Covenant Defeasance Options . . . . . 138
The Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140

HOW A BANKRUPTCY OF PP&L OR THE
SERVICER MAY AFFECT YOUR INVESTMENT . . . . . . . . . . . . . . . . . . . 141

MATERIAL INCOME TAX MATTERS FOR THE TRANSITION BOND . . . . . . . . . . . 144
Consequences to Non-U.S. Holder . . . . . . . . . . . . . . . . . . . . 144
Taxation of Foreign Transition Bondholders . . . . . . . . . . . . . . 146
Material Commonwealth of Pennsylvania Tax Matters . . . . . . . . . . . 148

ERISA CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 148
Plan Asset Issues For an Investment in the Transition Bonds . . . . . . 149
Prohibited Transaction Exemptions . . . . . . . . . . . . . . . . . . . 149
Special Considerations Applicable to Insurance Company General
Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151
General Investment Considerations For Prospective Plan Investors
in the Transition Bonds . . . . . . . . . . . . . . . . . . . . . . . 151

PLAN OF DISTRIBUTION FOR THE TRANSITION BONDS . . . . . . . . . . . . . . 152

RATINGS FOR THE TRANSITION BONDS . . . . . . . . . . . . . . . . . . . . 153

VARIOUS LEGAL MATTERS RELATING TO THE TRANSITION BONDS . . . . . . . . . 153

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.

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 14 of this Prospectus.

The Issuer of the Transition Bonds: PP&L Transition Bond Company LLC,
a Delaware limited liability
company wholly owned by PP&L. 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 GENA 9-2,
Room 3; Allentown, PA 18101

Issuer's Telephone Number: (610) 774-7934

Seller of the Intangible
Transition Property to the
Issuer: CEP Securities, an indirect wholly
owned subsidiary of PP&L. On May
13, 1999, PP&L assigned its
intangible transition property to
CEP Securities pursuant to a
contribution agreement. CEP
Securities is a special purpose
entity 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: 3960 Howard Hughes Parkway, Suite
630 North; Las Vegas, NV 89109

Seller's Telephone Number: (702) 866-2202

Servicer of the Intangible
Transition Property: PP&L, an operating electric
utility serving approximately 1.3
million customers in central and
eastern Pennsylvania. PP&L, acting
as servicer, will service the
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

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.

Those amounts will be recovered 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. 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 this prospectus.

On May 13, 1999, PP&L assigned its intangible transition property to the
seller pursuant to a contribution agreement. The seller will sell
intangible transition property to the issuer to support the issuance of up
to $2.57 billion in principal amount of transition bonds. 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, plus expenses and indemnity amounts, if any;

(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 or percentage in
an amount specified in the servicing agreement;

(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 $100,000 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, including any principal paid at final maturity or upon
redemption and acceleration;

(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 amount of all fees referenced in clauses (1) through (4) above are
described in the prospectus supplement for the related series of transition
bonds. 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 and investment earnings will be allocated, may be found
on page 28 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 reduce any excess in
intangible transition charge collections, upon approval of these
adjustments by the Pennsylvania PUC. The servicer will make these
changes on the dates specified in the related prospectus supplement.
See "The PUC Order and the Intangible Transition Charges - The PUC
Order" in this Prospectus.

1) Overcollateralization Subaccount -The prospectus supplement for
each series of transition bonds will specify a funding level for
the overcollateralization subaccount. That amount will be funded
ratably 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.

3) Reserve Subaccount - Any excess amount of intangible transition
charge collections and investment earnings not released to the
issuer 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
specified 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.
These reports 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.

Servicing Compensation

The issuer will pay the servicer on each payment date the quarterly
servicing fee with respect to all series of transition bonds, solely to the
extent that the issuer has funds available to pay this fee. As long as PP&L
acts as servicer, this quarterly fee will be $312,500. If a successor
servicer is appointed, the quarterly servicing fee will be an amount
approved by the PUC, but not in excess of 1.5% of the outstanding principal
balance of the transition bonds. The servicer will be entitled to retain as
additional compensation net investment income it receives on the intangible
transition charges it collects pending remittance to the Trustee, as well
as any late fees paid by customers to the servicer which are associated
with the intangible transition charges.

Tax Status

The issuer and PP&L have received a private letter ruling from the Internal
Revenue Service to the effect that the transition bonds will be classified
as obligations of PP&L. In addition, 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 Pennsylvania will not be
subject to these taxes. Neither residents nor nonresidents of Pennsylvania
will be subject to an intangible personal property tax in respect to the
Transition Bonds.

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, or other investor
subject to ERISA, 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 Pennsylvania legislature did not validly
enact the Competition Act. 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 allowing the recovery of
intangible transition charges violated the
Commerce Clause of the U.S. Constitution. The
Pennsylvania courts rejected that claim, and the
U.S. Supreme Court denied a petition to hear the
case. 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 The value of your investment may decline due to
Action May Reduce the legislative action. For example:
Value of 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.
Under these circumstances, not withstanding
the state pledge described above, it may be
possible for the Pennsylvania legislature to
repeal the Competition Act without providing
adequate compensation to holders of
transition bonds.

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 order,
Actions Which May which are stated to be irrevocable, the PUC
Reduce the Value retains the power to adopt, revise or rescind
of Your Investment rules or regulations affecting PP&L or a
successor utility. The PUC also retains the
power to interpret the irrevocable portions of
the PUC order. 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. In this regard, the PUC
currently is considering a request by West Penn
Power Co. for the issuance of a supplemental
qualified rate order. The West Penn Power Co.
request is substantially the same as PP&L's
request for a supplemental qualified rate order
that the PUC approved on May 21, 1999. A number
of parties have intervened in the West Penn
Power Co. proceeding, including the Pennsylvania
Office of Consumer Advocate, an association of
power marketers and an association of industrial
customers. Because the West Penn Power Co.
request is substantially the same as the PP&L
request, an adverse decision by the PUC in the
West Penn Power Co. proceeding could adversely
affect the interpretation of the PUC order for
PP&L, including interpretation of those
provisions designed to protect transition
bondholder interests. 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 of
Investment 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 and
Principal and Interest interest on transition bonds and other qualified
May Be Reduced If transition expenses is revenue received through
Customers Reduce intangible transition charges. Those funds may
Energy Consumption, be reduced for various reasons, including
Move Out of PP&L's reduction in energy consumption, departures of
Service Territory or Customers from PP&L's service territory or the
Install Alternative installation of alternative sources of energy by
Sources of Energy customers. The Competition Act addresses these
possibilities by providing for the adjustment of
intangible transition charges on a periodic
basis. However, these adjustments 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 from
Intangible Transition the PUC, on behalf of the issuer, periodic
Charges May Not Be adjustments of the intangible transition
Sufficient to Protect charges. These adjustments are intended to
Your Investment provide, among other things, for timely payment
of the transition bonds. However, the frequency
of these adjustments is limited. PP&L will
generally 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 in full and on a timely basis. However,
unforeseen events, such as weather, changes in
technology associated with distributed
generation, changes in economic conditions or
market changes due to increased competition, may
make projections inaccurate. Accordingly, PP&L
might request adjustments that are insufficient
to provide for timely payment of the transition
bonds. Also, 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 The customers who will be responsible for paying
Intangible Transition intangible transition charges are divided into
Charges by Rate 23 rate schedules. These rate schedules are
Schedule May Result grouped among three customer classes. Intangible
in Insufficient transition charges will be assessed by rate
Collections 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
that rate schedule as well as 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 permit costs to be shifted among customer
for the Failure to classes. As a result, a shortfall in collections
Collect Intangible of intangible transition charges in one customer
Transition Charges class cannot be made up by adjustments of
from Another Customer intangible transition charges in the other
Class customer classes. See "The Competition Act" in
this prospectus.

The Amount of The Competition Act and the PUC Order set a cap
Generation on generation charges including intangible
Charges Including transition charges through December 31, 2009.
Intangible Transition This cap applies to each rate schedule within
Charges May Not Exceed each customer class separately. If there is a
a Statutory Cap 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 in excess of the rate cap. 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 PUC order gives PP&L the right to request
relief from the generation rate cap, if the
combined total of the competitive transition
charges, intangible transition charges and
shopping credit exceeds the generation rate cap.
However, there is no assurance that the PUC
would grant this request, or that the PUC would
grant the request in a timely manner.

The Issuer May Not PP&L may not charge intangible transition
Charge Intangible charges for electricity delivery after December
Transition Charges 31, 2009. Amounts collected from intangible
for Services Rendered transition charges imposed for electricity
After December 31, 2009 delivery 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 PP&L, as servicer, will be responsible for
Relies on PP&L or billing and collecting intangible transition
its Successor Acting charges and for submitting requests to the PUC
as Servicer of the to adjust these charges. If PP&L ceased
Intangible Transition servicing the intangible transition property, it
Property might be hard to find a successor that can
perform all of the duties of servicer. 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 The methodology of determining the amount of
Collection Practices intangible transition charges the issuer may
May Reduce the Value impose on each customer is set by the PUC. Thus,
of Your Investment 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 May Not Correctly If PP&L incorrectly evaluates the customers'
Evaluate Its Customers' ability to pay their bills, it may experience
Ability to Pay delays in receiving payments or it may have to
Intangible Transition write off some payments. In that case, it may
Charges 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 Customers may pay intangible transition charges
Difficult to Collect to third parties. These third parties will
Intangible Transition forward the charges to PP&L as servicer. These
Charges From Third entities must pay PP&L the intangible transition
Parties than from charges even if they do not collect them from
PP&L's Retail Customers 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 then 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.
In no event may the servicer directly bill
a customer for service that was previously
billed by the third party and paid by that
customer to the third party.

o 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 PP&L's Customers within PP&L's service territory may
Service Territory May stop or delay paying intangible transition
Stop or Delay Making charges for the following reasons:
Intangible Transition
Charge Payments o They may become confused by the 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. Even if they remain
connected to PP&L's distribution system and
remain legally responsible for paying
intangible transition charges, 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 programs,
Problems Beginning whom it relies, relating to the year 2000. Many
in the Year 2000 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 July 1,
1999, approximately 97% of PP&L's mainframe
applications are year 2000 compliant. All
mainframe computer systems are expected to be
year 2000 compliant by the fourth quarter of
1999.

PP&L, or a third party on whom PP&L relies for
collection of intangible transition charges, may
have a computer system that is not 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
have a computer system that is not 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 after
Harm Your Investment PP&L pays them to the trustee. PP&L will be
in Case of Bankruptcy 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 that as a matter of Pennsylvania state law,
or Delays in Payments
on the Transition Bond 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, from using funds in
the accounts under the indenture to make
payments on 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 trustee's lien may not extend to
intangible transition charges in respect of
electricity consumed after the commencement
of PP&L's bankruptcy case, with the result
that the transition bonds would represent
only general unsecured claims against PP&L;

o PP&L may not be obligated to make any
payments on the transition bonds during the
pendency of the bankruptcy case;

o PP&L may be able to alter the terms of the
transition bonds as part of its plan of
reorganization;

o the bankruptcy court might rule that the
intangible transition charges 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.

Furthermore, if PP&L enters into bankruptcy, it
may be permitted to stop acting as servicer. 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 servicer,
Order for Intangible the Competition Act allows the PUC to order the
Transition Property sequestration and payment of all intangible
in Case of Default transition charge collections to the transition
Might Not Be bondholders. The Competition Act states that
Enforceable in this PUC order would be effective even if made
Bankruptcy 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 develop.
Transition Bonds 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 transition bonds if the assets of the issuer are
Due to Limited Assets insufficient to pay the principal amount of the
of the Issuer transition bonds in full. The only source of
funds for 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 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 transition
Additional Series of bonds without your prior review or approval.
Bonds 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 reduces or delays
payments on your transition bonds. This could
result from the fact that an increase in the
amount of transition bonds issued will increase
the amount of intangible transition charges.
That, in turn, could adversely affect the
issuer's ability to increase intangible
transition charges within the generation rate
cap. 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 at a different rate 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, there
Reinvest the Principal may be optional redemptions of the transition
of your Transition bonds. Future market conditions may require you
Bonds at a Lower to reinvest the proceeds of a redemption at a
Rate of Return Because rate lower than the rate you received on the
of Optional Redemption transition bonds. The issuer cannot predict
of the Transition Bonds 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 contribution
Indemnify the Issuer agreement to the seller have been assigned by
For a Breach of a the seller to the issuer. If PP&L breaches a
Representation or representation or warranty in the contribution
Warranty May Not agreement, PP&L is obligated to indemnify the
Be Sufficient to issuer and the trustee for any liabilities,
Protect Your obligation, claims, actions, suit or payments
Investment 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.
PP&L will not be obligated to repurchase the
intangible transition property in the event of a
breach of any of its representations and
warranties regarding the intangible transition
property, and neither the trustee nor the
transition bondholders will have the right to
accelerate payments on the transition bonds as a
result of the breach. 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 PP&L may
not be sufficient for you to recover your
transition bond investment. If PP&L becomes
obligated to indemnify transition bondholders,
the ratings on the transition bonds will likely
be downgraded since transition bondholders will
be unsecured creditors of PP&L with respect to
any of these indemnification amounts. 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 intangible transition charges that PP&L will
Later 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 effect of continued electric industry restructuring;

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

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

8. the payment patterns of customers including the rate of
delinquencies and the accuracy of the collections curve; 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.

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

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.

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 and 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 the
Customer's access to the utility's transmission and distribution system,
the customers will be assessed competitive transition charges 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 its
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. The PUC held evidentiary
hearings 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, 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. Competitive Transition Charges
will be reduced by the amount of Intangible Transition Charges upon
issuance of the Transition Bonds. 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, prior to reduction for the amount of Intangible
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 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 a 4% system average
reduction from the current total bundled bill of Customers in 1999. The
Bundled Rate is the sum of the Competitive Transition Charge Rate, the
Transmission & Distribution Rate and the Shopping Credit.

<TABLE>
<CAPTION>
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 and the Intangible Transition Charges will
be collected, taking into account the 4% system average rate reduction
during 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.

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,

1. a Shopping Credit for generation and

2. 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 the Transmission and
Distribution rate and 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 are being 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 on January 1,
1999, an additional one-third on January 2, 1999 and the remaining
one-third by January 2, 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 could 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 could 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 the 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, 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 or exceed the amount necessary to
ensure the receipt by the Trustee of revenues sufficient to recover fully
the Qualified Transition Expenses. Adjustments beginning twelve months
before the Expected Final Payment Date for the last Series or Class of
Transition Bonds will be quarterly or monthly if necessary to ensure, among
other items, 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. Beginning twelve months before the Expected Final
Payment Date of the last Series or Class of the Transition Bonds, 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 all Customers in each of PP&L's Customer Classes and Rate
Schedules.

Intangible Transition Charges will be allocated among PP&L's
Customer Classes based on the relative generation-related charges borne by
each Customer Class through the electric rates specified in PP&L's
electricity rate tariff which became effective on January 1, 1999. PP&L
will determine the amount to be allocated to each Rate Schedule within that
Customer Class. 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. That amount will be
expressed as a charge or charges for each Rate Schedule. 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 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, as follows. Prior to January
1, 2000, Intangible Transition charges will be applied to all services on
the bill regardless of whether the service was provided before or after the
date of issuance for a particular Series. Beginning on January 1, 2000,
Intangible Transition Charges will be applied only to services that were
provided on and after the date of issuance for a particular Series. 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 associated with the transition bonds, 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 the 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 beginning twelve months
before the Expected Final Payment Date of the last Series or Class of
Transition Bonds 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,

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

4. the amount in the Reserve Account equaling zero.

These Adjustment Requests are designed to achieve each of the above goals
by the Payment Date immediately preceding the next Adjustment Date or with
respect to the period in which monthly rate adjustments are utilized, the
25th day of the calendar month immediately preceding the next monthly
Adjustment 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 will be set forth in the Prospectus
Supplement for the related Series.

In order to obtain approval of each annual 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. Interim adjustments
beginning twelve months before the Expected Final Payment Date of the last
Series or Class of the 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. Beginning twelve months
before the Expected Final Payment Date of the last Series or Class of the
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 1, 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 the following 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 of
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. 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 the 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 Energy Company, another electricity provider
in the Commonwealth of Pennsylvania, which will be referred to in this
Prospectus as PECO, 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 the Competition Act,
of its own force and as construed and applied by the PUC violated various
provisions of the United States Constitution and federal law. 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. 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 was
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, virtually all 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' 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, Burns Mechanical, Inc. 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.

Residential customers 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 contract 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 and 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 contract 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.

If Rate Schedules are eliminated, Customers are expected to
remain in the same Customer Class. In addition, although Customers have
historically migrated between Rate Schedules as their voltage requirements
changed, that migration 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 PUC has approved this allocation of Intangible
Transition Charges among Customer Classes. 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. See "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 and Customer Class Breakdown

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
--------- ------ --------- ------ --------- ------ --------- ------ --------- ------ --------- ------
Residential
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Rate Schedule RS 1,048,223 86.9% 1,058,939 86.8% 1,066,724 86.7% 1,074,621 86.7% 1,081,800 86.5% 1,087,255 87.0%
Rate Schedule RTS 14,028 1.2% 14,449 1.2% 14,597 1.2% 14,568 1.2% 14,495 1.2% 13,796 1.1%
Rate Schedule RTD 313 0.0% 321 0.0% 304 0.0% 294 0.0% 290 0.0% 267 0.0%
--------- ----- --------- ----- --------- ----- --------- ----- --------- ----- --------- -----
Total 1,062,564 88.1% 1,073,709 88.0% 1,081,625 87.9% 1,089,483 87.8% 1,096,585 87.7% 1,101,318 88.1%

Small Commercial & Industrial

Rate Schedule GS-1 119,146 9.9% 120,921 9.9% 122,383 10.0% 124,374 10.0% 127,090 10.2% 123,030 9.9%
Rate Schedule GS-3 18,401 1.5% 18,981 1.6% 19,801 1.6% 20,313 1.6% 20,525 1.6% 19,893 1.6%
Rate Schedule
GH-1(R) 1,621 0.1% 1,588 0.1% 1,403 0.1% 1,144 0.1% 1,078 0.1% 1,008 0.1%
Rate Schedule
GH-2(R) 2,964 0.3% 2,911 0.2% 2,862 0.2% 2,805 0.2% 2,739 0.2% 2,614 0.2%
Rate Schedule IS-1 4 0.0% 4 0.0% 4 0.0% 4 0.0% 4 0.0% 4 0.0%
Rate Schedule SA 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0%
Rate Schedule SM 135 0.0% 125 0.0% 117 0.0% 115 0.0% 112 0.0% 113 0.0%
Rate Schedule SHS 760 0.1% 825 0.1% 869 0.1% 903 0.1% 934 0.1% 910 0.1%
Rate Schedule SE 57 0.0% 59 0.0% 61 0.0% 63 0.0% 63 0.0% 62 0.0%
Rate Schedule
SI-1(R) 5 0.0% 5 0.0% 3 0.0% 3 0.0% 3 0.0% 3 0.0%
Rate Schedule TS 17 0.0% 17 0.0% 17 0.0% 17 0.0% 17 0.0% 17 0.0%
Rate Schedule BL 24 0.0% 26 0.0% 21 0.0% 13 0.0% 25 0.0% 25 0.0%
--------- ----- --------- ----- --------- ----- --------- ----- --------- ----- --------- -----
Total 143,134 11.9% 145,462 11.9% 147,541 12.0% 149,754 12.1% 152,590 12.1% 147,679 11.8%

Large Commercial & Industrial

Rate Schedule LP-4 808 0.1% 816 0.1% 827 0.1% 826 0.1% 859 0.1% 900 0.1%
Rate Schedule IS-P 25 0.0% 32 0.0% 32 0.0% 39 0.0% 41 0.0% 34 0.0%
Rate Schedule LP-5 95 0.0% 91 0.0% 87 0.0% 88 0.0% 91 0.0% 85 0.0%
Rate Schedule LP-6 0 0.0% 5 0.0% 5 0.0% 4 0.0% 4 0.0% 4 0.0%
Rate Schedule IS-T 23 0.0% 28 0.0% 30 0.0% 35 0.0% 33 0.0% 32 0.0%
Rate Schedule LPEP 1 0.0% 1 0.0% 1 0.0% 1 0.0% 1 0.0% 1 0.0%
Rate Schedule ISM 1 0.0% 1 0.0% 1 0.0% 1 0.0% 1 0.0% 1 0.0%
Rate Schedule
Standby 9 0.0% 9 0.0% 10 0.0% 9 0.0% 8 0.0% 0 0.0%
--------- ----- --------- ----- --------- ----- --------- ----- --------- ----- --------- -----
Total 962 0.1% 983 0.1% 993 0.1% 1,003 0.1% 1,038 0.1% 1,057 0.1%

Aggregate
Customer
Classes 1,206,660 100.0% 1,220,154 100.0% 1,230,159 100.0% 1,239,237 100.0% 1,250,213 100.0% 1,256,054 100.0%
</TABLE>

<TABLE>
<CAPTION>
TABLE 4

Actual Retail Electric Usage per mWh and Customer Class Breakdown

Year Ended Year Ended Year Ended
12/31/94 12/31/95 12/31/96
-------- -------- --------
Rate Schedule mWh % of mWh % of mWh % of
Total Total Total
---------- ------ ---------- ------ ---------- ------
<S> <C> <C> <C> <C> <C> <C>
Residential

Rate Schedule RS 11,042,348 35.7% 10,905,634 34.9% 11,417,526 35.3%
Rate Schedule RTS 388,442 1.3% 381,659 1.2% 417,938 1.3%
Rate Schedule RTD 5,519 0.0% 5,367 0.0% 5,419 0.0%
---------- ------ ---------- ------ ---------- ------
Total 11,436,309 37.0% 11,292,660 36.1% 11,840,883 36.7%

Small Commercial & Industrial

Rate Schedule GS-1 1,401,597 4.5% 1,413,913 4.5% 1,449,933 4.5%
Rate Schedule GS-3 6,690,517 21.6% 6,909,728 22.1% 7,205,496 22.3%
Rate Schedule GH-1(R) 510,845 1.7% 476,356 1.5% 439,681 1.4%
Rate Schedule GH-2(R) 95,114 0.3% 85,477 0.3% 88,019 0.3%
Rate Schedule IS-1 3,688 0.0% 4,092 0.0% 4,337 0.0%
Rate Schedule SA 28,061 0.1% 27,494 0.1% 26,858 0.1%
Rate Schedule SM 9,148 0.0% 8,049 0.0% 7,168 0.0%
Rate Schedule SHS 57,854 0.2% 59,480 0.2% 60,875 0.2%
Rate Schedule SE 9,160 0.0% 9,594 0.0% 10,895 0.0%
Rate Schedule SI-1(R) 350 0.0% 221 0.0% 190 0.0%
Rate Schedule TS 504 0.0% 504 0.0% 504 0.0%
Rate Schedule BL 9,760 0.0% 2,684 0.0% 4,751 0.0%
---------- ------ ---------- ------ ---------- ------
Total 8,816,598 28.5% 8,997,592 28.8% 9,298,707 28.8%

Large Commercial & Industrial

Rate Schedule LP-4 4,197,312 13.6% 4,212,820 13.5% 4,371,372 13.5%
Rate Schedule IS-P 325,211 1.1% 425,342 1.4% 437,663 1.4%
Rate Schedule LP-5 3,435,484 11.1% 3,215,223 10.3% 2,962,609 9.2%
Rate Schedule LP-6 0 0.0% 105,071 0.3% 556,707 1.7%
Rate Schedule IS-T 2,151,956 7.0% 2,406,342 7.7% 2,208,843 6.8%
Rate Schedule LPEP 146,135 0.5% 105,628 0.3% 67,986 0.2%
Rate Schedule ISM 410,120 1.3% 509,520 1.6% 550,689 1.7%
Rate Schedule Standby 12,008 0.0% 11,005 0.0% 11,774 0.0%
---------- ------ ---------- ------ ---------- ------
Total 10,678,226 34.5% 10,990,951 35.1% 11,167,643 34.6%

Aggregate Customer
Classes 30,931,133 100.0% 31,281,203 100.0% 32,307,233 100.0%

<CAPTION>
Year Ended Year Ended Quarter Ended
12/31/97 12/31/98 3/31/99
-------- -------- -------
Rate Schedule mWh % of mWh % of mWh % of
Total Total Total
---------- ------ ---------- ------ --------- ------
<S> <C> <C> <C> <C> <C> <C>
Residential

Rate Schedule RS 11,029,356 34.5% 10,783,774 33.6% 3,603,814 39.02%
Rate Schedule RTS 391,796 1.2% 360,228 1.1% 150,083 1.6%
Rate Schedule RTD 4,976 0.0% 4,674 0.0% 1,697 0.0%
---------- ------ ---------- ------ --------- ------
Total 11,426,128 35.8% 11,148,676 34.7% 3,755,594 40.7%

Small Commercial & Industrial

Rate Schedule GS-1 1,458,263 4.6% 1,507,567 4.7% 453,582 4.9%
Rate Schedule GS-3 7,330,178 22.9% 7,486,597 23.3% 1,984,697 21.5%
Rate Schedule GH-1(R) 365,598 1.1% 321,752 1.0% 116,441 1.3%
Rate Schedule GH-2(R) 78,940 0.3% 69,051 0.2% 33,018 0.4%
Rate Schedule IS-1 4,062 0.0% 3,632 0.0% 1,756 0.0%
Rate Schedule SA 26,482 0.1% 25,894 0.1% 7,265 0.1%
Rate Schedule SM 6,653 0.0% 6,597 0.0% 1,756 0.0%
Rate Schedule SHS 61,855 0.2% 62,355 0.2% 16,367 0.2%
Rate Schedule SE 11,036 0.0% 11,901 0.0% 3,254 0.0%
Rate Schedule SI-1(R) 189 0.0% 188 0.0% 51 0.0%
Rate Schedule TS 504 0.0% 504 0.0% 123 0.0%
Rate Schedule BL 5,730 0.0% 7,341 0.0% 1,232 0.0%
---------- ------ ---------- ------ --------- -------
Total 9,349,490 29.3% 9,503,379 29.6% 2,619,542 28.4%

Large Commercial & Industrial

Rate Schedule LP-4 4,366,189 13.7% 4,599 ,955 14.3% 1,152,561 12.5%
Rate Schedule IS-P 524,541 1.6% 562,350 1.8% 143,987 1.6%
Rate Schedule LP-5 3,089,211 9.7% 3,045,536 9.5% 771,890 8.4%
Rate Schedule LP-6 454,463 1.4% 474,633 1.5% 119,1 85 1.3%
Rate Schedule IS-T 2,161,552 6.8% 2,218,105 6.9% 550,160 6.0%
Rate Schedule LPEP 56,206 0.2% 73,317 0.2% 24,678 0.3%
Rate Schedule ISM 526,539 1.7% 505,281 1.6% 97,481 1.1%
Rate Schedule Standby 9,779 0.0% 5,847 0.0% 658 0.0%
---------- ------ ---------- ------ --------- ------
Total 11,188,480 35.0% 11,485,024 35.7% 2,860,600 31.0%

Aggregate Customer
Classes 31,964,098 100.0% 32,137,079 100.0% 9,235,736 100.0%
</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>
<CAPTION>
TABLE 5

Retail Electric Revenues (dollars in thousands) and Customer Class Breakdown

Rate Schedule RS 909,494 40.6% 904,054 40.1% 976,460 41.0% 948,796 40.3% 909,667 39.5% 285,668 47.9%
Rate Schedule RTS 20,388 0.9% 20,528 0.9% 22,986 1.0% 21,809 0.9% 20,134 0.9% 7,261 1.2%
Rate Schedule RTD 418 0.0% 407 0.0% 420 0.0% 386 0.0% 355 0.0% 123 0.0%
--------- ------ --------- ------ --------- ------ --------- ------ --------- ------ ------- ------
Total 930,300 41.6% 924,989 41.0% 999,866 42.0% 970,991 41.3% 930,156 40.4% 293,052 49.1%

Small Commercial & Industrial

Rate Schedule GS-1 154,130 6.9% 155,066 6.9% 160,011 6.7% 160,416 6.8% 162,026 7.0% 46,148 7.7%
Rate Schedule GS-3 515,183 23.0% 530,197 23.5% 556,979 23.4% 565,757 24.1% 556,156 24.2% 125,031 21.0%
Rate Schedule GH-1(R) 40,740 1.8% 38,313 1.7% 36,481 1.5% 30,222 1.3% 25,411 1.1% 7,917 1.3%
Rate Schedule GH-2(R) 7,488 0.3% 6,771 0.3% 7,235 0.3% 6,492 0.3% 5,533 0.2% 2,596 0.4%
Rate Schedule IS-1 187 0.0% 202 0.0% 211 0.0% 197 0.0% 167 0.0% 75 0.0%
Rate Schedule SA 4,256 0.2% 4,237 0.2% 4,412 0.2% 4,433 0.2% 4,438 0.2% 1,086 0.2%
Rate Schedule SM 1,522 0.1% 1,324 0.1% 1,257 0.1% 1,185 0.1% 1,170 0.1% 184 0.1%
Rate Schedule SHS 14,699 0.7% 15,251 0.7% 16,396 0.7% 16,739 0.7% 16,943 0.7% 4,295 0.7%
Rate Schedule SE 365 0.0% 395 0.0% 457 0.0% 462 0.0% 507 0.0% 102 0.0%
Rate Schedule SI-1(R) 71 0.0% 48 0.0% 36 0.0% 36 0.0% 36 0.0% 6 0.0%
Rate Schedule TS 60 0.0% 60 0.0% 60 0.0% 60 0.0% 60 0.0% 10 0.0%
Rate Schedule BL 863 0.0% 245 0.0% 436 0.0% 527 0.0% 669 0.0% 110 0.0%
--------- ------ --------- ------ --------- ------ --------- ------ --------- ------ ------- ------
Total 739,564 33.0% 752,109 33.3% 783,971 32.9% 786,526 33.5% 773,116 33.6% 187,560 31.4%

Large Commercial & Industrial

Rate Schedule LP-4 263,108 11.8% 264,014 11.7% 277,112 11.6% 274,889 11.7% 282,324 12.3% 57,516 9.6%
Rate Schedule IS-P 15,650 0.7% 19,939 0.9% 21,221 0.9% 24,618 1.1% 26,363 1.1% 5,339 0.9%
Rate Schedule LP-5 181,183 8.1% 168,894 7.5% 156,344 6.6% 159,623 6.8% 155,182 6.7% 28,797 4.8%
Rate Schedule LP-6 0 0.0% 5,794 0.3% 29,961 1.3% 24,736 1.1% 24,544 1.1% 3,956 0.7%
Rate Schedule IS-T 82,970 3.7% 92,926 4.1% 88,611 3.7% 87,559 3.7% 87,810 3.8% 15,604 2.6%
Rate Schedule LPEP 8,180 0.4% 6,204 0.3% 4,679 0.2% 4,076 0.2% 4,948 0.2% 1,507 0.3%
Rate Schedule ISM 16,532 0.7% 19,571 0.9% 20,645 0.9% 18,955 0.8% 18,002 0.8% 3,513 0.6%
Rate Schedule
Standby 1,171 0.1% 1,145 0.1% 1,290 0.1% 1,106 0.1% 908 0.0% 112 0.0%
--------- ------ --------- ------ --------- ------ --------- ------ --------- ------ ------- ------
Total 568,794 25.4% 578,487 25.7% 599,863 25.2% 595,562 25.3% 600,081 26.1% 116,344 19.5%

Aggregate Customer
Classes 2,238,658 100.0% 2,255,585 100.0% 2,383,700 100.0% 2,353,079 100.0% 2,303,353 100.0% 596,956 100.0%
</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 tables below set
forth the delinquency and net 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 net 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. PP&L does not expect, but cannot assure, that the delinquency or
net 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

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%

Total 5.57% 5.73% 4.73% 4.38% 4.04% 4.94%

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%

Total 0.33% 0.35% 0.35% 0.26% 0.22% 0.49%

Grand Total 2.50% 2.54% 2.19% 1.95% 1.75% 2.34%

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
-------- -------- -------- -------- -------- -------
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%

The numbers in Table 6 for delinquencies over 90 days include all
accounts referred to collection agencies and attorneys, plus all accounts
on payment arrangement. Since the collection process is longer for
Residential Customers than it is for other customers, and only accounts
for Residential Customers are referred to collection agencies and
attorneys, the numbers in the over 90 day category are higher for
Residential Customers than the 30 and 60 day categories. In addition, the
state mandated winter moratorium also tends to increase the over 90 day
delinquency category for residential Customers. This discrepancy does not
apply to non-residential customers. See "PP&L Maintains Limited
Information on its Customers' Creditworthiness" below.

Customer bills are written off 90 days after the final bill is issued.
A final bill results from either of two actions:

1. the Customer notifies PP&L that the Customer no longer wants
electricity service at the address, or

2. electricity service is disconnected for nonpayment and the
Customer does not come forward to pay the required amount to
have service reconnected.

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.

The net write-offs for Residential Customers were higher in 1998 as
compared to previous years because:

1. as described in the paragraph titled "PP&L's Delinquency and
Write-Off Experience" on the previous page, increased aggressive
collection action forced PP&L to write-off a higher number of
Residential accounts, and

2. billed revenue for Residential Customers was lower in 1998 than
in previous years.

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
fund 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.
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
based 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 1.17% to (5.78%). The
variances for the Small Commercial and Industrial Customer Class, ranged
from 0.30% to 2.91%. The variances for the Large Commercial and Industrial
Customer Class, ranged from (1.74%) to 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. In the following table "variance" represents percentage
deviation from the forecasted amount of electricity usage.

<TABLE>
<CAPTION>
TABLE 8

Annual Forecast Variance For the Amount of Electricity Consumed

Year Ended Year Ended Year Ended Year Ended Year Ended
1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C>
Residential

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 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 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 3.66% 3.08% 2.05% (1.74)% 2.91%

TOTAL

Forecast (in mWh) 30,384,000 31,043,000 31,699,000 32,406,000 32,285,000
Actual (in mWh) 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 of
(0.66%) to 0.1%. The variances for the Small Commercial and Industrial
Customer Class, ranged from 0.20% to 1.33%. The variances for the Large
Commercial and Industrial Customer Class, ranged from (0.60%) to 2.37%.
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. In the following
table "variance" represents percentage deviation from the forecasted number
of Customers.

TABLE 9

Annual Forecast Variance For the Number of Customers

1994 1995 1996 1997 1998
Residential

Forecast 1,062,493 1,078,402 1,086,567 1,092,868 1,103,905
Actual 1,062,564 1,073,709 1,081,625 1,089,483 1,096,585
Variance 0.01% (0.44)% (0.45)% (0.31)% (0.66)%

Small Commercial & Industrial

Forecast 142,843 144,941 146,367 148,058 150,580
Actual 143,134 145,462 147,541 149,754 152,590
Variance 0.20% 0.36% 0.80% 1.15% 1.33%

Large Commercial & Industrial

Forecast 968 978 984 1,001 1,013
Actual 962 983 993 1,003 1,038
Variance (0.60)% 0.61% 0.91% 0.30% 2.37%

TOTAL

Forecast 1,206,304 1,224,312 1,233,918 1,241,926 1,255,499
Actual 1,206,660 1,220,154 1,230,159 1,240,240 1,250,213
Variance 0.03% (0.34)% (0.30)% (0.14)% (0.42)%

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 began 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 2,579 customers enrolled in OnTrack accounting for $948,424 in
revenue 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 for balances arising after
Customers are permitted to choose their electricity generation supplier in
the following manner:

1. to the balance due for prior intangible transition charges,
competitive transition charges and transmission and distribution
charges;

2. to current intangible transition charges and competitive
transition charges;

3. to current transmission and distribution charges;

4. to the balance due for prior supply charges;

5. to current supply charges; and

6. 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.

As of July 1, 1999, PP&L has determined that all of its power
plants and electricity delivery systems are Year 2000 ready. In addition,
as of July 1, 1999 PP&L has determined that approximately 97% of mainframe
applications that will remain in production are Year 2000 compliant. As of
July 1, 1999, all mission-critical systems--for example, mainframe,
embedded technologies, and client server applications are Year 2000 ready,
and it is anticipated that all systems will be Year 2000 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 recognized that additional contingency plans were
necessary and, as part of the seven-step remediation process, developed
additional contingency plans.

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 has completed the
development of these contingency plans.

In May 1998, the Nuclear Regulatory Commission, which is referred
to as the NRC in this Prospectus, issued a notification requirement under
which nuclear utilities are required to inform the NRC, in writing, that
they are working to solve the Year 2000 computer problem. In addition,
nuclear utilities had until July 1, 1999 to inform the NRC that their
computers are Year 2000 compliant and Year 2000 ready or to submit a status
report summarizing the ongoing work. On July 1, 1999, PP&L filed its
written response with the NRC, stating that PP&L's nuclear power plant is
Year 2000 ready.

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
were incorporated into the overall Year 2000 Program Readiness Plan for
PP&L's nuclear department. In May 1999, the NRC conducted an audit of
PP&L's nuclear-related Year 2000 compliance activities. This audit was
observed by the PUC. There were no adverse findings identified as a result
of the audit.

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, 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. On July 1, 1999, PP&L informed the
PUC that all of the systems that support the generation and delivery of
electricity are Year 2000 ready. PP&L also filed its updated Year 2000
contingency plans with the PUC.

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 a 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
were 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
were incorporated into the respective business entities' Year 2000
remediation efforts.

As of July 1, 1999, PP&L has achieved the following completion
percentages on the seven steps referenced above for Year 2000 compliance:
awareness, 97%; inventory, 100%; assessment, 99%; remediation, 96%;
testing, 96%; implementation, 92%; and additional contingency plans, beyond
the basic plans referenced above, 74%. The preceding percentages are for
all of PP&L's computer systems, including components of the computer
systems that are mission-critical.

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
identified approximately 400 of these suppliers. An introductory letter,
as well as two follow-up letters, were mailed to the suppliers asking for
their Year 2000 compliance status. Approximately 96% of all vendors have
responded to date, with 99% of their responses being favorable. All of the
mission-critical vendors have provided favorable responses. PP&L is
responding to those suppliers whose Year 2000 compliance status does not
meet PP&L's expectations.

Delivery of electricity is dependent on the overall reliability
of the electric grid. In this regard, 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.

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 NERC-sponsored Year 2000
test on September 8, 1999, which will be a full simulation of generation,
transmission and distribution operational plans. PP&L also will
participate with all PJM member companies during late September of 1999 in
conducting similar testing.

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 $11 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 comprise 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, CEP Securities, as the Seller, will sell Intangible
Transition Property to the Issuer pursuant to the Sale Agreement between
the Seller and the Issuer. PP&L assigned the Intangible Transition
Property to the Seller pursuant to a 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 five years from the date of his or her
appointment:

1. a stockholder, member, partner, director, officer, employee,
affiliate, associate, customer, supplier, creditor or
independent contractor of, or any person that has received any
benefit in any form whatever from or any person that has
provided any service in any form whatever to, the Issuer or PP&L
or any of their respective affiliates, other than as a Customer
of PP&L in the ordinary course of business,

2. any person owning beneficially, directly or indirectly, any
outstanding shares of common stock, any limited liability
company interests or any partnership interests, as applicable,
of the Issuer or PP&L or any of their respective affiliates,

3. a stockholder, member, partner, director, officer, employee,
affiliate, associate, customer, supplier, creditor or
independent contractor of, or any person that has received any
benefit in any form whatever from, or any person that has
provided any service in any form whatever to, a beneficial owner
referred to in clause 2 above or any of its affiliates or
associates; or

4. a member of the immediate family of any person described in
clauses 1-3 above..

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
James S. 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 included 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 included 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 included 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 material acts or
omissions involving intentional misconduct, fraud or a knowing violation of
the law. 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 case described in the preceding
sentence.

The Issuer is a Separate 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 Managers. 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 maintain its assets and accounts separate from PP&L and its
affiliates and

o to maintain separate records and financial statements and not
commingle its records with the records of PP&L or its
affiliates.

The principal place of business of the Issuer is Two North Ninth
Street; Allentown, PA 18101, and its telephone number is (610) 774-7934.

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 the Seller. The Seller
will distribute the proceeds to its owner, CEP Reserves, Inc., a Delaware
corporation, who will make available distributed these proceeds to 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 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) 774-7934.

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.

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 a Series. The terms of each Series will be specified
in the related Prospectus Supplement.

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 provides
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.

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, 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 generally
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. 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 swap agreement,

8. a repurchase obligation,

9. a third party payment or other support,

10. a cash deposit or other credit enhancement, or

11. 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 generally 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 and to pay interest and related fees and expenses will be
allocated to 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 the rate of write-offs and delinquencies. 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, the Transition Bonds will not 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 all material terms and provisions
of the Contribution Agreement pursuant to which PP&L assigned the
Intangible Transition Property to CEP Securities. CEP Securities is an
indirect wholly owned subsidiary of PP&L. The Contribution Agreement may
be amended by the parties who signed the document, if the Trustee consents,
and if notice of the substance of any amendment is provided to each Rating
Agency and the Rating Agency Condition has been satisfied. The Contribution
Agreement has been filed as an exhibit to the Registration Statement of
which this Prospectus forms a part.

In order to facilitate the possible issuance of the Transition
Bonds in multiple Series on different issuance dates, PP&L arranged for the
formation of CEP Securities as a bankruptcy remote special purpose entity
for the purpose of holding any remaining Intangible Transition Property not
sold to the Issuer on or before the issuance of the first Series of
Transition Bonds. PP&L, CEP Securities and two affiliated companies
entered into the Contribution Agreement in order to provide for the
assignment of the Intangible Transition Property to CEP Securities in
accordance with the Competition Act.

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 PP&L's
indemnification obligations, 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, 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;

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 by
the Contribution Agreement or the fulfillment by each of them of
the terms of the Contribution Agreement do not conflict with,
result in any breach of any of the terms and provisions of, or
constitute a default under, the organizational documents 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
its properties pursuant to the terms of any such 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 by the Contribution Agreement or the
fulfillment by it of the terms of the Contribution Agreement,
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; and

(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;

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;

21. The sale, transfer and assignment contemplated by the Sale
Agreement constitute an absolute transfer of the Intangible
Transition Property from CEP Securities to the Issuer as
provided in 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 CEP Securities under any
bankruptcy law; and

22. CEP Securities is the sole owner of the Intangible Transition
Property being sold, transferred and assigned by CEP Securities
to the Issuer pursuant to the Bill of Sale; upon the execution
and delivery of the Bill of Sale, the Intangible Transition
Property will have been validly, sold, assigned, transferred and
conveyed to the Issuer free and clear of all Liens; all filings,
including filings with the PUC under the Competition Act,
necessary in any jurisdiction to give the Issuer and its
permitted assignees a valid ownership interest in the Intangible
Transition Property, free and clear of all Liens of CEP
Securities or PP&L or anyone claiming through CEP Securities or
PP&L have been made.

PP&L further agrees that these representations and warranties
will inure to the benefit of CEP Securities and that CEP Securities will
have the right to enforce such representations and warranties directly
against PP&L. Also, PP&L agrees that CEP Securities will 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 will have the right to further
assign such rights to the Trustee for the benefit of the Transition
Bondholders. These representations and warranties will 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 of 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;

7. (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 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
the Transition 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 authorized officers
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 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
will 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 will 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, 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 of those persons under existing law as of the date of
issuance of the Transition Bonds as a result of the assignment
of the Intangible Transition Property by PP&L to CEP Securities,
or the sale and assignment of the Intangible Transition Property
by CEP Securities to the Issuer, or 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, but excluding any
taxes imposed as a result of a failure of that person to
properly withhold or remit taxes imposed with respect to
payments on any Transition Bond; and

2. (a) any and all amounts of principal of and interest on the
Transition Bonds not paid when due or when scheduled to be
paid 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, in either case as a result of
PP&L's breach of any of its representations, warranties or
covenants contained in the Contribution Agreement, and

(b) any and all liabilities, obligations, claims, actions,
suits or payments of any kind whatsoever that may be
imposed on or asserted against any of those persons, other
than any liabilities, obligations or claims for or payments
of principal or interest on the Transition Bonds, 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 the Contribution 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:

1. into which PP&L may be merged or consolidated and which succeeds
to all or substantially all of the electric distribution
business of PP&L,

2. which results from the division of PP&L into two or more persons
and which succeeds to all or substantially all of the electric
distribution business of PP&L,

3. which may result from any merger or consolidation to which PP&L
shall be a party and which succeeds to all or substantially all
of the electric distribution business of PP&L,

4. which may succeed to the properties and assets of PP&L
substantially as a whole and which succeeds to all or
substantially all of the electric distribution business of PP&L,
or

5. which may otherwise succeed to all or substantially all of the
electric distribution business of PP&L,

will be the successor to PP&L. 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 successor to PP&L must execute an agreement of assumption to
perform every obligation of PP&L under the Contribution
Agreement;

3. the Rating Agencies will have received prior written notice of
the transaction; and

4. 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 on a Subsequent Transfer
Date 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.

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 and any subsequent Intangible
Transition Property will be perfected as 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 Servicing Agreement has been
filed as an exhibit to the Registration Statement of which this Prospectus
forms a part. 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 Transferred Intangible
Transition Property would be payable from ITC Collections as an operating
expense.

Collections Curve. 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. 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

3. 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 IBCA 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 may make remittances on account of ITC Collections on a
monthly basis. On each Monthly Remittance Date, 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. If the Servicer has not
satisfied the conditions specified above, the Servicer will be required to
remit periodic payments on account of ITC Collections to the Trustee on
each Business Day. 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.

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 beginning twelve months before the
Expected Final Payment Date of the last Series or Class of Transition Bonds
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,

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

4. the amount in the Reserve Account equaling zero.

by the Payment Date immediately preceding the next Adjustment Date or with
respect to the period in which monthly rate adjustments are utilized, the
25th day of the month immediately preceding the next monthly Adjustment
Date, 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. Beginning twelve months before
the Expected Final Payment Date of the last Series or Class of Transition
Class, 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 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. 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 Obtain 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 obtain a letter of credit to 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 misconduct, 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 amount on deposit in the Overcollateralization Subaccount
and the Scheduled Overcollateralization Level as of the
immediately preceding Payment Date;

3. the amount on deposit in the Capital Subaccount and the amount
required to be on deposit in the Capital Subaccount 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 Projected Transition Bond Balance and the Servicer's
projection of the Transition Bond Balance for the Payment Date
immediately preceding the next succeeding Adjustment Date;

6. the Scheduled Overcollateralization Level and the Servicer's
projection of the amount on deposit in the Overcollateralization
Subaccount for the Payment Date immediately preceding the next
succeeding Adjustment Date;

7. the required Capital Subaccount balance and the Servicer's
projection of the amount on deposit in the Capital Subaccount
for the Payment Date immediately preceding the next succeeding
Adjustment Date; and

8. the Servicer's projection of the amount on deposit in the
Reserve Subaccount for the Payment Date immediately preceding
the next succeeding Adjustment 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
on that Remittance Date. 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:

1. into which the Servicer may be merged or consolidated and which
succeeds to all or substantially all of the electric
distribution business of the Servicer,

2. which results from the division of the Servicer into two or more
persons and which succeeds to all or substantially all of the
electric distribution business of the Servicer,

3. which may result from any merger or consolidation to which the
Servicer shall be a party and which succeeds to all or
substantially all of the electric distribution business of the
Servicer,

4. which may succeed to the properties and assets of the Servicer
substantially as a whole and which succeeds to all or
substantially all of the electric distribution business of the
Servicer or

5. which may otherwise succeed to all or substantially all of the
electric distribution business of the Servicer, 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 if it
executes an agreement of assumption to perform every obligation 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. the successor to PP&L must execute an agreement of assumption to
perform every obligation of PP&L under the Servicing Agreement;

3. officers' certificates and opinions of counsel will have been
delivered to the Issuer, the Trustee, and the Rating Agencies;
and

4. prior written notice will have been received by the Rating
Agencies.

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 must
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 misconduct,
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 bankruptcy, 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
outstanding principal amount of the Transition Bonds of all Series 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 or the Trustee, may 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 Customers
may sue a 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 the material terms of the
Indenture pursuant to which Transition Bonds will be issued. The Indenture,
including the Supplemental Indenture, has been filed as an exhibit to the
Registration Statement of which this Prospectus forms a part.

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 Intangible Transition Property sold by the Seller to the
Issuer pursuant to the Sale Agreement and all proceeds thereof;

2. the Sale Agreement;

3. the Contribution Agreement;

4. all bills of sale delivered by the Seller pursuant to the Sale
Agreement;

5. the Servicing Agreement;

6. the Collection Account and all amounts on deposit therein from
time to time;

7. all other property of whatever kind owned from time to time by
the Issuer, other than any cash released to the Issuer by the
Trustee pursuant to the Indenture;

8. all present and future claims, demands, causes and choses in
action in respect of any or all of the foregoing; and

9. 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. The aggregate
principal amount of Transition Bonds that may be authenticated and
delivered under the Indenture may not exceed $2.85 billion. 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 consent of the
Transition Bondholders of any previously issued Series. See "Risk
Factors Other Risks Associated With An Investment In The Transition
Bonds,"and "The Transition Bonds" 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 must 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:

1. pay all fees, costs and charges associated with the Transition
Bonds,

2. pay interest of each Series of Transition Bonds when due,

3. pay principal of each Series of Transition Bonds in accordance
with the Expected Amortization Schedule therefor, and

4. fund the Overcollateralization Subaccount to 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.

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 IBCA 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 must be invested in any of the following,
each of which referred to as an Eligible Investment:

1. direct obligations of, and obligations fully guaranteed as to
timely payment by, the United States of America;

2. demand deposits, time deposits or certificates of deposit of any
depositors institution or trust company incorporated under the
laws of the United States of America or any State thereof, or
any domestic branch of a foreign bank, and subject to
supervision and examination by federal or state banking or
depository institution authorities; provided, however, that at
the time of the investment or contractual commitment to invest
therein, the commercial paper or other short-term unsecured debt
obligations, other than any obligations where the rating is
based on the credit of a person other than such depository
institution or trust company, thereof shall have a credit rating
from each of the Rating Agencies in the highest investment
category granted thereby;

3. commercial paper or other short term obligations of any
corporation organized under the laws of the United States of
America, other than PP&L, whose ratings, at the time of the
investment or contractual commitment to invest therein, from
each of the Rating Agencies are in the highest investment
category granted thereby;

4. investments in money market funds having a rating from each of
the Rating Agencies in the highest investment category granted
thereby, including funds for which the Trustee or any of its
affiliates act as investment manager or advisor;

5. bankers' acceptances issued by any depository institution or
trust company referred to in clause 2 above;

6. repurchase obligations with respect to any security that is a
direct obligation of, or fully guaranteed by, the United States
of America or any agency or instrumentality thereof the
obligations of which are backed by the full faith and credit of
the United States of America, in either case entered into with a
depository institution or trust company, acting as principal,
described in clause 2 above;

7. repurchase obligations with respect to any security or whole
loan entered into with

a. a depository institution or trust company, acting as
principal, described in clause 2 above, except that the
rating referred to in the proviso in this clause 2 shall be
A-1 or higher in the case of S&P,

b. a broker/dealer, acting as principal, registered as a broker
or dealer under Section 15 of the Exchange Act, the
unsecured short-term debt obligations of which are rated P-1
by Moody's and at least A-1 by S&P at the time of entering
into this repurchase obligation, or

c. an unrated broker/dealer, acting as principal, that is a
wholly-owned subsidiary of a non-bank or bank holding
company the unsecured short-term debt obligations of which
are rated P-1 by Moody's and at least A-1 by S&P at the time
of purchase; or

8. any other investment permitted by each of the Rating Agencies;
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 such 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 such 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 and any Indemnity Amounts to
the Trustee under the Indenture for deposit in the Collection Account.
Indemnity Amount means any amount 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. On each
Payment Date, the Trustee will allocate amounts in the General Subaccount
as 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, among other items:

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 payments on the Transition
Bonds 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. To the extent funds are
available as described in "How Funds in the General Subaccount Will Be
Allocated" below, the Trustee will allocate them 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 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 payments on the Transition Bonds 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. Funds available on any Payment Date that are
not required to be allocated pursuant to clauses 1 through 12 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 11 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
payments on the Transition Bonds 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, among any other amounts, 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 Collection 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, including expenses and
Indemnity Amounts, if any, 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 $100,000 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 following
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 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 of the Issuer will be
paid to the persons entitled thereto;

10. any amount necessary to replenish withdrawals from the Capital
Subaccount will be allocated to that subaccount;

11. an amount necessary to cause the amount in the
Overcollateralization Subaccount to equal the Scheduled
Overcollateralization Level for that Payment Date will be
allocated to the Overcollateralization Subaccount;

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 all 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 interest accrued on that Series at the
applicable Bond Rate from the prior Payment Date, or with
respect to the first Payment Date, the amount of interest
accrued since the Closing 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 that Series on the related 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.

If, on any Payment Date, available collections of Intangible
Transition Charges, together with available amounts in the subaccounts, are
not sufficient to pay interest due on all outstanding Transition Bonds,
amounts available will be allocated among the outstanding Series of
Transition Bonds pro rata based on the amount of interest payable on the
outstanding Series. If on any Payment Date, remaining collections on the
Intangible Transition Property, together with available amounts in the
subaccounts, are not sufficient to pay principal legally due on all
outstanding Series of Transition Bonds, amounts available will be allocated
among the outstanding Series pro rata based on the scheduled Principal then
legally due on the outstanding Series. If on any Payment Date, remaining
collections on the Intangible Transition Property, together with available
amounts in the subaccounts, are not sufficient to pay principal scheduled
to be paid on all outstanding Series of Transition Bonds, amounts available
will be allocated on a pro-rata basis based on the scheduled principal
payable on the Payment Date.

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 and the
related Classes in respect of principal;

2. the amount paid to Transition Bondholders of that Series and the
related Classes in respect of interest;

3. the Transition Bond Balance and the Projected Transition Bond
Balance of that Series and the related Classes as of that
Payment Date;

4. the amount on deposit in the Overcollateralization Subaccount
and the Scheduled Overcollateralization Level, with respect to
that Series and as of that Payment Date;

5. the amount on deposit in the Capital Subaccount and the Required
Capital Amount as of that Payment Date; and

6. the amount, if any, on deposit in the Reserve Subaccount for all
Series as of that 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 to
better 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 to 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 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, 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 Series and 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 provides 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 also
provides 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 without the consent of the holders of a
majority of the outstanding principal amount of the Transition Bonds.

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 in the payment of any interest on any Transition Bond
when the same becomes due and payable and the continuation of
this default for five Business Days;

2. a default in the payment of the then unpaid principal of any
Transition Bond of any Series on the Final Maturity Date for
that Series or, if applicable, any Class on the 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 clause 1, 2 or 3 above, or any
representation or warranty of the Issuer made in the Indenture
or in any certificate or other writing delivered pursuant to the
Indenture or in connection with the Indenture proving to have
been incorrect in any material respect as of the time when made,
and this default shall continues or is not cured, for a period
of 30 days after

a. notice of the default is given to the Issuer by the Trustee
or to the Issuer and the Trustee by the holders of at least
25% of the outstanding principal amount of the Transition
Bonds of any Series or Class, or

b. the date the Issuer has knowledge of the default;

5. the filing of a decree or order for relief by a court having
jurisdiction in respect of the Issuer or any substantial part of
the Collateral in an involuntary case under any applicable
federal or state bankruptcy, insolvency or other similar law now
or hereafter in effect, or appointing a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official
of the Issuer or for any substantial part of the Collateral, or
ordering the winding-up or liquidation of the Issuer's affairs,
and such decree or order remains unstayed and in effect for a
period of 90 consecutive days;

6. the commencement by the Issuer of a voluntary case under any
applicable federal or state bankruptcy, insolvency or other
similar law now or hereafter in effect, or the consent by the
Issuer to the entry of an order for relief in an involuntary
case under any such law, or the consent by the Issuer to the
appointment or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official
of the Issuer or for any substantial part of the Collateral, or
the making by the Issuer of any general assignment for the
benefit of creditors, or the failure by the Issuer generally to
pay its debts as such debts become due, or the taking of action
by the Issuer in furtherance of any of the foregoing; or

7. any act or failure to act by the Commonwealth of Pennsylvania or
any of its agencies, including the PUC, officers or employees
that violates or is not in accordance with the pledge and
agreement of the Commonwealth in the Competition Act.

If an Event of Default occurs and is continuing, other than a default
described in clause 7 above, 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 for five days or more in the payment of any
interest on any Transition Bond of any Series, a default in the payment of
the then unpaid principal of any Transition Bond of any Series on the Final
Maturity Date for that Series or, if applicable, any Class on the Final
Maturity Date for that Class, 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 outstanding principal 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 does 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 is
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 this 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 if

o 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; or

o 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 may 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 to 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 has 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, of the Indenture and the priority thereof. 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 of
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.

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 who has owned a Transition Bond for at
least six months 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, a
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, 125 days pass after
the deposit is made and during the 125-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 the
Seller to the Issuer 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. 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 and Nevada. 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. Furthermore, should the Servicer enter into
bankruptcy, it may be permitted to stop acting as Service.

Other risks relating to bankruptcy may be found in "Risk Factors
--The Risks Associated With Potential Bankruptcy Proceedings."

MATERIAL INCOME TAX MATTERS FOR THE TRANSITION BONDHOLDERS

Income Tax Status of the Transition Bonds and the Issuer

The Issuer and PP&L have received a private letter ruling from
the IRS to the effect that the Transition Bonds will be classified as debt
obligations of PP&L Based on that private letter ruling and the
assumptions contained therein, including a representation by PP&L that it
will not make, or allow there to be made, any election to the contrary,
Skadden, Arps, Slate, Meagher & Flom LLP, special federal income tax
counsel to PP&L and the Issuer, will render its opinion that the Issuer
will not be subject to United States federal income tax as an entity
separate from PP&L.

Consequences to Non-U.S. Holders

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 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 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 Foreign Person. For purposes of the discussion
below, a Foreign Person means any person other than:

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 or, in the case of a partnership, otherwise treated as a
U.S. person under applicable Treasury Regulations;

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 Non-U.S. Holder means a holder of a Transition Bond that is a Foreign
Person. The following summary applies only to a Foreign Persons.

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,
assuming that the interest income is not effectively connected with the
Non-U.S. Holder's conduct of a trade or business in the United States and
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
that does not hold its Transition Bonds in connection with the conduct of a
trade or business in the United States 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 that does not hold its Transition Bonds in connection with
the conduct of a trade or business in the United States 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 the income is effectively connected with the Non-U.S.
Holder's conduct of a trade or business in the United States. 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 rate provided by a treaty.

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 the conduct by the Non-
U.S. Holder of a trade or business in the United States 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 of Pennsylvania will not be subject
to these taxes. Neither residents nor nonresidents of the Commonwealth of
Pennsylvania will be subject to an intangible personal property tax in
respect to the Transition Bonds.

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

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 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 be 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 PTCE 84-14, and which is referred to as
a QPAM; or

5. PTCE 96-23, which exempts specific transactions effected on
behalf of a Plan by "in-house" asset managers that satisfy the
requirements of PTCE 95-23.

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.

Conditions That Would Allow the QPAM Exemption to Apply. Plan
fiduciaries intending to rely upon the QPAM exemption should consider the
following. 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 unless another exception were applicable. In this event,
ITC Collections would 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, if one or more Customers were Parties in
Interest with respect to a Plan that owned that Class or Series of
Transition Bonds, this holding could be deemed to constitute a prohibited
transfer of property between a Plan and any Party in Interest with respect
to the Plan. 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 a Party in
Interest with respect to a Plan that holds this Class or Series is a
Customer, that has the authority to appoint or terminate the QPAM as a
manager of the Plan's assets (for example, the Plan's sponsor or a director
of the Plan's sponsor), 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.

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.

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 was 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, the Seller, the Issuer 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 a 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 Final Maturity Date or Class Final Maturity 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 and the Issuer will be passed upon for PP&L and
the Issuer by Morgan Lewis & Bockius LLP, Philadelphia, Pennsylvania. Other
legal matters relating to PP&L will be passed upon for PP&L by Thelen Reid
& Priest LLP, New York, New York. 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 assignment for
the Intangible Transition Property pursuant to the Contribution
Agreement, the Sale Agreement, the Servicing Agreement, the bills of
sale for the 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 in the Collection Account
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.

CEP Securities means CEP Securities Co. LLC, a Delaware limited
liability company and 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 pursuant to the Indenture.

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
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
wholly owned by PP&L, CEP Reserves, Inc., a Delaware corporation
indirectly wholly owned by PP&L, 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 accesses PP&L's transmission and
distribution system.

Customer Class means one of the three customer classes which make up
PP&L's customer base.

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 mean 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 mean book-entry securities, negotiable
instruments or securities represented by instruments in bearer or
registered form which evidence:

1. direct obligations of, and obligations fully guaranteed as to
timely payment by, the United States of America;

5. bankers' acceptances issued by any depository institution or
trust company referred to in clause 2 above;

7. repurchase obligations with respect to any security or whole
loan entered into with

a. a depository institution or trust company, acting as
principal, described in clause 2 above, except that the rating
referred to in the proviso in this clause 2 shall be A-1 or
higher in the case of S&P,,

b. a broker/dealer, acting as principal, registered as a broker
or dealer under Section 15 of the Exchange Act, the unsecured
short-term debt obligations of which are rated P-1 by Moody's
and at least A-1 by S&P at the time of entering into this
repurchase obligation, or

c. an unrated broker/dealer, acting as principal, that is a
wholly-owned subsidiary of a non-bank or bank holding company
the unsecured short-term debt obligations of which are rated
P-1 by Moody's and at least A-1 by S&P at the time of
purchase; or

8. any other investment permitted by each of the Rating Agencies;

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 such 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 such 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.. 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 outstanding
principal balance amounts of the Transition Bonds of each Series and,
if applicable, each Class.

Expected Final Payment Date for each Series or Class of Transition
Bonds means the date when all 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 IBCA 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 in 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 to be entered into between the Issuer
and the Trustee providing for the issuance of the Transition Bonds, 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 in effect in any jurisdiction within the United States.

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 Customer, 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 to be executed by
PP&L as sole member.

Monthly Remittance Date means the 15th day of each calendar month, or
if such 15th 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 Customers even if those Customers
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
are to 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 holding company
of PP&L.

Projected Transition Bond Balance means, for each Series or Class of
Transition Bonds and each Payment Date, the projected aggregate
outstanding principal balance for that Series or Class as specified
for that Payment Date in the Expected Amortization Schedule.

provider of last resort means PP&L as provider of electric generation
service to its Customers.

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,
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 associated with the transition
bonds, 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 12th
day (or if the 12th 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 to the Trustee for deposit in the Collection Account.

Required Capital Amount means the amount deposited by the Issuer in
the Capital Subaccount upon the issuance of each Series of Transition
Bonds as specified in the related Prospectus Supplement.

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
to be entered into 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.

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 successor in that capacity.

Servicing Agreement means the Servicing Agreement to be entered into
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 means the bundled rate for electricity consumption
that PP&L charged its customers prior to the implementation of the
Competition Act less PP&L's Competitive Transition Charges, the
Intangible Transition Charges and PP&L's transmission and distribution
charges and less a 4% system average rate reduction during 1999. This
represents the amount that Customers can apply towards electricity
generation charges for electricity they purchase from other
Electricity Generation Suppliers.

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 of those costs by PP&L.

Subaccount means any subaccount in 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 the underwriting agreement with respect
to the Transition Bonds 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

INDEX TO FINANCIAL STATEMENTS OF PP&L TRANSITION BOND COMPANY LLC

Page

Report of Independent Accountants . . . . . . . . . . . . . . . . . . F-2
Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . F-3
Statement of Income and Changes in Member's Equity . . . . . . . F-4
Statement of Cash Flows . . . . . . . . . . . . . . . . . . . . F-5
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . F-6

Report of Independent Accountants

To PP&L, Inc., the Sole Member
of PP&L Transition Bond Company LLC

In our opinion, the accompanying balance sheet and the related
statements of operations and changes in member's equity and of cash flows
present fairly, in all material respects, the financial position of PP&L
Transition Bond Company LLC (the Company) as of June 30, 1999, and the
results of its operations and its cash flows for the period from March 25,
1999 (date of inception) to June 30, 1999 in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Company'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

July 14, 1999

____________________

PP&L Transition Bond Company LLC
Balance Sheet at June 30, 1999

(in thousands)

Assets

Cash and cash equivalents $ 1
Unamortized debt issuance expenses 1,056
-----

Total Assets $1,057
===

Liabilities and Member's Equity

Payable to member - as servicer $1,056
Member's equity 1
------

Total Liabilities and Member's Equity $1,057
======

See accompanying Notes to Financial Statements

PP&L Transition Bond Company LLC
Statement of Operations and Changes in Member's Equity
For the Period March 25, 1999 (date of inception) to June 30, 1999

(in thousands)

Income $0

Expenses 0
---
Net Income (Loss) $0
===

Member's equity - beginning of period $0

Member's initial cash contribution 1
--
Member's equity - end of period $1
==

See accompanying Notes to Financial Statements

PP&L Transition Bond Company LLC
Statement of Cash Flows
for the Period March 25, 1999 (date of inception) to June 30, 1999

(in thousands)

Cash Flow from Operating Activities
Net income (loss) $ 0

Adjustment to reconcile net income to
net cash provided by (used in) operating activities:
Increase in payable to member 1,056
------
Net cash provided by operating activities 0
------

Cash Flow from Investing Activities 0

Cash Flow from Financing Activities
Member's initial cash contribution 1
------
Unamortized debt issuance expense (1,056)
Net cash used in financing activities (1,055)
-------

Net Increase in Cash and Cash Equivalents $ 1

Cash and Cash Equivalents - Beginning of Period 0
-------
Cash and Cash Equivalents - End of Period $ 1
=======

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 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.

The Company anticipates issuing Bonds in the third quarter of 1999.

Furthermore, the results of operations of the Company will be
consolidated with PP&L for financial and income tax reporting purposes.

2. Summary of 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 will affect the reported
amount of revenues, expenses, assets, and liabilities and disclosure of
contingencies. Actual results could differ from these estimates.

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 are
being capitalized and will be amortized over the life of the Bonds
utilizing the effective interest method. These costs, consisting primarily
of legal fees, have been incurred by PP&L, and are reflected on the Balance
Sheet as "Payable to member" at June 30, 1999. The Company will reimburse
PP&L for these and any additional Bond issuance costs when the Bonds are
issued.

Income Taxes

The Company 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 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 (the "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 ITP and
other assets of the Company will collateralize the Bonds. 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 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 of $1.25 million to PP&L. PP&L will also invoice the
Company for certain other administrative expenses incurred.

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 [1999-1] BONDS ........................................... S-13
DESCRIPTION OF INTANGIBLE TRANSITION PROPERTY ...................... S-20
DESCRIPTION OF PP&L'S BUSINESS ..................................... S-24
UNDERWRITING THE SERIES [1999-1] BONDS ............................. S-26
RATINGS FOR THE SERIES [1999-1] BONDS .............................. S-27

Prospectus

IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS..... 6
SUMMARY OF TERMS - PROSPECTUS....................................... 7
RISK FACTORS........................................................ 13
FORWARD LOOKING INFORMATION......................................... 27
PP&L................................................................ 31
THE COMPETITION ACT................................................. 31
PP&L'S RESTRUCTURING PLAN........................................... 35
THE PUC ORDER AND THE INTANGIBLE TRANSITION CHARGES ................ 41
PRIOR LEGAL CHALLENGES TO THE COMPETITION ACT OR THE PUC ORDER...... 48
THE SERVICER OF THE INTANGIBLE TRANSITION PROPERTY.................. 53
PP&L TRANSITION BOND COMPANY LLC, THE ISSUER........................ 78
HOW THE ISSUER WILL USE THE PROCEEDS OF THE TRANSITION BONDS........ 81
INCORPORATION OF DOCUMENTS BY REFERENCE............................. 81
THE TRANSITION BONDS................................................ 82
WEIGHTED AVERAGE LIFE AND YIELD CONSIDERATIONS
FOR THE TRANSITION BONDS............................................ 90
THE CONTRIBUTION AGREEMENT ......................................... 91
THE SALE AGREEMENT.................................................. 104
THE SERVICING AGREEMENT............................................. 106
THE INDENTURE....................................................... 118
HOW A BANKRUPTCY OF PP&L OR THE
SERVICER MAY AFFECT YOUR INVESTMENT................................. 141
MATERIAL INCOME TAX MATTERS FOR THE TRANSITION BONDS................ 144
ERISA CONSIDERATIONS ............................................... 148
PLAN OF DISTRIBUTION FOR THE TRANSITION BONDS ...................... 152
RATINGS FOR THE TRANSITION BONDS.................................... 153
VARIOUS LEGAL MATTERS RELATING TO THE TRANSITION BONDS.............. 153

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 [1999-1]

___ %

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

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 $ 714,460
---------
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 Transition Bond Company 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 2 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 July 15, 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.

July 15, 1999 /s/ John R. Biggar
------------- --------------------------
Date Name: John. R. Biggar
Title: Manager

July 15, 1999 /s/ James E. Abel
-------------- -------------------------
Date Name: James E. Abel
Title: Manager

July 15, 1999 /s/ James S. Pennington
-------------- -------------------------
Date Name: James S. Pennington
Title: Manager

INDEX TO EXHIBITS

Exhibit No. Description

* To be filed by amendment

** Previously filed

EXHIBIT 4.3

PP&L Transition Bond Company LLC

Issuer

and

The Bank of New York

Trustee

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

INDENTURE

Dated as of July __, 1999

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

Securing Transition Bonds

Issuable in Series

TABLE OF CONTENTS

ARTICLE I
Definitions and Incorporation by Reference

SECTION 1.01 Definitions . . . . . . . . . . . . . . . . . 2
SECTION 1.02 Incorporation by Reference of the
Trust Indenture Act . . . . . . . . . . . . . 2
SECTION 1.03 Rules of Construction . . . . . . . . . . . . 3

ARTICLE II
The Transition Bonds

SECTION 2.01 Form . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.02 Execution, Authentication and
Delivery . . . . . . . . . . . . . . . . . . . 4
SECTION 2.03 Denominations; Transition Bonds
Issuable in Series . . . . . . . . . . . . . . 4
SECTION 2.04 Temporary Transition Bonds . . . . . . . . . . 6
SECTION 2.05 Registration; Registration of
Transfer and Exchange . . . . . . . . . . . . 6
SECTION 2.06 Mutilated, Destroyed, Lost or Stolen
Transition Bonds . . . . . . . . . . . . . . . 8
SECTION 2.07 Persons Deemed Owner . . . . . . . . . . . . . 9
SECTION 2.08 Payment of Principal, Premium, if
any, and Interest; Interest on Overdue
Principal and Premium, if any; Principal,
Premium and Interest Rights Preserved . . . . 9
SECTION 2.09 Cancellation . . . . . . . . . . . . . . . . 11
SECTION 2.10 Amount; Authentication and Delivery
of Transition Bonds . . . . . . . . . . . . .11
SECTION 2.11 Book-Entry Transition Bonds . . . . . . . . 16
SECTION 2.12 Notices to Clearing Agency . . . . . . . . . 18
SECTION 2.13 Definitive Transition Bonds . . . . . . . . 18

ARTICLE III
Covenants

SECTION 3.01 Payment of Principal, Premium, if
any, and Interest . . . . . . . . . . . . . .19
SECTION 3.02 Maintenance of Office or Agency . . . . . . 19
SECTION 3.03 Money for Payments To Be Held in
Trust. . . . . . . . . . . . . . . . . . . . 19
SECTION 3.04 Existence. . . . . . . . . . . . . . . . . . 21
SECTION 3.05 Protection of Collateral . . . . . . . . . . 21
SECTION 3.06 Opinions as to Collateral. . . . . . . . . . 22
SECTION 3.07 Performance of Obligations . . . . . . . . . 23
SECTION 3.08 Negative Covenant. . . . . . . . . . . . . . 24
SECTION 3.09 Annual Statement as to Compliance. . . . . . 24
SECTION 3.10 Issuer May Consolidate, etc., Only
on Certain Terms . . . . . . . . . . . . . . 25
SECTION 3.11 Successor or Transferee . . . . . . . . . . 26
SECTION 3.12 No Other Business. . . . . . . . . . . . . . 26
SECTION 3.13 No Borrowing . . . . . . . . . . . . . . . . 27
SECTION 3.14 Guarantees, Loans, Advances and
Other Liabilities. . . . . . . . . . . . . . 27
SECTION 3.15 Capital Expenditures . . . . . . . . . . . . 27
SECTION 3.16 Restricted Payments. . . . . . . . . . . . . 27
SECTION 3.17 Notice of Events of Default. . . . . . . . . 27
SECTION 3.18 Inspection . . . . . . . . . . . . . . . . . 28
SECTION 3.19 Adjusted Overcollateralization
Balance Schedules. . . . . . . . . . . . . . 28

SECTION 3.20 Sale Agreement, Contribution
Agreement, the Administration Agreement
and Servicing Agreement Covenants. . . . . . 28
SECTION 3.21 Taxes . . . . . . . . . . . . . . . . . . . 31

ARTICLE IV
Satisfaction and Discharge; Defeasance

SECTION 4.01 Satisfaction and Discharge of
Indenture; Defeasance . . . . . . . . . . . 32
SECTION 4.02 Conditions to Defeasance . . . . . . . . . . 34
SECTION 4.03 Application of Trust Money . . . . . . . . . 36
SECTION 4.04 Repayment of Moneys Held by Paying
Agent. . . . . . . . . . . . . . . . . . . . 36

ARTICLE V
Remedies

SECTION 5.01 Events of Default . . . . . . . . . . . . . 36
SECTION 5.02 Acceleration of Maturity; Rescission
and Annulment . . . . . . . . . . . . . . . 38
SECTION 5.03 Collection of Indebtedness and Suits
for Enforcement by Trustee . . . . . . . . . 38
SECTION 5.04 Remedies; Priorities . . . . . . . . . . . . 41
SECTION 5.05 Optional Preservation of the
Collateral . . . . . . . . . . . . . . . . . 42
SECTION 5.06 Limitation of Proceedings . . . . . . . . . 43
SECTION 5.07 Unconditional Rights of Transition
Bondholders To Receive Principal, Premium,
if any, and Interest . . . . . . . . . . . . 44
SECTION 5.08 Restoration of Rights and Remedies . . . . . 44
SECTION 5.09 Rights and Remedies Cumulative . . . . . . . 44
SECTION 5.10 Delay or Omission Not a Waiver . . . . . . . 45
SECTION 5.11 Control by Transition Bondholders . . . . . 45
SECTION 5.12 Waiver of Past Defaults . . . . . . . . . . 46
SECTION 5.13 Undertaking for Costs . . . . . . . . . . . 46
SECTION 5.14 Waiver of Stay or Extension Laws . . . . . . 47
SECTION 5.15 Action on Transition Bonds . . . . . . . . . 47

ARTICLE VI
The Trustee

SECTION 6.01 Duties and Liabilities of Trustee . . . . . 47
SECTION 6.02 Rights of Trustee . . . . . . . . . . . . . 49
SECTION 6.03 Individual Rights of Trustee . . . . . . . . 50
SECTION 6.04 Trustee's Disclaimer . . . . . . . . . . . . 50
SECTION 6.05 Notice of Defaults . . . . . . . . . . . . . 50
SECTION 6.06 Reports by Trustee to Holders . . . . . . . 50
SECTION 6.07 Compensation and Indemnity . . . . . . . . . 51
SECTION 6.08 Replacement of Trustee . . . . . . . . . . . 52
SECTION 6.09 Successor Trustee by Merger . . . . . . . . 53
SECTION 6.10 Appointment of Co-Trustee or
Separate Trustee . . . . . . . . . . . . . . 54
SECTION 6.11 Eligibility; Disqualification . . . . . . . 55
SECTION 6.12 Preferential Collection of Claims
Against Issuer . . . . . . . . . . . . . . . 55

ARTICLE VII
Transition Bondholders' Lists and Reports

SECTION 7.01 Issuer To Furnish Trustee Names and
Addresses of Transition Bondholders . . . . 56
SECTION 7.02 Preservation of Information;
Communications to Transition Bondholders . . 56
SECTION 7.03 Reports by Issuer . . . . . . . . . . . . . 56
SECTION 7.04 Reports by Trustee . . . . . . . . . . . . . 57
SECTION 7.05 Provision of Servicer Reports . . . . . . . 58

ARTICLE VIII
Accounts, Disbursements and Releases

SECTION 8.01 Collection of Money . . . . . . . . . . . . 58
SECTION 8.02 Collection Account . . . . . . . . . . . . . 58
SECTION 8.03 Release of Collateral . . . . . . . . . . . 63
SECTION 8.04 Issuer Opinion of Counsel . . . . . . . . . 64
SECTION 8.05 Reports by Independent Accountants . . . . . 64

ARTICLE IX
Supplemental Indentures

SECTION 9.01 Supplemental Indentures Without
Consent of Transition Bondholders . . . . . 65
SECTION 9.02 Supplemental Indentures with Consent
of Transition Bondholders . . . . . . . . . 66
SECTION 9.03 Execution of Supplemental Indentures . . . . 69
SECTION 9.04 Effect of Supplemental Indenture . . . . . . 69
SECTION 9.05 Conformity with Trust Indenture Act . . . . 69
SECTION 9.06 Reference in Transition Bonds to
Supplemental Indentures . . . . . . . . . . 69

ARTICLE X
Redemption of Transition Bonds;

SECTION 10.01 Optional Redemption by Issuer . . . . . . . 70
SECTION 10.02 Mandatory Redemption by Issuer . . . . . . 70
SECTION 10.03 Form of Redemption Notice . . . . . . . . . 70
SECTION 10.04 Payment of Redemption Price . . . . . . . . 71

ARTICLE XI
Miscellaneous

SECTION 11.01 Compliance Certificates and
Opinions, etc . . . . . . . . . . . . . . . 73
SECTION 11.02 Form of Documents Delivered to
Trustee . . . . . . . . . . . . . . . . . . 74
SECTION 11.03 Acts of Transition Bondholders. . . . . . . 75
SECTION 11.04 Notices, etc., to Trustee, Issuer
and Rating Agencies . . . . . . . . . . . . 75
SECTION 11.05 Notices to Transition Bondholders;
Waiver. . . . . . . . . . . . . . . . . . . 76
SECTION 11.06 Alternate Payment and Notice
Provisions. . . . . . . . . . . . . . . . . 77
SECTION 11.07 Conflict with Trust Indenture Act . . . . . 77
SECTION 11.08 Effect of Headings and Table of
Contents. . . . . . . . . . . . . . . . . . 77
SECTION 11.09 Successors and Assigns. . . . . . . . . . . 77
SECTION 11.10 Separability. . . . . . . . . . . . . . . . 78
SECTION 11.11 Benefits of Indenture . . . . . . . . . . . 78
SECTION 11.12 Legal Holidays. . . . . . . . . . . . . . . 78
SECTION 11.13 Governing Law . . . . . . . . . . . . . . . 78
SECTION 11.14 Counterparts. . . . . . . . . . . . . . . . 78
SECTION 11.15 Issuer Obligation . . . . . . . . . . . . . 78
SECTION 11.16 No Petition . . . . . . . . . . . . . . . . 79

INDENTURE dated as of July __, 1999, between PP&L Transition Bond
Company LLC, a Delaware limited liability company (the "Issuer"), and The
Bank of New York, a New York banking corporation, as trustee (the
"Trustee").

The Issuer has duly authorized the execution and delivery of this
Indenture to provide for one or more Series of Transition Bonds, issuable
as provided in this Indenture. Each such Series of Transition Bonds will
be issued only under a separate Series Supplement to this Indenture duly
executed and delivered by the Issuer and the Trustee. The Issuer is
entering into this Indenture, and the Trustee is accepting the trusts
created hereby, each for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and each intending to be
legally bound hereby.

GRANTING CLAUSE

The Issuer hereby Grants to the Trustee as trustee for the benefit of
the Holders of the Transition Bonds from time to time issued and
outstanding, all of the Issuer's right, title and interest in, to and under
(a) the Intangible Transition Property transferred by the Seller to the
Issuer from time to time pursuant to the Sale Agreement and all proceeds
thereof, (b) the Sale Agreement, (c) the Contribution Agreement, (d) all
Bills of Sale delivered by the Seller pursuant to the Sale Agreement, (e)
the Servicing Agreement, (f) the Collection Account and all sub-accounts
thereof and all cash, securities, instruments, investment property or other
assets credited to any such Account or subaccount from time to time or
purchased with funds therefrom, (g) all other property of whatever kind
owned from time to time by the Issuer other than any cash released to the
Issuer by the Trustee pursuant to Section 8.02, (h) all present and future
claims, demands, causes and choses in action in respect of any or all of
the foregoing and (i) all payments on or under and all proceeds of every
kind and nature whatsoever in respect of any or all of the foregoing,
including all proceeds of the conversion, voluntary or involuntary, into
cash or other liquid property, all cash proceeds, accounts, accounts
receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, insurance proceeds, condemnation awards, rights to payment of any
and every kind, and other forms of obligations and receivables, instruments
and other property which at any time constitute all or part of or are
included in the proceeds of any of the foregoing (collectively, the
"Collateral").

Such Grants are made to the Trustee to have and to hold in trust to
secure the payment of principal of and premium, if any, and interest on,
and any other amounts (including all fees, expenses, counsel fees and other
amounts due and owing to the Trustee) owing in respect of, the Transition
Bonds equally and ratably without prejudice, preference, priority or
distinction, except as expressly provided in this Indenture and to secure
performance by the Issuer of all of the Issuer's obligations under this
Indenture with respect to the Transition Bonds, all as provided in this
Indenture.

The Trustee, as trustee on behalf of the Holders of the Transition
Bonds, acknowledges such Grant, accepts the trusts hereunder in accordance
with the provisions hereof and agrees to perform its duties herein
required.

ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE

SECTION 1.01 DEFINITIONS. Capitalized terms used but not
otherwise defined in this Agreement have the respective meanings set forth
in Appendix A hereto unless the context otherwise requires.

SECTION 1.02 INCORPORATION BY REFERENCE OF THE TRUST INDENTURE
ACT. Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this
Indenture. Each of the following TIA terms used in this Indenture has the
following meaning:

"Commission" means the Securities and Exchange Commission.

"indenture securities" means the Transition Bonds.

"indenture to be qualified" means this Indenture.

"indenture trustee" or "institutional trustee" means the Trustee.

All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule
have the meaning assigned to them by such definitions.

SECTION 1.03 RULES OF CONSTRUCTION.

(i) An accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting
principles as in effect from time to time;

(ii) "including" means including without limitation;

(iii) with respect to terms defined in Appendix A hereto, words
in the singular include the plural and words in the plural include the
singular;

(iv) unless otherwise specified, references herein to Sections
or Articles are to Sections or Articles of this Indenture; and

(v) the words "herein", "hereof", "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision.

ARTICLE II
THE TRANSITION BONDS
-------------------------

SECTION 2.01 FORM. The Transition Bonds and the Trustee's
certificate of authentication shall be in substantially the forms set forth
in Exhibit A hereto, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture or by the related Series Supplement and may have such letters,
numbers or other marks of identification and such legends or endorsements
placed thereon as may, consistently herewith, be determined by the Managers
of the Issuer executing such Transition Bonds, as evidenced by their
execution of such Transition Bonds. Any portion of the text of any
Transition Bond may be set forth on the reverse thereof, with an
appropriate reference thereto on the face of the Transition Bond. Each
Transition Bond shall be dated the date of its authentication.

The Transition Bonds shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods (with or without
steel engraved borders), all as determined by the Managers of the Issuer
executing such Transition Bonds, as evidenced by their execution of such
Transition Bonds.

Each Transition Bond shall bear upon its face the designation so
selected for the Series and Class, if any, to which it belongs. The terms
of all Transition Bonds of the same Series shall be the same, unless such
Series is comprised of one or more Classes, in which case the terms of all
Transition Bonds of the same Class shall be the same.

SECTION 2.02 EXECUTION, AUTHENTICATION AND DELIVERY. The
Transition Bonds shall be executed on behalf of the Issuer by a Manager.
The signature of any such Manager on the Transition Bonds may be manual or
facsimile.

Transition Bonds bearing the manual or facsimile signature of
individuals who were at any time Managers shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold
such offices prior to the authentication and delivery of such Transition
Bonds.

At any time and from time to time after the execution and delivery of
this Indenture, the Issuer may deliver Transition Bonds executed on behalf
of the Issuer to the Trustee pursuant to an Issuer Order for
authentication; and the Trustee shall authenticate and deliver such
Transition Bond as in this Indenture provided and not otherwise.

No Transition Bond shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose, unless there appears
on such Transition Bond a certificate of authentication substantially in
the form provided for herein executed by the Trustee by the manual
signature of one of its authorized signatories, and such certificate upon
any Transition Bond shall be conclusive evidence, and the only evidence,
that such Transition Bond has been duly authenticated and delivered
hereunder.

SECTION 2.03 DENOMINATIONS; TRANSITION BONDS ISSUABLE IN SERIES.
The Transition Bonds of each Series shall be issuable as registered
Transition Bonds in the Authorized Denominations specified in the Series
Supplement therefor.

The Transition Bonds may, at the election of and as authorized by a
Manager and set forth in a Series Supplement, be issued in one or more
Series (each of which may be comprised of one or more Classes), and shall
be designated generally as the "Transition Bonds" of the Issuer, with such
further particular designations added or incorporated in such title for the
Transition Bonds of any particular Series or Class as a Manager of the
Issuer may determine and be set forth in the Series Supplement therefor.

Each Series of Transition Bonds shall be created by a Series
Supplement authorized by a Manager and establishing the terms and
provisions of such Series. The several Series and Classes thereof may
differ as between Series and Classes, in respect of any of the following
matters:

(i) designation of the Series and, if applicable, the Classes
thereof;

(ii) the aggregate principal amount of the Transition Bonds of
the Series and, if applicable, each Class thereof;

(iii) the Bond Rate of the Series and, if applicable, each Class
thereof or the formula, if any, used to calculate the applicable Bond
Rate or Bond Rates for the Series;

(iv) the Payment Dates for the Series;

(v) the Expected Final Payment Date of the Series, and, if
applicable, each Class thereof;

(vi) the Series Final Maturity Date for the Series and, if
applicable, the Class Final Maturity Dates for each Class thereof;

(vii) the Series Issuance Date for the Series;

(viii) the place or places for payments with respect to the
Series;

(ix) the Authorized Denominations for the Series;

(x) the provisions, if any, for redemption of the Series by the
Issuer;

(xi) the Expected Amortization Schedule for the Series;

(xii) the Overcollateralization Amount with respect to the
Series;

(xiii) the Required Capital Amount with respect to the Series;

(xiv) the Calculation Dates and Adjustment Dates for the Series;

(xv) the credit enhancement, if any, applicable to the Series;
and

(xvi) any other terms of the Series or Class that are not
inconsistent with the provisions of this Indenture.

SECTION 2.04 TEMPORARY TRANSITION BONDS. Pending the
preparation of definitive Transition Bonds, or by agreement of the
purchasers of all Transition Bonds or, in the case of Transition Bonds held
in a book-entry only system by a Clearing Agency, a Manager on behalf of
the Issuer may execute, and upon receipt of an Issuer Order the Trustee
shall authenticate and deliver, temporary Transition Bonds which are
printed, lithographed, typewritten, mimeographed or otherwise produced, of
the tenor of the definitive Transition Bonds in lieu of which they are
issued and with such variations not inconsistent with the terms of this
Indenture as the Manager executing such Transition Bonds may determine, as
evidenced by their execution of such Transition Bonds.

If temporary Transition Bonds are issued, the Issuer will cause
definitive Transition Bonds to be prepared without unreasonable delay
except where temporary Transition Bonds are held by a Clearing Agency.
After the preparation of definitive Transition Bonds, the temporary
Transition Bonds shall be exchangeable for definitive Transition Bonds upon
surrender of the temporary Transition Bonds at the office or agency of the
Issuer to be maintained as provided in Section 3.02, without charge to the
Holder. Upon surrender for cancellation of any one or more temporary
Transition Bonds, a Manager on behalf of the Issuer shall execute and the
Trustee shall authenticate and deliver in exchange therefor a like initial
principal amount of definitive Transition Bonds in Authorized
Denominations. Until so exchanged, the temporary Transition Bonds shall in
all respects be entitled to the same benefits under this Indenture as
definitive Transition Bonds.

SECTION 2.05 REGISTRATION; REGISTRATION OF TRANSFER AND
EXCHANGE. The Issuer shall cause to be kept a register (the "Transition
Bond Register") in which, subject to such reasonable regulations as it may
prescribe, the Issuer shall provide for the registration of Transition
Bonds and the registration of transfers of Transition Bonds. The Trustee
shall be "Transition Bond Registrar" for the purpose of registering
Transition Bonds and transfers of Transition Bonds as herein provided.
Upon any resignation of any Transition Bond Registrar, the Issuer shall
promptly appoint a successor or, if it elects not to make such an
appointment, assume the duties of Transition Bond Registrar.

If a Person other than the Trustee is appointed by the Issuer as
Transition Bond Registrar, the Issuer shall give the Trustee prompt written
notice of the appointment of such Transition Bond Registrar and of the
location, and any change in the location, of the Transition Bond Register,
and the Trustee shall have the right to inspect the Transition Bond
Register at all reasonable times and to obtain copies thereof, and the
Trustee shall have the right to rely upon a certificate executed on behalf
of the Transition Bond Registrar by a duly authorized officer thereof as to
the names and addresses of the Holders of the Transition Bonds and the
principal amounts and number of such Transition Bonds.

Upon surrender for registration of transfer of any Transition Bond at
the office or agency of the Issuer to be maintained as provided in Section
3.02, a Manager on behalf of the Issuer shall execute, and the Trustee
shall authenticate and the Transition Bondholder shall obtain from the
Trustee, in the name of the designated transferee or transferees, one or
more new Transition Bonds in any Authorized Denominations, of a like Series
(and, if applicable, Class) and aggregate initial principal amount.

At the option of the Holder, Transition Bonds may be exchanged for
other Transition Bonds of a like Series (and, if applicable, Class) and
aggregate initial principal amount in Authorized Denominations, upon
surrender of the Transition Bonds to be exchanged at such office or agency.
Whenever any Transition Bonds are so surrendered for exchange, a Manager on
behalf of the Issuer shall execute, and the Trustee shall authenticate and
the Transition Bondholder shall obtain from the Trustee, the Transition
Bonds which the Transition Bondholder making the exchange is entitled to
receive.

All Transition Bonds issued upon any registration of transfer or
exchange of Transition Bonds shall be the valid obligations of the Issuer,
evidencing the same debt, and entitled to the same benefits under this
Indenture, as the Transition Bonds surrendered upon such registration of
transfer or exchange.

Every Transition Bond presented or surrendered for registration of
transfer or exchange shall be duly endorsed by, or be accompanied by a
written instrument of transfer in the form set forth in Exhibit A hereto or
such other form as is satisfactory to the Trustee duly executed by, the
Holder thereof or such Holder's attorney duly authorized in writing, with
such signature guaranteed by an Eligible Guarantor Institution in the form
set forth in such Transition Bond.

No service charge shall be made to a Holder for any registration of
transfer or exchange of Transition Bonds, but, other than in respect of
exchanges pursuant to Section 2.04 or 9.06 not involving any transfer, the
Issuer may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration
of transfer or exchange of Transition Bonds.

The preceding provisions of this Section notwithstanding, the Issuer
shall not be required to make, and the Transition Bond Registrar need not
register, transfers or exchanges of Transition Bonds selected for
redemption or transfers or exchanges of any Transition Bond for a period of
15 days preceding the date on which final payment of principal is to be
made with respect to such Transition Bond.

SECTION 2.06 MUTILATED, DESTROYED, LOST OR STOLEN TRANSITION
BONDS. If (i) any mutilated Transition Bond is surrendered to the Trustee,
or the Trustee receives evidence to its satisfaction of the destruction,
loss or theft of any Transition Bond, and (ii) there is delivered to the
Trustee such security or indemnity as may be required by it to hold the
Issuer and the Trustee harmless, then, in the absence of notice to the
Issuer, the Transition Bond Registrar or the Trustee that such Transition
Bond has been acquired by a bona fide purchaser, a Manager on behalf of the
Issuer shall execute, and upon a Manager's request the Trustee shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Transition Bond, a replacement Transition Bond of
like Series (and, if applicable, Class), tenor and initial principal amount
in Authorized Denominations, bearing a number not contemporaneously
outstanding; provided, however, that if any such destroyed, lost or stolen
Transition Bond, but not a mutilated Transition Bond, shall have become or
within seven days shall be due and payable, or shall have been called for
redemption, instead of issuing a replacement Transition Bond, the Issuer
may pay such destroyed, lost or stolen Transition Bond when so due or
payable or upon the Redemption Date without surrender thereof. If, after
the delivery of such replacement Transition Bond or payment of a destroyed,
lost or stolen Transition Bond pursuant to the proviso to the preceding
sentence, a bona fide purchaser of the original Transition Bond in lieu of
which such replacement Transition Bond was issued presents for payment such
original Transition Bond, the Issuer and the Trustee shall be entitled to
recover such replacement Transition Bond (or such payment) from the Person
to whom it was delivered or any Person taking such replacement Transition
Bond from such Person to whom such replacement Transition Bond was
delivered or any assignee of such Person, except a bona fide purchaser, and
shall be entitled to recover upon the security or indemnity provided
therefor to the extent of any loss, damage, cost or expense incurred by the
Issuer or the Trustee in connection therewith.

Upon the issuance of any replacement Transition Bond under this
Section, the Issuer may require the payment by the Holder of such
Transition Bond of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other reasonable
expenses (including the fees and expenses of the Trustee) connected
therewith.

Every replacement Transition Bond issued pursuant to this Section in
replacement of any mutilated, destroyed, lost or stolen Transition Bond
shall constitute an original additional contractual obligation of the
Issuer, whether or not the mutilated, destroyed, lost or stolen Transition
Bond shall be at any time enforceable by anyone, and shall be entitled to
all the benefits of this Indenture equally and proportionately with any and
all other Transition Bonds duly issued hereunder.

The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Transition
Bonds.

SECTION 2.07 PERSONS DEEMED OWNER. Prior to due presentment for
registration of transfer of any Transition Bond, the Issuer, the Trustee
and any agent of the Issuer or the Trustee may treat the Person in whose
name any Transition Bond is registered (as of the day of determination) as
the owner of such Transition Bond for the purpose of receiving payments of
principal of and premium, if any, and interest on such Transition Bond and
for all other purposes whatsoever, whether or not such Transition Bond be
overdue, and neither the Issuer, the Trustee nor any agent of the Issuer or
the Trustee shall be affected by notice to the contrary.

SECTION 2.08 PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND
INTEREST; INTEREST ON OVERDUE PRINCIPAL AND PREMIUM, IF ANY; PRINCIPAL,
PREMIUM AND INTEREST RIGHTS PRESERVED.

(a) The Transition Bonds shall accrue interest as provided in the form
of Transition Bond attached to the Series Supplement for such Transition
Bonds, at the applicable Bond Rate specified therein, and such interest
shall be payable on each Payment Date as specified therein. Any instalment
of interest, principal or premium, if any, payable on any Transition Bond
which is punctually paid or duly provided for by the Issuer on the
applicable Payment Date shall be paid to the Person in whose name such
Transition Bond (or one or more Predecessor Transition Bonds) is registered
on the Record Date for such Payment Date, by check mailed first-class,
postage prepaid to such Person's address as it appears on the Transition
Bond Register on such Record Date or in such other manner as may be
provided in the related Series Supplement, except that with respect to
Transition Bonds registered on a Record Date in the name of the nominee of
the Clearing Agency (initially, such nominee to be Cede & Co.), payments
will be made by wire transfer in immediately available funds to the account
designated by such nominee and except for the final instalment of principal
and premium, if any, payable with respect to such Transition Bond on a
Payment Date which shall be payable as provided in clause (b) below. The
funds represented by any such checks returned undelivered shall be held in
accordance with Section 3.03.

(b) The principal of each Transition Bond of each Series (and, if
applicable, Class) shall be payable in instalments on each Payment Date
specified in the Expected Amortization Schedule included in the form of
Transition Bond attached to the Series Supplement for such Transition
Bonds, but only to the extent that moneys are available for such payment
pursuant to Section 8.02. Failure to pay in accordance with such Expected
Amortization Schedule because moneys are not so available pursuant to
Section 8.02 to make such payments shall not constitute a Default or Event
of Default under this Indenture. Notwithstanding the foregoing, the entire
unpaid principal amount of the Transition Bonds of any Series or Class
shall be due and payable, if not previously paid (i) on the Series Final
Maturity Date (or, if applicable, Class Final Maturity Date) therefor, (ii)
on the date on which the Transition Bonds of all Series have been declared
immediately due and payable in accordance with Section 5.02 or (iii) on the
Redemption Date, if any, therefor. The Trustee shall notify the Person in
whose name a Transition Bond is registered at the close of business on the
Record Date preceding the Payment Date on which the Issuer expects that the
final instalment of principal of and premium, if any, and interest on such
Transition Bond will be paid. Such notice shall be mailed no later than
five days prior to such final Payment Date and shall specify that such
final instalment of principal and premium, if any, will be payable only
upon presentation and surrender of such Transition Bond and shall specify
the place where such Transition Bond may be presented and surrendered for
payment of such instalment. Notices in connection with redemptions of
Transition Bonds shall be mailed to Transition Bondholders as provided in
Section 10.03.

(c) If the Issuer defaults in a payment of interest on the Transition
Bonds of any Series, the Issuer shall pay defaulted interest (plus interest
on such defaulted interest at the applicable Bond Rate to the extent
lawful) in any lawful manner. The Issuer may pay such defaulted interest
to the Persons who are Transition Bondholders on a subsequent special
record date, which date shall be at least five Business Days prior to the
payment date. The Issuer shall fix or cause to be fixed any such special
record date and payment date, and, at least 15 days before any such special
record date, the Issuer shall mail to each affected Transition Bondholder a
notice that states the special record date, the payment date and the amount
of defaulted interest to be paid.

SECTION 2.09 CANCELLATION. All Transition Bonds surrendered for
payment, registration of transfer, exchange or redemption shall, if
surrendered to any Person other than the Trustee, be delivered to the
Trustee and shall be promptly canceled by the Trustee. The Issuer may at
any time deliver to the Trustee for cancellation any Transition Bonds
previously authenticated and delivered hereunder which the Issuer may have
acquired in any manner whatsoever, and all Transition Bonds so delivered
shall be promptly canceled by the Trustee. No Transition Bonds shall be
authenticated in lieu of or in exchange for any Transition Bonds canceled
as provided in this Section, except as expressly permitted by this
Indenture. All canceled Transition Bonds may be held or disposed of by the
Trustee in accordance with its standard retention or disposal policy as in
effect at the time unless the Issuer shall direct by an Issuer Order that
they be destroyed or returned to it; provided that such Issuer Order is
timely and the Transition Bonds have not been previously disposed of by the
Trustee.

SECTION 2.10 AMOUNT; AUTHENTICATION AND DELIVERY OF TRANSITION
BONDS. The aggregate principal amount of Transition Bonds that may be
authenticated and delivered under this Indenture shall not exceed
$__________ plus the amount of any Refunding Issuance. The Issuer may
issue Transition Bonds of a new Series as a Financing Issuance or a
Refunding Issuance.

Transition Bonds of a new Series may from time to time be executed by
a Manager on behalf of the Issuer and delivered to the Trustee for
authentication and thereupon the same shall be authenticated and delivered
by the Trustee upon Issuer Request and upon delivery by the Issuer, at the
Issuer's expense, to the Trustee of the following:

(1) Trust Action. An Issuer Order authorizing and directing the
execution, authentication and delivery of the Transition Bonds by the
Trustee and specifying the principal amount of Transition Bonds to be
authenticated.

(2) Authorizations. An Issuer Opinion of Counsel that no
authorization, approval or consent of any governmental body is
required for the valid issuance, authentication or delivery of such
Transition Bonds, except for any such authorization, approval or
consent as has already been obtained and such registrations as are
required under the Blue Sky and securities laws of any State.

(3) Authorizing Certificate. A certified resolution of the Managers
authorizing the execution and delivery of the Series Supplement for
the Transition Bonds applied for and the execution, authentication and
delivery of such Transition Bonds.

(4) A Series Supplement for the Series of Transition Bonds being
issued, which shall set forth the provisions and form of the
Transition Bonds of such Series (and, if applicable, each Class
thereof).

(5) Certificates of the Issuer and the Seller.

(a) An Issuer Officer's Certificate dated as of the Series
Issuance Date, stating:

(i) that no Default has occurred and is continuing under
this Indenture and that the issuance of the Transition Bonds
being issued will not result in any Default;

(ii) that the Issuer has not assigned any interest or
participation in the Collateral except for the Grant
contained in this Indenture; that the Issuer has the power
and authority to Grant the Collateral to the Trustee as
security hereunder; and that the Issuer, subject to the
terms of this Indenture, has Granted to the Trustee all
right, title and interest in and to the Collateral free and
clear of any Lien arising as a result of action of the
Issuer or through the Issuer, except the Lien of this
Indenture;

(iii) that the Issuer has appointed the firm of independent
certified public accountants as contemplated in Section
8.05;

(iv) that attached thereto are duly executed, true and
complete copies of the Sale Agreement, the Contribution
Agreement and the Servicing Agreement;

(v) that all filings with the PUC pursuant to the
Competition Act and all UCC financing statements with
respect to the Collateral which are required to be filed by
the terms of the Sale Agreement, the Contribution Agreement,
the Servicing Agreement or this Indenture have been filed as
required; and

(vi) that all conditions precedent provided in the Indenture
relating to the authentication and delivery of the
Transition Bonds have been complied with.

(b) An Officer's Certificate from the Seller, dated as of the
Series Issuance Date, to the effect that, in the case of the
Intangible Transition Property to be transferred to the Issuer on
such date immediately prior to the conveyance thereof to the
Issuer pursuant to the Sale Agreement:

(i) the Seller is the sole owner of such Intangible
Transition Property; such Intangible Transition Property has
been validly transferred and sold to the Issuer free and
clear of all Liens (other than Liens created by the Issuer
pursuant to this Indenture); the Seller has the power and
authority to own, sell and assign such Intangible Transition
Property to the Issuer; and the Seller has duly authorized
such sale and assignment to the Issuer; and

(ii) the attached copy of the Qualified Rate Order creating
such Intangible Transition Property is true and correct and
is in full force and effect.

(6) Issuer Opinion of Counsel. An Issuer Opinion of Counsel, portions
of which may be delivered by counsel for the Issuer and portions of
which may be delivered by counsel for the Seller and/or the Servicer,
dated as of the Series Issuance Date, to the collective effect that:

(a) the Issuer has the power and authority to execute and
deliver the Series Supplement and this Indenture and to issue the
Transition Bonds being issued, each of the Series Supplement and
this Indenture and such Transition Bonds have been duly
authorized, executed and delivered, and the Issuer is duly
organized and in good standing under the laws of the jurisdiction
of its organization and is in good standing in any jurisdiction
where it is required to be qualified;

(b) the Transition Bonds being issued, when authenticated in
accordance with the provisions of the Indenture and delivered,
will constitute valid and binding obligations of the Issuer
entitled to the benefits of the Indenture and the related Series
Supplement;

(c) the Indenture (including the related Series Supplement), the
Sale Agreement and the Servicing Agreement are valid and binding
agreements of the Issuer, enforceable against the Issuer in
accordance with their respective terms except as such
enforceability may be subject to bankruptcy, insolvency,
reorganization and other similar laws affecting the rights of
creditors generally and general principles of equity (regardless
of whether such enforceability is considered in a proceeding in
equity or at law);

(d) the Sale Agreement is a valid and binding agreement of the
Seller, enforceable against the Seller in accordance with its
terms except as such enforceability may be subject to bankruptcy,
insolvency, reorganization and other similar laws affecting the
rights of creditors generally and general principles of equity
(regardless of whether such enforcement is considered in a
proceeding in equity or at law);

(e) the Servicing Agreement is a valid and binding agreement of
the Servicer, enforceable against the Servicer in accordance with
its terms except as such enforceability may be subject to
bankruptcy, insolvency, reorganization and other similar laws
affecting the rights of creditors generally and general
principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law);

(f) the Contribution Agreement is a valid and binding agreement
of each of the parties thereto, enforceable in accordance with
its terms except as such enforceability may be subject to
bankruptcy, insolvency, reorganization and other similar laws
affecting the rights of creditors generally and general
principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law);

(g) the assignment of the Intangible Transition Property from
PP&L to the Seller pursuant to the Contribution Agreement and the
Assignment conveys all of PP&L's right, title and interest in the
Intangible Transition Property to the Seller and will be treated
as an absolute transfer as provided in Section 2812(e) of the
Competition Act; [(ii) such transfer has priority over any other
assignment or transfer of such Intangible Transition Property,
and (iii) such Intangible Transition Property is free and clear
of all Liens created prior to its transfer to the Seller pursuant
to the Contribution Agreement and the Assignment;]

(h) upon the delivery of a fully executed Bill of Sale delivered
to the Issuer pursuant to Section 2.03(i) of the Sale Agreement
in connection with the issuance of Transition Bonds being issued
and the payment of the purchase price of the related Intangible
Transition Property by the Issuer to the Seller pursuant to such
Bill of Sale and the Sale Agreement, then under the law of the
Commonwealth of Pennsylvania (i) the transfer of the Intangible
Transition Property by the Seller to the Issuer pursuant to such
Bill of Sale and the Sale Agreement conveys all of the Seller's
right, title and interest in such Intangible Transition Property
to the Issuer and will be treated as an absolute transfer of all
of the Seller's right, title, and interest in such Intangible
Transition Property, (ii) such transfer is perfected [and has
priority over any other assignment or transfer of such Intangible
Transition Property, and (iii) such Intangible Transition
Property is free and clear of all Liens created prior to its
transfer to the Issuer pursuant to such Bill of Sale and the Sale
Agreement;]

(i) (i) to the extent that the provisions of Section 2812 of the
Competition Act apply to the grant of a security interest by
the Issuer in the Collateral pursuant to this Indenture,
then upon the giving of value by the Trustee to the Issuer
with respect to the Collateral,

(A) this Indenture creates in favor of the Trustee a
valid and enforceable security interest in the rights
of the Issuer in the Collateral to secure the
Transition Bonds, and

(B) such security interest has attached and is
perfected and is prior to any other Lien; and

(ii) to the extent that the provisions of Section 2812 of
the Competition Act do not apply to the grant of a security
interest by the Issuer in the Collateral pursuant to this
Indenture, then upon the giving of value by the Trustee to
the Issuer with respect to the Collateral,

(A) this Indenture creates in favor of the Trustee a
security interest in the rights of the Issuer in the
Collateral, and such security interest is enforceable
against the Issuer with respect to such Collateral to
secure the Transition Bonds and any other amounts
(including all fees, expenses, counsel fees and other
amounts due and owing to the Trustee) owing in respect
of the Transition Bonds,

(B) such security interest is perfected, and

(j) the Indenture has been duly qualified under the Trust
Indenture Act and either the Series Supplement for the Transition
Bonds applied for has been duly qualified under the Trust
Indenture Act or no such qualification of such Series Supplement
is necessary;

(k) all instruments furnished to the Trustee conform to the
requirements of this Indenture and constitute all the documents
required to be delivered hereunder for the Trustee to
authenticate and deliver the Transition Bonds applied for, and
all conditions precedent provided for in this Indenture relating
to the authentication and delivery of the Transition Bonds have
been complied with;

(l) either

(i) the registration statement covering the Transition Bonds
is effective under the Securities Act of 1933 and, to the
best of such counsel's knowledge and information, no stop
order suspending the effectiveness of such registration
statement has been issued under the Securities Act of 1933
nor have proceedings therefor been instituted or threatened
by the Commission or

(ii) the Transition Bonds are exempt from the registration
requirements under the Securities Act of 1933;

(m) the Indenture (including the related Series Supplement) has
been duly authorized, executed and delivered by the Issuer;

(n) the Sale Agreement, the Contribution Agreement and the
Servicing Agreement have been duly authorized, executed and
delivered by each of the parties thereto; and

(o) the Issuer is not now and, following the issuance of the
Transition Bonds will not be, required to be registered under the
Investment Company Act of 1940, as amended.

(7) Accountant's Certificate or Opinion. A certificate or opinion,
addressed to the Issuer and the Trustee, complying with the
requirements of Section 11.01 hereof, of a firm of Independent
certified public accountants of recognized national reputation to the
effect that (a) such accountants are Independent within the meaning of
the Indenture, and are independent public accountants within the
meaning of the standards of The American Institute of Certified Public
Accountants, and (b) with respect to the Collateral, they have made
such calculations as they deemed necessary for the purpose and
determined that, based on the assumptions used in calculating the
initial Intangible Transition Charges with respect to the Transferred
Intangible Transition Property or, if applicable, the most recent
revised Intangible Transition Charges with respect to the Transferred
Intangible Transition Property, and taking into account amounts on
deposit in the Reserve Subaccount, as of the Series Issuance Date for
such Series (after giving effect to the issuance of such Series and
the application of the proceeds therefrom) such Intangible Transition
Charges are sufficient to (a) pay Operating Expenses when incurred,
(b) pay interest on each Series of Transition Bonds at their
respective Bond Rates when due, (c) pay principal of the Transition
Bonds of all Series in accordance with their respective Expected
Amortization Schedules and (d) fund the Scheduled
Overcollateralization Level and replenish any shortfalls in the
Capital Subaccount as of each Payment Date.

(8) Rating Agency Condition. The Trustee shall receive written notice
from each Rating Agency that the Rating Agency Condition will be
satisfied with respect to the issuance of any additional Series of
Transition Bonds being issued.

(9) Bill of Sale. If the issuance of an additional Series of
Transition Bonds is a Financing Issuance, the Bill of Sale delivered
to the Issuer under the Sale Agreement with respect to the Intangible
Transition Property being purchased with the proceeds of such
Financing Issuance.

(10) Moneys for Refunding. If the issuance of a Series of Transition
Bonds is a Refunding Issuance, the amount of money necessary to pay
the outstanding principal balance of, and premium and interest on, the
Transition Bonds being refunded to the Redemption Date for the
Transition Bonds being refunded upon redemption, such money to be
deposited into a separate account with the Trustee.

SECTION 2.11 BOOK-ENTRY TRANSITION BONDS. Unless otherwise
specified in the related Series Supplement, each Series of Transition
Bonds, upon original issuance, will be issued in the form of a typewritten
Transition Bond or Transition Bonds representing the Book-Entry Transition
Bonds, to be delivered to The Depository Trust Company, the initial
Clearing Agency, by, or on behalf of, the Issuer. Such Transition Bond
shall initially be registered on the Transition Bond Register in the name
of Cede & Co., the nominee of the initial Clearing Agency, and no
Transition Bond Owner will receive a definitive Transition Bond
representing such Transition Bond Owner's interest in such Transition Bond,
except as provided in Section 2.13. Unless and until definitive, fully
registered Transition Bonds (the "Definitive Transition Bonds") have been
issued to Transition Bondholders pursuant to Section 2.13:

(i) the provisions of this Section shall be in full force and
effect;

(ii) the Transition Bond Registrar and the Trustee shall be
entitled to deal with the Clearing Agency for all purposes of
this Indenture (including the payment of principal of and
premium, if any, and interest on the Transition Bonds and the
giving of instructions or directions hereunder) as the sole
holder of the Transition Bonds, and shall have no obligation to
the Transition Bond Owners;

(iii) to the extent that the provisions of this Section conflict
with any other provisions of this Indenture, the provisions of
this Section shall control;

(iv) the rights of Transition Bond Owners shall be exercised only
through the Clearing Agency and shall be limited to those
established by law and agreements between such Transition Bond
Owners and the Clearing Agency or the Clearing Agency
Participants. Pursuant to the DTC Agreement, unless and until
Definitive Transition Bonds are issued pursuant to Section 2.13,
the initial Clearing Agency will make book-entry transfers among
the Clearing Agency Participants and receive and transmit
payments of principal of and premium, if any, and interest on the
Transition Bonds to such Clearing Agency Participants; and

(v) whenever this Indenture requires or permits actions to be
taken based upon instructions or directions of Holders of
Transition Bonds evidencing a specified percentage of the
Outstanding Amount of the Transition Bonds or a Series or Class
thereof, the Clearing Agency shall be deemed to represent such
percentage only to the extent that it has received instructions
to such effect from Transition Bond Owners or Clearing Agency
Participants owning or representing, respectively, such required
percentage of the beneficial interest in the Transition Bonds or
such Series or Class and has delivered such instructions to the
Trustee.

SECTION 2.12 NOTICES TO CLEARING AGENCY. Whenever a notice or
other communication to the Transition Bondholders is required under this
Indenture, unless and until Definitive Transition Bonds shall have been
issued to Transition Bond Owners pursuant to Section 2.13, the Trustee
shall give all such notices and communications specified herein to be given
to Transition Bondholders to the Clearing Agency, and shall have no
obligation to the Transition Bond Owners.

SECTION 2.13 DEFINITIVE TRANSITION BONDS. If (i) the Issuer
advises the Trustee in writing that the Clearing Agency is no longer
willing or able to properly discharge its responsibilities as depository
with respect to any Series or Class of Transition Bonds and the Issuer is
unable to locate a qualified successor, (ii) the Issuer, at its option,
advises the Trustee in writing that it elects to terminate the book-entry
system through the Clearing Agency with respect to any Series or Class of
Transition Bonds or (iii) after the occurrence of an Event of Default,
Transition Bond Owners representing beneficial interests aggregating at
least a majority of the Outstanding Amount of the Transition Bonds of all
Series advise the Trustee through the Clearing Agency in writing that the
continuation of a book-entry system through the Clearing Agency is no
longer in the best interests of the Transition Bond Owners, then the
Clearing Agency shall notify all affected Transition Bond Owners and the
Trustee of the occurrence of any such event and of the availability of
Definitive Transition Bonds to affected Transition Bond Owners requesting
the same. Upon surrender to the Trustee of the typewritten Transition Bond
or Transition Bonds representing the Book-Entry Transition Bonds by the
Clearing Agency, accompanied by registration instructions, a Manager on
behalf of the Issuer shall execute and the Trustee shall authenticate the
Definitive Transition Bonds in accordance with the instructions of the
Clearing Agency. None of the Issuer, the Transition Bond Registrar or the
Trustee shall be liable for any delay in delivery of such instructions and
may conclusively rely on, and shall be protected in relying on, such
instructions. Upon the issuance of Definitive Transition Bonds, the
Trustee shall recognize the Holders of the Definitive Transition Bonds as
Transition Bondholders.

ARTICLE III
COVENANTS
-------------

SECTION 3.01 PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND
INTEREST. The Issuer will duly and punctually pay the principal of and
premium, if any, and interest on the Transition Bonds in accordance with
the terms of the Transition Bonds and this Indenture; provided that except
on the Series Final Maturity Date, the Class Final Maturity Date or the
Redemption Date for a Series or Class of Transition Bonds or upon the
acceleration of the Transition Bonds following the occurrence of an Event
of Default, the Issuer shall only be obligated to pay the principal of such
Transition Bonds on each Payment Date therefor to the extent moneys are
available for such payment pursuant to Section 8.02. Amounts properly
withheld under the Code by any Person from a payment to any Transition
Bondholder of interest or principal or premium, if any, shall be considered
as having been paid by the Issuer to such Transition Bondholder for all
purposes of this Indenture.

SECTION 3.02 MAINTENANCE OF OFFICE OR AGENCY. The Issuer will
maintain in the Borough of Manhattan, the City of New York, an office or
agency where Transition Bonds may be surrendered for registration of
transfer or exchange, and where notices and demands to or upon the Issuer
in respect of the Transition Bonds and this Indenture may be served. The
Issuer hereby initially appoints the Trustee to serve as its agent for the
foregoing purposes. The Issuer will give prompt written notice to the
Trustee of the location, and of any change in the location, of any such
office or agency. If at any time the Issuer shall fail to maintain any
such office or agency or shall fail to furnish the Trustee with the address
thereof, such surrenders, notices and demands may be made or served at the
Corporate Trust Office, and the Issuer hereby appoints the Trustee as its
agent to receive all such surrenders, notices and demands.

SECTION 3.03 MONEY FOR PAYMENTS TO BE HELD IN TRUST. As
provided in Section 8.02(a), all payments of principal of, or premium and
interest on, the Transition Bonds that are to be made from amounts
withdrawn from the Collection Account pursuant to Section 8.02(d) or (e) or
Section 4.03 shall be made on behalf of the Issuer by the Trustee or by
another Paying Agent, and no amounts so withdrawn from the Collection
Account for payments of Transition Bonds shall be paid over to the Issuer
except as provided in this Section and in Section 8.02.

The Issuer shall cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee (and if the Trustee acts as Paying Agent, it
hereby so agrees), subject to the provisions of this Section, that such
Paying Agent will:

(i) hold all sums held by it for the payment of principal of, or
premium or interest on, the Transition Bonds in trust for the
benefit of the Persons entitled thereto until such sums shall be
paid to such Persons or otherwise disposed of as herein provided
and pay such sums to such Persons as herein provided;

(ii) give the Trustee notice of any Default by the Issuer (or any
other obligor upon the Transition Bonds) of which the Paying
Agent has actual knowledge in the making of any payment required
to be made with respect to the Transition Bonds;

(iii) at any time during the continuance of any such Default,
upon the written request of the Trustee, forthwith pay to the
Trustee all sums so held in trust by such Paying Agent;

(iv) immediately resign as a Paying Agent and forthwith pay to
the Trustee all sums held by the Paying Agent in trust for the
payment of Transition Bonds if at any time the Paying Agent
ceases to meet the standards required to be met by a Paying Agent
at the time of its appointment; and

(v) comply with all requirements of the Code with respect to the
withholding from any payments made by it on any Transition Bonds
of any applicable withholding taxes imposed thereon and with
respect to any applicable reporting requirements in connection
therewith.

The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by
Issuer Order direct any Paying Agent to pay to the Trustee all sums held in
trust by such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which the sums were held by such Paying Agent;
and upon such payment by any Paying Agent to the Trustee, such Paying Agent
shall be released from all further liability with respect to such money.

Subject to applicable laws with respect to escheat of funds, any money
held by the Trustee or any Paying Agent in trust for the payment of any
amount of principal of, premium on, if any, or interest on any Transition
Bond and remaining unclaimed for two years after such amount has become due
and payable shall be discharged from such trust and be paid to the Issuer;
and the Holder of such Transition Bond shall thereafter, as an unsecured
general creditor, look only to the Issuer for payment thereof (but only to
the extent of the amounts so paid to the Issuer), and all liability of the
Trustee or such Paying Agent with respect to such trust money shall
thereupon cease; provided, however, that the Trustee or such Paying Agent,
before being required to make any such repayment, may at the expense of the
Issuer cause to be published once, in a newspaper published in the English
language, customarily published on each Business Day and of general
circulation in the City of New York, notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less
than 30 days from the date of such publication, any unclaimed balance of
such money then remaining will be repaid to the Issuer. The Trustee may
also adopt and employ, at the expense of the Issuer, any other reasonable
means of notification of such repayment (including mailing notice of such
repayment to Holders whose Transition Bonds have been called but have not
been surrendered for redemption or whose right to or interest in moneys due
and payable but not claimed is determinable from the records of the Trustee
or of any Paying Agent, at the last address of record for each such
Holder).

SECTION 3.04 EXISTENCE. Subject to Section 3.10, the Issuer
shall keep in full effect its existence, rights and franchises as a
statutory limited liability company under the laws of the State of Delaware
(unless it becomes, or any successor Issuer hereunder is or becomes,
organized under the laws of any other State or of the United States of
America, in which case the Issuer will keep in full effect its existence,
rights and franchises under the laws of such other jurisdiction) and will
obtain and preserve its qualification to do business in each jurisdiction
in which such qualification is or shall be necessary to protect the
validity and enforceability of this Indenture, the Transition Bonds, the
Collateral and each other instrument or agreement included therein.

SECTION 3.05 PROTECTION OF COLLATERAL. The Issuer shall from
time to time execute and deliver all such supplements and amendments hereto
and all such filings (including filings with the PUC pursuant to the
Competition Act), financing statements, continuation statements,
instruments of further assurance and other instruments, and shall take such
other action necessary or advisable to:

(i) maintain and preserve the lien and security interest (and the
priority thereof) of this Indenture or carry out more effectively
the purposes hereof;

(ii) perfect, publish notice of or protect the validity of any
Grant made or to be made by this Indenture;

(iii) enforce any of the Collateral;

(iv) preserve and defend title to the Collateral and the rights
of the Trustee and the Transition Bondholders in the Collateral
against the claims of all Persons and parties; or

(v) pay any and all taxes levied or assessed up on all or any
part of the Collateral.

The Issuer hereby designates the Trustee its agent and attorney-in-fact to
execute any filing with the PUC, financing statement, continuation
statement or other instrument required by the Trustee pursuant to this
Section.

SECTION 3.06 OPINIONS AS TO COLLATERAL. (a) On or before [March
31] in each calendar year, while any Series is outstanding, the Issuer
shall furnish to the Trustee an Issuer Opinion of Counsel either stating
that, in the opinion of such counsel, such action has been taken with
respect to the recording, filing, re-recording and re-filing of this
Indenture, any indentures supplemental hereto and any other requisite
documents and, with respect to the execution and filing of any filings
pursuant to the Competition Act or the UCC, financing statements and
continuation statements as is necessary to maintain the lien and security
interest, and the first priority thereof, created by this Indenture and
reciting the details of such action or stating that in the opinion of such
counsel no such action is necessary to maintain such lien and security
interest, and the first priority thereof. Such Issuer Opinion of Counsel
shall also describe the recording, filing, re-recording and re-filing of
this Indenture, any indentures supplemental hereto and any other requisite
documents, and the execution and filing of any filings pursuant to the
Competition Act or the UCC, financing statements and continuation
statements that will, in the opinion of such counsel, be required to
maintain the lien and security interest of this Indenture until [ ] in
the following calendar year.

(b) Prior to the effectiveness of any amendment to the Sale Agreement,
the Contribution Agreement or the Servicing Agreement, the Issuer shall
furnish to the Trustee an Issuer Opinion of Counsel either (A) stating
that, in the opinion of such counsel, all filings, including filings
pursuant to the Competition Act or the UCC, have been executed and filed
that are necessary fully to preserve and protect the interest of the Issuer
and the Trustee in the Transferred Intangible Transition Property and the
proceeds thereof, and reciting the details of such filings or referring to
prior Opinions of Counsel in which such details are given, or (B) stating
that, in the opinion of such counsel, no such action shall be necessary to
preserve and protect such interest.

SECTION 3.07 PERFORMANCE OF OBLIGATIONS. (a) The Issuer (i)
shall diligently pursue any and all actions to enforce its rights under
each instrument or agreement included in the Collateral and (ii) shall not
take any action and will use its best efforts not to permit any action to
be taken by others that would release any Person from any of such Person's
covenants or obligations under any such instrument or agreement or that
would result in the amendment, hypothecation, subordination, termination or
discharge of, or impair the validity or effectiveness of, any such
instrument or agreement, except, in each case, as expressly provided in
this Indenture, the Sale Agreement, the Contribution Agreement or the
Servicing Agreement or such other instrument or agreement.

(b) The Issuer may contract with other Persons to assist it in
performing its duties under this Indenture, and any performance of such
duties by a Person identified to the Trustee in an Issuer Officer's
Certificate of the Issuer shall be deemed to be action taken by the Issuer.
Initially, the Issuer has contracted with the Administrator to assist the
Issuer in performing its duties under this Indenture.

(c) The Issuer shall punctually perform and observe all of its
obligations and agreements contained in the Sale Agreement, the Servicing
Agreement, the Contribution Agreement and in all other instruments and
agreements included in the Collateral.

NEGATIVE COVENANTS. The Issuer shall not:

(i) except as expressly permitted by this 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 Article V;

(ii) 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 from such
payments under the Code) or assert any claim against any present or
former Transition Bondholder by reason of the payment of taxes levied
or assessed upon the Issuer or any part of the Collateral; or

(iii) (A) permit the validity or effectiveness of this
Indenture to be impaired, or permit the lien of this Indenture to be
amended, hypothecated, subordinated, terminated or discharged, or
permit any Person to be released from any covenants or obligations
with respect to the Transition Bonds under this Indenture except as
may be expressly permitted hereby, (B) permit any Lien (other than the
Lien created by this 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 or (C) permit the Lien of
this Indenture not to constitute a continuing valid first priority
security interest in the Collateral.

SECTION 3.08 ANNUAL STATEMENT AS TO COMPLIANCE. The Issuer will
deliver to the Trustee, within 120 days after the end of each fiscal year
of the Issuer (commencing with the fiscal year 1999), an Issuer Officer's
Certificate stating, as to the Manager signing such Issuer Officer's
Certificate, that

(i) a review of the activities of the Issuer during such year (or
relevant portion thereof) and of performance under this Indenture
has been made under such Manager's supervision; and

(ii) to the best of such Manager's knowledge, based on such
review, the Issuer has complied with all conditions and covenants
under this Indenture throughout such calendar year (or relevant
portion thereof), or, if there has been a default in complying
with any such condition or covenant, describing each such default
and the nature and status thereof.

SECTION 3.09 ISSUER MAY CONSOLIDATE, ETC., ONLY ON CERTAIN
TERMS. The Issuer shall not consolidate or merge with or into any other
Person or sell substantially all of its assets to any other Person and
dissolve, unless:

(i) the Person (if other than the Issuer) formed by or surviving
such consolidation or merger or to whom substantially all of such
assets are sold shall be a Person organized and existing under
the laws of the United States of America or any State and shall
expressly assume by an indenture supplemental hereto, executed
and delivered to the Trustee, in form satisfactory to the
Trustee, the due and punctual payment of the principal of and
premium, if any, and interest on all Transition Bonds and the
performance or observance of every agreement and covenant of this
Indenture on the part of the Issuer to be performed or observed,
all as provided herein and in the applicable Series Supplement or
Series Supplements;

(ii) the Person (if other than the Issuer) formed by or surviving
such consolidation or merger or to whom substantially all of such
assets are sold shall expressly assume all obligations and
succeed to all rights of the Issuer under the Sale Agreement, the
Contribution Agreement, the Administration Agreement and the
Servicing Agreement pursuant to an assignment and assumption
agreement executed and delivered to the Trustee, in form
satisfactory to the Trustee;

(iii) immediately after giving effect to such consolidation or
merger or sale, no Default or Event of Default shall have
occurred and be continuing;

(iv) the Rating Agency Condition shall have been satisfied with
respect to such consolidation or merger or sale;

(v) the Issuer shall have received an Issuer Opinion of Counsel
(and shall have delivered copies thereof to the Trustee) to the
effect that such consolidation or merger or sale (a) will not
have any material adverse tax consequence to the Issuer or any
Transition Bondholder, (b) complies with this Indenture and all
of the conditions precedent herein relating to such transaction
and (c) will result in the Trustee maintaining a continuing valid
first priority security interest in the Collateral;

(vi) neither the Intangible Transition Property nor the Qualified
Rate Order nor the Issuer's rights under the Competition Act or
the Qualified Rate Order shall be impaired thereby; and

(vii) any action as is necessary to maintain the Lien created by
this Indenture shall have been taken.

SECTION 3.10 SUCCESSOR OR TRANSFEREE. (a) Upon any consolidation
or merger of the Issuer in accordance with Section 3.10, the Person formed
by or surviving such consolidation or merger (if other than the Issuer)
shall succeed to, and be substituted for, and may exercise every right and
power of, the Issuer under this Indenture with the same effect as if such
Person had been named as the Issuer herein.

(b) Upon any sale by the Issuer of substantially all of its assets in
a sale which complies with Section 3.10, PP&L Transition Bond Company LLC
will be released from every covenant and agreement of this Indenture to be
observed or performed on the part of the Issuer with respect to the
Transition Bonds and from every covenant and agreement of the Sale
Agreement, the Administration Agreement and the Servicing Agreement to be
observed or performed on the part of the Issuer.

SECTION 3.11 NO OTHER BUSINESS. The Issuer shall not engage in
any business other than purchasing and owning Intangible Transition
Property, issuing Transition Bonds from time to time, pledging its interest
in the Collateral to the Trustee under this Indenture in order to secure
the Transition Bonds and performing activities that are necessary, suitable
or convenient to accomplish these purposes or are incidental thereto.

SECTION 3.12 NO BORROWING. The Issuer shall not issue, incur,
assume, guarantee or otherwise become liable, directly or indirectly, for
any indebtedness and except for the Transition Bonds and except as
contemplated by the Basic Documents.

SECTION 3.13 GUARANTEES, LOANS, ADVANCES AND OTHER LIABILITIES.
Except as contemplated by the Basic Documents, Issuer shall not make any
loan or advance or credit to, or guarantee (directly or indirectly or by an
instrument having the effect of assuring another's payment or performance
on any obligation or capability of so doing or otherwise), endorse or
otherwise become contingently liable, directly or indirectly, in connection
with the obligations, stocks or dividends of, or own, purchase, repurchase
or acquire (or agree contingently to do so) any stock, obligations, assets
or securities of, or any other interest in, or make any capital
contribution to, any other Person.

SECTION 3.14 CAPITAL EXPENDITURES. The Issuer shall not make
any expenditure (by long-term or operating lease or otherwise) for capital
assets (either realty or personalty) other than Intangible Transition
Property purchased from the Seller pursuant to, and in accordance with, the
Sale Agreement.

SECTION 3.15 RESTRICTED PAYMENTS. The Issuer shall not,
directly or indirectly, (i) pay any dividend or make any distribution (by
reduction of capital or otherwise), whether in cash, property, securities
or a combination thereof, to any owner of a beneficial interest in the
Issuer or otherwise with respect to any ownership or equity interest in, or
ownership security of, the Issuer, (ii) redeem, purchase, retire or
otherwise acquire for value any such ownership or equity interest or
security or (iii) set aside or otherwise segregate any amounts for any such
purpose; provided, however, that if no Event of Default shall have occurred
and be continuing, the Issuer may make, or cause be made, any such
distributions to any owner of a beneficial interest in the Issuer or
otherwise with respect to any ownership or equity interest or security in
or of the Issuer using funds distributed to the Issuer pursuant to Section
8.02(d) to the extent that such distributions would not cause the book
value of the remaining equity in the Issuer to decline below 0.5% of the
original principal amount of all Series of Transition Bonds which remain
outstanding. The Issuer will not, directly or indirectly, make payments to
or distributions from the Collection Account except in accordance with this
Indenture and the Basic Documents.

SECTION 3.16 NOTICE OF EVENTS OF DEFAULT. The Issuer agrees to
deliver to the Trustee and the Rating Agencies written notice in the form
of an Issuer Officer's Certificate of any Default or Event of Default
hereunder or under any of the Basic Documents, its status and what action
the Issuer is taking or proposes to take with respect thereto within five
Business Days after the occurrence thereof.

SECTION 3.17 INSPECTION. The Issuer agrees that, on reasonable
prior notice, it will permit any representative of the Trustee, during the
Issuer's normal business hours, to examine all the books of account,
records, reports, and other papers of the Issuer, to make copies and
extracts therefrom, to cause such books to be audited annually by
Independent certified public accountants, and to discuss the Issuer's
affairs, finances and accounts with the Issuer's officers, employees, and
Independent certified public accountants, all at such reasonable times and
as often as may be reasonably requested. The Trustee shall and shall cause
its representatives to hold in confidence all such information except to
the extent disclosure may be required by law (and all reasonable
applications for confidential treatment are unavailing) and except to the
extent that the Trustee may reasonably determine that such disclosure is
consistent with its obligations hereunder.

SECTION 3.18 ADJUSTED OVERCOLLATERALIZATION BALANCE SCHEDULES.
Not later than the date on which a new Series of Transition Bonds is issued
or any outstanding Series of Transition Bonds is redeemed or defeased, the
Issuer shall deliver to the Trustee a replacement Schedule 1 hereto,
adjusted to reflect such issuance, redemption or defeasance and setting
forth the Scheduled Overcollateralization Level for each Payment Date.

SECTION 3.19 SALE AGREEMENT, CONTRIBUTION AGREEMENT, THE
ADMINISTRATION AGREEMENT AND SERVICING AGREEMENT COVENANTS. (a) The Issuer
agrees to take all such lawful actions to enforce its rights under the Sale
Agreement, the Contribution Agreement, the Administration Agreement and the
Servicing Agreement and to compel or secure the performance and observance
by the Seller, PP&L and the Servicer, of each of their obligations to the
Issuer under or in connection with the Sale Agreement, the Contribution
Agreement, the Administration Agreement and the Servicing Agreement,
respectively, in accordance with the terms thereof. So long as no Event of
Default occurs and is continuing, but subject to Section 3.20(f), 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, the Administration Agreement and the
Servicing Agreement.

(b) If an Event of Default occurs and is continuing, the Trustee may,
and, at the direction (which direction shall be in writing or by telephone
(confirmed in writing promptly thereafter)) of the Holders of a majority of
the Outstanding Amount of the Transition Bonds of all Series shall,
exercise all right, 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, the Administration Agreement
and the Servicing Agreement, respectively, including the right or power to
take any action to compel or secure performance or observance by the
Seller, PP&L or the Servicer of each of their obligations to the Issuer
thereunder and to give any consent, request, notice, direction, approval,
extension or waiver under the Sale Agreement, the Contribution Agreement,
the Administration Agreement and the Servicing Agreement, and any right of
the Issuer to take such action shall be suspended.

(c) 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, provided that such amendment shall not, as evidenced by an
Issuer Opinion of Counsel, adversely affect the interest of any Transition
Bondholder in any material respect without the consent of the Holders of a
majority of the Outstanding Amount of the Transition Bonds of each Series
materially and adversely affected thereby and without having satisfied the
Rating Agency Condition.

(d) If the Issuer, the Seller, PP&L or the Servicer proposes to amend,
modify, waive, supplement, terminate or surrender, or agree to any
amendment, modification, supplement, termination, waiver or surrender of,
the terms of the Sale Agreement, the Contribution Agreement or the
Servicing Agreement, or waive timely performance or observance by the
Servicer, PP&L or the Seller under the Sale Agreement, the Contribution
Agreement or the Servicing Agreement, respectively, in each case in such a
way as would materially and adversely affect the interests of Transition
Bondholders, the Issuer shall first notify the Rating Agencies of the
proposed amendment and, upon satisfaction of the Rating Agency Condition,
shall notify the Trustee and the Trustee shall notify the Transition
Bondholders of the proposed amendment and that the Rating Agency Condition
has been satisfied with respect thereto. The Trustee shall consent to such
proposed amendment, modification, supplement or waiver only with the
consent of the Holders of a majority of the Outstanding Amount of the
Transition Bonds of each Series materially and adversely affected thereby.
If any such amendment, modification, supplement or waiver shall be so
consented to by the Trustee or such Holders, the Issuer agrees to execute
and deliver, in its own name and at its own expense, such agreements,
instruments, consents and other documents as shall be necessary or
appropriate in the circumstances.

(e) If the Issuer or the Servicer proposes to amend, modify, waive,
supplement, terminate or surrender in any material respect, or to agree to
any material amendment, modification, supplement, termination, waiver or
surrender of, the Intangible Transition Charge Adjustment Process, the
Issuer shall notify the Trustee and the Trustee shall notify Transition
Bondholders of such proposal and the Trustee shall consent thereto only
with the consent of the Holders a majority of the Outstanding Amount of the
Transition Bonds of each Series materially and adversely affected thereby
and only if the Rating Agency Condition has been satisfied with respect
thereto.

(f) Promptly following a default by either the Seller, PP&L or the
Servicer under the Sale Agreement, the Contribution Agreement or the
Servicing Agreement, respectively, and at the Issuer's expense, the Issuer
agrees to take all such lawful actions as the Trustee may request to compel
or secure the performance and observance by the Seller, PP&L or the
Servicer, as applicable, of each of their obligations to the Issuer under
or in connection with the Sale Agreement, the Contribution Agreement or the
Servicing Agreement in accordance with the terms thereof, and to 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 or the Servicing Agreement to the extent and in the manner
directed by the Trustee, including the transmission of notices of default
on the part of the Seller, PP&L or the Servicer thereunder and the
institution of legal or administrative actions or proceedings to compel or
secure performance by the Seller, PP&L or the Servicer of each of their
obligations under the Sale Agreement, the Contribution Agreement and the
Servicing Agreement.

(g) If the Issuer shall have knowledge of the occurrence of a Servicer
Default under the Servicing Agreement, the Issuer shall promptly give
written notice thereof to the Trustee and the Rating Agencies, and shall
specify in such notice the action, if any, the Issuer is taking with
respect to such default. If a Servicer Default shall arise from the
failure of the Servicer to perform any of its duties or obligations under
the Servicing Agreement with respect to the Intangible Transition Property
or the Intangible Transition Charges, the Issuer shall take all reasonable
steps available to it to remedy such failure. The Issuer shall not take
any action to terminate the Servicer's rights and powers under the
Servicing Agreement following a Servicer Default without the prior written
consent of the Trustee and of the Holders of a majority of the Outstanding
Amount of the Transition Bonds of all Series.

(h) As promptly as possible after the giving of notice of termination
to the Servicer and the Rating Agencies of the Servicer's rights and powers
pursuant to Section 6.01 of the Servicing Agreement, the Trustee, with the
consent of the Holders of Transition Bonds evidencing not less than a
majority of the Outstanding Amount of the Transition Bonds of all Series,
shall appoint a successor Servicer (the "Successor Servicer"), and such
Successor Servicer shall accept its appointment by a written assumption in
a form acceptable to the Issuer and the Trustee. A person shall qualify as
a Successor Servicer only if such Person satisfies the requirements of
Section 6.04 of the Servicing Agreement. If within 30 days after the
delivery of the notice referred to above, a Successor Servicer shall not
have been appointed and accepted its appointment as such, the Trustee, with
the consent of the Holders of Transition Bonds evidencing not less than a
majority of the Outstanding Amount of the Transition Bonds of all Series,
may petition the PUC or a court of competent jurisdiction to appoint a
Successor Servicer. In connection with any such appointment, the Issuer
may make such arrangements for the compensation of such Successor Servicer
as it and such Successor Servicer shall agree, subject to the limitations
set forth below and in the Servicing Agreement, and in accordance with
Section 6.04 of the Servicing Agreement, the Issuer shall enter into an
agreement with such Successor Servicer for the servicing of the Intangible
Transition Property (such agreement to be in form and substance
satisfactory to the Trustee).

(i) Upon termination of the Servicer's rights and powers pursuant to
the Servicing Agreement, the Trustee shall promptly notify the Issuer, the
Transition Bondholders and the Rating Agencies of such termination. As
soon as a Successor Servicer is appointed, the Issuer shall notify the
Trustee, the Transition Bondholders and the Rating Agencies of such
appointment, specifying in such notice the name and address of such
Successor Servicer.

SECTION 3.20 TAXES. So long as any of the Transition Bonds are
outstanding, the Issuer shall pay all material 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
Collateral.

ARTICLE IV
SATISFACTION AND DISCHARGE; DEFEASANCE
-----------------------------------------------

SECTION 4.01 SATISFACTION AND DISCHARGE OF INDENTURE;
DEFEASANCE. (a) The Transition Bonds of any Series, all moneys payable with
respect thereto and this Indenture as it applies to such Series shall cease
to be of further effect and the Lien hereunder shall be released with
respect to such Series, interest shall cease to accrue on the Transition
Bonds of such Series and the Trustee, on demand of and at the expense of
the Issuer, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture with respect to the Transition Bonds of such
Series, when

(A) either

(1) all Transition Bonds of such Series theretofore
authenticated and delivered (other than (i) Transition
Bonds that have been destroyed, lost or stolen and that
have been replaced or paid as provided in Section 2.06
and (ii) Transition Bonds for whose payment money has
theretofore been deposited in trust or segregated and
held in trust by the Issuer and thereafter repaid to
the Issuer or discharged from such trust, as provided
in Section 3.03) have been delivered to the Trustee for
cancellation; or

(2) the Expected Final Payment Date or Redemption Date
has occurred with respect to all Transition Bonds of
such Series not theretofore delivered to the Trustee
for cancellation, and the Issuer has irrevocably
deposited or caused to be irrevocably deposited with
the Trustee cash, in trust for such purpose, in an
amount sufficient to pay and discharge the entire
indebtedness on such Transition Bonds not theretofore
delivered to the Trustee on the Expected Final Payment
Date or Redemption Date, as applicable, therefor;

(B) the Issuer has paid or caused to be paid all other sums
payable hereunder by the Issuer with respect to such Series; and

(C) the Issuer has delivered to the Trustee an Issuer Officer's
Certificate, an Issuer Opinion of Counsel and (if required by the
TIA or the Trustee) an Independent Certificate from a firm of
certified public accountants, each meeting the applicable
requirements of Section 11.01 and each stating that all
conditions precedent herein provided for relating to the
satisfaction and discharge of this Indenture with respect to
Transition Bonds of such Series have been complied with.

(b) Subject to Sections 4.01(c) and 4.02, the Issuer at any time may
terminate (i) all its obligations under this Indenture with respect to the
Transition Bonds of any Series ("Legal Defeasance Option") or (ii) its
obligations under Sections 3.04, 3.05, 3.06, 3.07, 3.08, 3.09, 3.10, 3.12,
3.13, 3.14, 3.15, 3.16, 3.17, 3.18, 3.19 and 3.20 and the operation of
Section 5.01(iv) ("Covenant Defeasance Option") with respect to any Series
of Transition Bonds. 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 such Series.

If the Issuer exercises the Legal Defeasance Option with respect to
any Series, the maturity of the Transition Bonds of such Series may not be
(a) accelerated because of an Event of Default or (b) except as provided in
Section 4.02, redeemed. If the Issuer exercises the Covenant Defeasance
Option with respect to any Series, the maturity of the Transition Bonds of
such Series may not be accelerated because of an Event of Default specified
in Section 5.01(iv).

Upon satisfaction of the conditions set forth herein to the exercise
of the Legal Defeasance Option or the Covenant Defeasance Option with
respect to any Series of Transition Bonds, the Trustee, on demand of and at
the expense of the Issuer, shall execute proper instruments acknowledging
satisfaction and discharge of the obligations that are terminated pursuant
to such exercise.

(c) Notwithstanding Sections 4.01(a) and 4.01(b) above, (i) rights of
registration of transfer and exchange, (ii) rights of substitution of
mutilated, destroyed, lost or stolen Transition Bonds, (iii) rights of
Transition Bondholders to receive payments of principal, premium, if any,
and interest, but only from the amounts deposited with the Trustee for such
payments, (iv) Sections 4.03 and 4.04, (v) the rights, obligations and
immunities of the Trustee hereunder (including the rights of the Trustee
under Section 6.07 and the obligations of the Trustee under Section 4.03)
and (vi) the rights of Transition Bondholders under this Indenture with
respect to the property deposited with the Trustee payable to all or any of
them, shall survive until the Transition Bonds of the Series as to which
this Indenture or certain obligations hereunder have be satisfied and
discharged pursuant to Section 4.01(a) or 4.01(b) and have been paid in
full. Thereafter, the obligations in Sections 6.07 and 4.04 with respect
to such Series shall survive.

SECTION 4.02 CONDITIONS TO DEFEASANCE. The Issuer may exercise
the Legal Defeasance Option or the Covenant Defeasance Option with respect
to any Series of Transition Bonds only if:

(a) 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
such Series of Transition Bonds to the Expected Payment Date or
Redemption Date therefor, as applicable, such deposit to be made
in the Defeasance Subaccount for such Series of Transition Bonds;

(b) 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 when due
and without reinvestment on the deposited U.S. Government
Obligations plus any deposited cash without investment will
provide cash at such times and in such amounts (but, in the case
of the Legal Defeasance Option only, not more than such amounts)
as will be sufficient to pay in respect of the Transition Bonds
of such Series (i) subject to clause (ii), principal in
accordance with the Expected Amortization Schedule therefor, (ii)
if such Series is to be redeemed, the Redemption Price therefor
on the Redemption Date therefor and (iii) interest when due;

(c) in the case of the Legal Defeasance Option, 95 days pass
after the deposit is made and during the 95-day period no Default
specified in Section 5.01(v) or (vi) occurs which is continuing
at the end of the period;

(d) no Default has occurred and is continuing on the day of such
deposit and after giving effect thereto;

(e) in the case of the Legal Defeasance Option, the Issuer
delivers to the Trustee an Issuer Opinion of Counsel stating that
(i) the Issuer has received from, or there has been published by,
the Internal Revenue Service a ruling, or (ii) since the date of
execution of this Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect
that, and based thereon such opinion shall confirm that, the
Holders of the Transition Bonds of such Series will not recognize
income, gain or loss for federal income tax purposes as a result
of the exercise of such 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 such
Legal Defeasance had not occurred;

(f) in the case of the Covenant Defeasance Option, the Issuer
delivers to the Trustee an Issuer Opinion of Counsel to the
effect that the Holders of the Transition Bonds of such Series
will not recognize income, gain or loss for federal income tax
purposes as a result of the exercise of such 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 such Covenant Defeasance had not occurred; and

(g) the Issuer delivers to the Trustee an Issuer Officer's
Certificate and an Issuer Opinion of Counsel, each stating that
all conditions precedent to the satisfaction and discharge of the
Transition Bonds of such Series to the extent contemplated by
this Article IV have been complied with.

Notwithstanding any other provision of this Section 4.02 to the
contrary, no delivery of cash or U.S. Government Obligations to the Trustee
under this Section shall terminate any obligations of the Issuer under this
Indenture with respect to any Transition Bonds which are to be redeemed
prior to the Expected Final Payment Date therefor until such Transition
Bonds shall have been irrevocably called or designated for redemption on a
date thereafter on which such Transition Bonds may be redeemed in
accordance with the provisions of this Indenture and proper notice of such
redemption shall have been given in accordance with the provisions of this
Indenture or the Issuer shall have given the Trustee, in form satisfactory
to the Trustee, irrevocable instructions to give, in the manner and at the
times prescribed herein, notice of redemption of such Series.

SECTION 4.03 APPLICATION OF TRUST MONEY. All moneys or U.S.
Government Obligations deposited with the Trustee pursuant to Section 4.01
or 4.02 hereof with respect to any Series of Transition Bonds shall be held
in trust in the Defeasance Subaccount for such Series and applied by it, in
accordance with the provisions of the Transition Bonds and this Indenture,
to the payment, either directly or through any Paying Agent, as the Trustee
may determine, to the Holders of the particular Transition Bonds for the
payment or redemption of which such moneys have been deposited with the
Trustee, of all sums due and to become due thereon for principal, premium,
if any, and interest. Such moneys shall be segregated and held apart
solely for paying such Transition Bonds and such Transition Bonds shall not
be entitled to any amounts on deposit in the Collection Account other than
amounts on deposit in the Defeasance Subaccount for such Transition Bonds.

SECTION 4.04 REPAYMENT OF MONEYS HELD BY PAYING AGENT. In
connection with the satisfaction and discharge of this Indenture or the
Covenant Defeasance Option or Legal Defeasance Option with respect to the
Transition Bonds of any Series, all moneys then held by any Paying Agent
other than the Trustee under the provisions of this Indenture with respect
to such Transition Bonds shall, upon demand of the Issuer, be paid to the
Trustee to be held and applied according to Section 3.03 and thereupon such
Paying Agent shall be released from all further liability with respect to
such moneys.

ARTICLE V
REMEDIES
-------------

SECTION 5.01 EVENTS OF DEFAULT. "Event of Default" wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body):

(i) default in the payment of any interest on any Transition
Bond when the same becomes due and payable and the continuation of
such default for five Business Days;

(ii) default in the payment of the then unpaid principal of any
Transition Bond of any Series on the Series Final Maturity Date for

such Series or, if applicable, any Class on the Class Final Maturity
Date for such Class;

(iii) default in the payment of the Redemption Price for any
Transition Bond on the Redemption Date therefor;

(iv) default in the observance or performance of any covenant or
agreement of the Issuer made in this Indenture (other than a covenant
or agreement, a default in the observance or performance of which is
specifically dealt with in clause (i), (ii) or (iii) above), or any
representation or warranty of the Issuer made in this indenture or in
any certificate or other writing delivered pursuant hereto or in
connection herewith proving to have been incorrect in any material
respect as of the time when made, and any such default shall continue
or not be cured, for a period of 30 days after (A) there shall have
been given, by registered or certified mail, to the Issuer by the
Trustee or to the Issuer and the Trustee by the Holders of at least
25% of the Outstanding Amount of the Transition Bonds of any Series or
Class, a written notice specifying such default or incorrect
representation or warranty and requiring it to be remedied and stating
that such notice is a "Notice of Default" hereunder or (B) the date
the Issuer has knowledge of the default;

(v) the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Issuer or any
substantial part of the Collateral in an involuntary case under any
applicable federal or state bankruptcy, insolvency or other similar
law now or hereafter in effect, or appointing a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official of the
Issuer or for any substantial part of the Collateral, or ordering the
winding-up or liquidation of the Issuer's affairs, and such decree or
order shall remain unstayed and in effect for a period of 90
consecutive days;

(vi) the commencement by the Issuer of a voluntary case under
any applicable federal or state bankruptcy, insolvency or other
similar law now or hereafter in effect, or the consent by the Issuer
to the entry of an order for relief in an involuntary case under any
such law, or the consent by the Issuer to the appointment or taking
possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Issuer or for any substantial
part of the Collateral, or the making by the Issuer of any general
assignment for the benefit of creditors, or the failure by the Issuer
generally to pay its debts as such debts become due, or the taking of
action by the Issuer in furtherance of any of the foregoing; or

(vii) any act or failure to act by the Commonwealth of
Pennsylvania or any of its agencies (including the PUC), officers or
employees that violates or is not in accordance with the pledge and
agreement of the Commonwealth in Section 2812(c)(2) of the Competition
Act.

SECTION 5.02 ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
If an Event of Default (other than an Event of Default under clause (vii)
of Section 5.01) occurs and is continuing, then and in every such case
either the Trustee or the Holders of Transition Bonds representing not less
than a majority of the Outstanding Amount of the Transition Bonds of all
Series may, but need not, declare all the Transition Bonds to be
immediately due and payable, by a notice in writing to the Issuer (and to
the Trustee if given by Transition Bondholders), and upon any such
declaration the unpaid principal amount of the Transition Bonds of all
Series, together with accrued and unpaid interest thereon through the date
of acceleration, shall become immediately due and payable.

At any time after such declaration of acceleration of maturity has
been made and before a judgment or decree for payment of the money due has
been obtained by the Trustee as hereinafter in this Article V provided, the
Holders of Transition Bonds representing a majority of the Outstanding
Amount of the Transition Bonds of all Series, by written notice to the
Issuer and the Trustee, may rescind and annul such declaration and its
consequences if:

(i) the Issuer has paid or deposited with the Trustee, for
deposit in the General Subaccount of the Collection Account, a sum
sufficient to pay

(A) all payments of principal of and premium, if any, and
interest on all Transition Bonds of all Series and all other
amounts that would then be due hereunder or upon such Transition
Bonds if the Event of Default giving rise to such acceleration
had not occurred; and

(B) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of
the Trustee and its agents and counsel; and

(ii) all Events of Default, other than the nonpayment of the
principal of the Transition Bonds of all Series that has become due
solely by such acceleration, have been cured or waived as provided in
Section 5.12.

No such rescission shall affect any subsequent Default or impair any
right consequent thereto.

SECTION 5.03 COLLECTION OF INDEBTEDNESS AND SUITS FOR
ENFORCEMENT BY TRUSTEE. (a) The Issuer covenants that if (i) Default is
made in the payment of any interest on any Transition Bond when such
interest becomes due and payable and such Default continues for five
Business Days, (ii) Default is made in the payment of the then unpaid
principal of any Transition Bond on the Series Final Maturity Date or Class
Final Maturity Date, as applicable, therefor (iii) Default is made in the
payment of the Redemption Price or for any Transition Bond on the
Redemption Date therefor, the Issuer shall, upon demand of the Trustee, pay
to it, for the benefit of the Holders of the Transition Bonds of such
Series, such amount as shall be sufficient to cover the costs and expenses
of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee and its agents and counsel and
the whole amount then due and payable on such Transition Bonds for
principal, premium, if any, and interest, with interest upon the overdue
principal and premium, if any, and, to the extent payment at such rate of
interest shall be legally enforceable, upon overdue instalments of
interest, at the respective Bond Rate of such Series or the applicable
Class of such Series.

(b) In case the Issuer shall fail forthwith to pay the amounts
specified in clause (a) above upon such demand, the Trustee, in its own
name and as trustee of an express trust, may institute a Proceeding for the
collection of the sums so due and unpaid, and may prosecute such Proceeding
to judgment or final decree, and may enforce the same against the Issuer or
other obligor upon such Transition Bonds and collect in the manner provided
by law out of the property of the Issuer or other obligor upon such
Transition Bonds, wherever situated, the moneys adjudged or decreed to be
payable.

(c) If an Event of Default occurs and is continuing, the Trustee
may, as more particularly provided in Section 5.04, in its discretion,
proceed to protect and enforce its rights and the rights of the Transition
Bondholders, by such appropriate Proceedings as the Trustee shall deem most
effective to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy
or legal or equitable right vested in the Trustee by this Indenture or by
law including foreclosing or otherwise enforcing the Lien on the Intangible
Transition Property securing the Transition Bonds or applying to the PUC
for sequestration of revenues arising with respect to such Intangible
Transition Property.

(d) In case there shall be pending, relative to the Issuer or
any other obligor upon the Transition Bonds or any Person having or
claiming an ownership interest in the Collateral, Proceedings under Title
11 of the United States Code or any other applicable federal or state
bankruptcy, insolvency or other similar law, or in case a receiver,
assignee or trustee in bankruptcy or reorganization, liquidator,
sequestrator or similar official shall have been appointed for or taken
possession of the Issuer or its property or such other obligor or Person,
or in case of any other comparable judicial Proceedings relative to the
Issuer or other obligor upon the Transition Bonds, or to the creditors or
property of the Issuer or such other obligor, the Trustee, irrespective of
whether the principal of any Transition Bonds shall then be due and payable
as therein expressed or by declaration or otherwise and irrespective of
whether the Trustee shall have made any demand pursuant to the provisions
of this Section, shall be entitled and empowered, by intervention in such
Proceedings or otherwise:

(i) to file and prove a claim or claims for the whole amount of
principal, premium, if any, and interest owing and unpaid in respect
of the Transition Bonds and to file such other papers or documents as
may be necessary or advisable in order to have the claims of the
Trustee (including any claim for reasonable compensation to the
Trustee and each predecessor Trustee, and their respective agents,
attorneys and counsel, and for reimbursement of all expenses and
liabilities incurred, and all advances made, by the Trustee and each
predecessor Trustee, except as a result of negligence or bad faith)
and of the Transition Bondholders allowed in such Proceedings;

(ii) unless prohibited by applicable law and regulations, to
vote on behalf of the Holders of Transition Bonds in any election of a
trustee, a standby trustee or Person performing similar functions in
any such Proceedings;

(iii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute all
amounts received with respect to the claims of the Transition
Bondholders and of the Trustee on their behalf; and

(iv) to file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims of the
Trustee or the Holders of Transition Bonds allowed in any judicial
proceedings relative to the Issuer, its creditors and its property;

and any trustee, receiver, liquidator, custodian or other similar official
in any such Proceeding is hereby authorized by each of such Transition
Bondholders to make payments to the Trustee, and, in the event that the
Trustee shall consent to the making of payments directly to such Transition
Bondholders, to pay to the Trustee such amounts as shall be sufficient to
cover reasonable compensation to the Trustee, each predecessor Trustee and
their respective agents, attorneys and counsel, and all other expenses and
liabilities incurred, and all advances made, by the Trustee and each
predecessor Trustee except as a result of negligence or bad faith.

(e) Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or vote for or accept or adopt on behalf
of any Transition Bondholder any plan of reorganization, arrangement,
adjustment or composition affecting the Transition Bonds or the rights of
any Holder thereof or to authorize the Trustee to vote in respect of the
claim of any Transition Bondholder in any such proceeding except, as
aforesaid, to vote for the election of a trustee in bankruptcy or similar
Person.

(f) All rights of action and of asserting claims under this
Indenture, or under any of the Transition Bonds, may be enforced by the
Trustee without the possession of any of the Transition Bonds or the
production thereof in any trial or other Proceedings relative thereto, and
any such action or proceedings instituted by the Trustee shall be brought
in its own name as trustee of an express trust, and any recovery of
judgment, subject to the payment of the expenses, disbursements and
compensation of the Trustee, each predecessor Trustee and their respective
agents and attorneys, shall be for the ratable benefit of the Holders of
the Transition Bonds.

(g) In any Proceedings brought by the Trustee (and also any
Proceedings involving the interpretation of any provision of this Indenture
to which the Trustee shall be a party), the Trustee shall be held to
represent all the Holders of the Transition Bonds, and it shall not be
necessary to make any Transition Bondholder a party to any such
Proceedings.

SECTION 5.04 REMEDIES; PRIORITIES. (a) If an Event of Default
occurs and is continuing, the Trustee may do one or more of the following
(subject to Section 5.05):

(i) institute Proceedings in its own name and as trustee of an
express trust for the collection of all amounts then payable on the
Transition Bonds or under this Indenture with respect thereto, whether
by declaration or otherwise, enforce any judgment obtained, and
collect from the Issuer and any other obligor upon such Transition
Bonds moneys adjudged due;

(ii) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the Collateral;

(iii) exercise any remedies of a secured party under the UCC or
the Competition Act or any other applicable law and take any other
appropriate action to protect and enforce the rights and remedies of
the Trustee and the Holders of the Transition Bonds of such Series;

(iv) sell the Collateral or any portion thereof or rights or
interest therein, at one or more public or private sales called and
conducted in any manner permitted by law; and

(v) 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, the
Administration Agreement or the Servicing Agreement as provided in
Section 3.20(b);

provided, however, that the Trustee may not sell or otherwise liquidate any
portion of the Collateral following an Event of Default, other than an
Event of Default described in Section 5.01(i), (ii) or (iii), with respect
to any Series unless (A) the Holders of 100% of the Outstanding Amount of
the Transition Bonds of all Series consent thereto, (B) the proceeds of
such sale or liquidation distributable to the Transition Bondholders of all
Series are sufficient to discharge in full all amounts then due and unpaid
upon such Transition Bonds for principal, premium, if any, and interest or
(C) the Trustee determines that the Collateral will not continue to provide
sufficient funds for all payments on the Transition Bonds of all Series as
they would have become due if the Transition Bonds had not been declared
due and payable, and the Trustee obtains the consent of Holders of 66-2/3%
of the Outstanding Amount of the Transition Bonds of all Series. In
determining such sufficiency or insufficiency with respect to clause (B)
and (C), the Trustee may, but need not, obtain and rely upon an opinion of
an Independent investment banking or accounting firm of national reputation
as to the feasibility of such proposed action and as to the sufficiency of
the Collateral for such purpose.

(b) If an Event of Default under clause (vii) of Section 5.01
occurs and is continuing, the Trustee, for the benefit of the Holders,
shall be entitled and empowered to the extent permitted by applicable law,
to institute or participate in Proceedings reasonably necessary to compel
performance of or to enforce the pledge and agreement of the Commonwealth
in Section 2812(c)(2) of the Competition Act and to collect any monetary
damages incurred by the Holders or the Trustee as a result of any such
Event of Default, and may prosecute any such Proceeding to final judgment
or decree.

SECTION 5.05 OPTIONAL PRESERVATION OF THE COLLATERAL. If the
Transition Bonds have been declared to be due and payable under Section
5.02 following an Event of Default and such declaration and its
consequences have not been rescinded and annulled, the Trustee may, but
need not, elect, as provided in Section 5.11(iii), to maintain possession
of the Collateral and not sell or liquidate the same. It is the desire of
the parties hereto and the Transition Bondholders that there be at all
times sufficient funds for the payment of principal of and premium, if any,
and interest on the Transition Bonds, and the Trustee shall take such
desire into account when determining whether or not to maintain possession
of the Collateral or sell or liquidate the same. In determining whether to
maintain possession of the Collateral or sell or liquidate the same, the
Trustee may, but need not, obtain and rely upon an opinion of an
Independent investment banking or accounting firm of national reputation as
to the feasibility of such proposed action and as to the sufficiency of the
Collateral for such purpose.

SECTION 5.06 LIMITATION OF PROCEEDINGS. No Holder of any
Transition Bond of any Series shall have any right to institute any
Proceeding, judicial or otherwise, or to avail itself of the remedies
provided in Section 2812(d)(3)(v) of the Competition Act, with respect to
this Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless:

(i) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;

(ii) the Holders of not less than 25% of the Outstanding Amount
of the Transition Bonds of all Series have made written request to the
Trustee to institute such Proceeding in respect of such Event of
Default in its own name as Trustee hereunder;

(iii) such Holder or Holders have offered to the Trustee
security or indemnity reasonably satisfactory to the Trustee against
the costs, expenses and liabilities to be incurred in complying with
such request;

(iv) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute such
Proceedings; and

(v) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a
majority of the Outstanding Amount of the Transition Bonds of all
Series;

it being understood and intended that no one or more Holders of Transition
Bonds shall have any right in any manner whatever by virtue of, or by
availing of, any provision of this Indenture to affect, disturb or
prejudice the rights of any other Holders of Transition Bonds or to obtain
or to seek to obtain priority or preference over any other Holders or to
enforce any right under this Indenture, except in the manner herein
provided.

In the event the Trustee shall receive conflicting or inconsistent
requests and indemnity from two or more groups of Holders of Transition
Bonds, each representing less than a majority of the Outstanding Amount of
the Transition Bonds of all Series, the Trustee in its sole discretion may
determine what action, if any, shall be taken, notwithstanding any other
provisions of this Indenture.

SECTION 5.07 UNCONDITIONAL RIGHTS OF TRANSITION BONDHOLDERS TO
RECEIVE PRINCIPAL, PREMIUM, IF ANY, AND INTEREST. Notwithstanding any
other provisions in this Indenture, the Holder of any Transition Bond shall
have the right, which is absolute and unconditional, and shall not be
impaired without the consent of each such Holder, (a) to receive payment of
(i) the interest, if any, on such Transition Bond on or after the due dates
thereof expressed in such Transition Bond or in this Indenture, (ii) the
unpaid principal, if any, of such Transition Bonds on or after the Series
Final Maturity Date or Class Final Maturity Date therefor or (iii) in the
case of redemption, receive payment of the unpaid principal, if any, of and
premium, if any, and interest, if any, on such Transition Bond on or after
the Redemption Date therefor and (b) to institute suit for the enforcement
of any such payment, and such right shall not be impaired without the
consent of such Holder.

SECTION 5.08 RESTORATION OF RIGHTS AND REMEDIES. If the Trustee
or any Transition Bondholder has instituted any Proceeding to enforce any
right or remedy under this Indenture and such Proceeding has been
discontinued or abandoned for any reason or has been determined adversely
to the Trustee or to such Transition Bondholder, then and in every such
case the Issuer, the Trustee and the Transition Bondholders shall, subject
to any determination in such Proceeding, be restored severally and
respectively to their former positions hereunder, and thereafter all rights
and remedies of the Trustee and the Transition Bondholders shall continue
as though no such Proceeding had been instituted.

SECTION 5.09 RIGHTS AND REMEDIES CUMULATIVE. No right or remedy
herein conferred upon or reserved to the Trustee or to the Transition
Bondholders is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative
and in addition to every other right and remedy given hereunder or now or
hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not
prevent the concurrent assertion or employment of any other appropriate
right or remedy.

SECTION 5.10 DELAY OR OMISSION NOT A WAIVER. No delay or
omission of the Trustee or any Transition Bondholder to exercise any right
or remedy accruing upon any Default or Event of Default shall impair any
such right or remedy or constitute a waiver of any such Default or Event of
Default or an acquiescence therein. Every right and remedy given by this
Article V or by law to the Trustee or to the Transition Bondholders may be
exercised from time to time, and as often as may be deemed expedient, by
the Trustee or by the Transition Bondholders, as the case may be.

SECTION 5.11 CONTROL BY TRANSITION BONDHOLDERS. The Holders of
a majority of the Outstanding Amount of the Transition Bonds of all Series
(or, if less than all Series or Classes are affected, the affected Series
or Class or Classes) shall have the right to direct the time, method and
place of conducting any Proceeding for any remedy available to the Trustee
with respect to the Transition Bonds of such Series or Class or Classes or
exercising any trust or power conferred on the Trustee with respect to such
Series or Class or Classes; provided that

(i) such direction shall not be in conflict with any rule of law
or with this Indenture;

(ii) subject to the express terms of Section 5.04, any direction
to the Trustee to sell or liquidate the Collateral shall be by the
Holders of Transition Bonds representing not less than 100% of the
Outstanding Amount of the Transition Bonds of all Series;

(iii) if the conditions set forth in Section 5.05 have been
satisfied and the Trustee elects to retain the Collateral pursuant to
such Section and no sell or liquidate the same, then any direction to
the Trustee by Holders of Transition Bonds representing less than 100%
of the Outstanding Amount of the Transition Bonds of all Series to
sell or liquidate the Collateral shall be of no force and effect; and

(iv) the Trustee may take any other action deemed proper by the
Trustee that is not inconsistent with such direction;

provided, however, that, subject to Section 6.01, the Trustee need not take
any action that it determines might involve it in liability for which 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. The Trustee also need not take any action that it
determines might materially and adversely affect the rights of any
Transition Bondholders not consenting to such action.

SECTION 5.12 WAIVER OF PAST DEFAULTS. Prior to the declaration
of the acceleration of the maturity of the Transition Bonds of all Series
as provided in Section 5.02, the Holders of not less than a majority of the
Outstanding Amount of the Transition Bonds of all Series may waive any past
Default or Event of Default and its consequences except a Default (i) in
payment of principal of or premium, if any, or interest on any of the
Transition Bonds or (ii) in respect of a covenant or provision hereof which
cannot be modified or amended without the consent of the Holder of each
Transition Bond of all Series or Classes affected. In the case of any such
waiver, the Issuer, the Trustee and the Holders of the Transition Bonds
shall be restored to their former positions and rights hereunder,
respectively; but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereto.

Upon any such waiver, such Default shall cease to exist and be deemed
to have been cured and not to have occurred, and any Event of Default
arising therefrom shall be deemed to have been cured and not to have
occurred, for every purpose of this Indenture; but no such waiver shall
extend to any subsequent or other Default or Event of Default or impair any
right consequent thereto.

SECTION 5.13 UNDERTAKING FOR COSTS. All parties to this
Indenture agree, and each Holder of any Transition Bond by such Holder's
acceptance thereof shall be deemed to have agreed, that any court may in
its discretion require, in any suit for the enforcement of any right or
remedy under this Indenture, or in any suit against the Trustee for any
action taken, suffered or omitted by it as Trustee, the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and
that such court may in its discretion assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in such suit, having
due regard to the merits and good faith of the claims or defenses made by
such party litigant; but the provisions of this Section shall not apply to
(a) any suit instituted by the Trustee, (b) any suit instituted by any
Transition Bondholder, or group of Transition Bondholders, in each case
holding in the aggregate more than 10% of the Outstanding Amount of the
Transition Bonds of a Series or (c) any suit instituted by any Transition
Bondholder for the enforcement of the payment of (i) interest on any
Transition Bond on or after the due dates expressed in such Transition Bond
and in this Indenture, (ii) the unpaid principal, if any, of any Transition
Bond on or after the Series Final Maturity Date or Class Final Maturity
Date, if applicable, therefor or (iii) in the case of redemption, the
unpaid principal of and premium, if any, and interest on any Transition
Bond on or after the Redemption Date therefor.

SECTION 5.14 WAIVER OF STAY OR EXTENSION LAWS. The Issuer
covenants (to the extent that it may lawfully do so) that it will not at
any time insist upon, or plead or in any manner whatsoever, claim or take
the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, that may affect the covenants or the
performance of this Indenture; and the Issuer (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any
such law, and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and
permit the execution of every such power as though no such law had been
enacted.

SECTION 5.15 ACTION ON TRANSITION BONDS. The Trustee's right to
seek and recover judgment on the Transition Bonds or under this Indenture
shall not be affected by the seeking, obtaining or application of any other
relief under or with respect to this Indenture. Neither the Lien of this
Indenture nor any rights or remedies of the Trustee or the Transition
Bondholders shall be impaired by the recovery of any judgment by the
Trustee against the Issuer or by the levy of any execution under such
judgment upon any portion of the Collateral or upon any of the assets of
the Issuer.

ARTICLE VI
THE TRUSTEE
----------------------

SECTION 6.01 DUTIES AND LIABILITIES OF TRUSTEE. (a) If an
Event of Default has occurred and is continuing, the Trustee shall exercise
the rights and powers vested in it by this Indenture and use the same
degree of care and skill in their exercise as a prudent Person would
exercise or use under the circumstances in the conduct of such Person's own
affairs.

(b) Except during the continuance of an Event of Default:

(i) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture and
no implied covenants or obligations shall be read into this
Indenture against the Trustee; and

(ii) in the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates
or opinions furnished to the Trustee and conforming to the
requirements of this Indenture.

(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful
misconduct, except that:

(i) this paragraph does not limit the effect of paragraph (b) of
this Section;

(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer unless it is proved that
the Trustee was negligent in ascertaining the pertinent facts; and

(iii) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 5.11.

(d) Every provision of this Indenture that in any way relates to
the Trustee is subject to paragraphs (a), (b) and (c) of this Section 6.01.

(e) The Trustee shall not be liable for interest on any money
received by it except as provided in this Indenture or as the Trustee may
agree in writing with the Issuer.

(f) Money held in trust by the Trustee need not be segregated
from other funds held by the Trustee except to the extent required by law
or the terms of this Indenture or the Sale Agreement or the Servicing
Agreement.

(g) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that
repayments of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.

(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.

(i) Under no circumstances shall the Trustee be liable for any
indebtedness of the Issuer, the Servicer, the Seller or PP&L evidenced by
or arising under the Transition Bonds or any Basic Document.

SECTION 6.02 RIGHTS OF TRUSTEE. (a) The Trustee may rely on any
document believed by it to be genuine and to have been signed or presented
by the proper Person. The Trustee need not investigate any fact or matter
stated in the document.

(b) Before the Trustee acts or refrains from acting, it may require an
Issuer Officer's Certificate or an Issuer Opinion of Counsel. The Trustee
shall not be liable for any action it takes or omits to take in good faith
in reliance on an Issuer Officer's Certificate or an Issuer Opinion of
Counsel.

(c) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian or nominee, but shall remain liable as if it had
performed such trusts or powers itself.

(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its
rights or powers; provided, however, that the Trustee's conduct does not
constitute wilful misconduct, negligence or bad faith.

(e) The Trustee may consult with counsel, and the advice or opinion of
counsel with respect to legal matters relating to this Indenture and the
Transition Bonds shall be full and complete authorization and protection
from liability in respect to any action taken, omitted or suffered by it
hereunder in good faith and in accordance with the advice or opinion of
such counsel.

SECTION 6.03 INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its
individual or any other capacity may become the owner or pledgee of
Transition Bonds and may otherwise deal with the Issuer or its affiliates
with the same rights it would have if it were not Trustee. Any Paying
Agent, Transition Bond Registrar, co-registrar or co-paying agent may do
the same with like rights. However, the Trustee must comply with Sections
6.11 and 6.12.

SECTION 6.04 TRUSTEE'S DISCLAIMER. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy
of this Indenture or the Transition Bonds. The Trustee shall not be
accountable for the Issuer's use of the proceeds from the Transition Bonds,
and the Trustee shall not be responsible for any statement of the Issuer in
the Indenture or in any document issued in connection with the sale of the
Transition Bonds or in the Transition Bonds other than the Trustee's
certificate of authentication. The Trustee shall not be responsible for
the form, character, genuineness, sufficiency, value or validity of any of
the Collateral, or for or in respect of the validity or sufficiency of the
Transition Bonds (other than the certificate of authentication for the
Transition Bonds) or the Basic Documents and the Trustee shall in no event
assume or incur any liability, duty or obligation to any Holder of a
Transition Bond, other than as expressly provided for in this Indenture.
The Trustee shall not be liable for the default or misconduct of the
Issuer, the Seller, the Servicer or a Manager or any Manager of the Issuer
under any Basic Document or otherwise and the Trustee shall have no
obligation or liability to perform the obligations of the Issuer.

SECTION 6.05 NOTICE OF DEFAULTS. If a Default occurs and is
continuing with respect to any Class or Series and if it is known to a
Responsible Officer of the Trustee, the Trustee shall mail to each Holder
of Transition Bonds of all Series notice of the Default within 90 days
after it occurs. Except in the case of a Default in payment of principal
of or premium, if any, or interest on any Transition Bond, the Trustee may
withhold the notice if and so long as a committee of its Responsible
Officers in good faith determines that withholding the notice is in the
interests of Transition Bondholders.

SECTION 6.06 REPORTS BY TRUSTEE TO HOLDERS. (a)The Trustee shall
deliver to each Holder of Transition Bonds such information as may be
required to enable such Holder to prepare its federal and state income tax
returns.

(b) With respect to each Series of Transition Bonds, on or prior
to each Payment Date therefor, the Trustee will deliver a statement
prepared by the Trustee to each Holder of Transition Bonds which will
include (to the extent applicable) the following information (and any other
information so specified in the Series Supplement for such Series) as to
the Transition Bonds of such Series with respect to such Payment Date or
the period since the previous Payment Date, as applicable:

(i) the amount paid to Holders of such Transition Bonds in
respect of principal;

(ii) the amount paid to Holders of such Transition Bonds in
respect of interest;

(iii) the Transition Bond Balance, after giving effect to the
payments to be made on such Payment Date, and the Projected Transition
Bond Balance, in each case for such Series and as of such Payment
Date;

(iv) the amount on deposit in the Overcollateralization
Subaccount and the Scheduled Overcollateralization Level as of such
Payment Date;

(v) the amount on deposit in the Capital Subaccount as of such
Payment Date; and

(vi) the amount, if any, on deposit in the Reserve Subaccount as
of such Payment Date.

(c) The Trustee's responsibility for disbursing the information
described in subsection (b) above to Holders of Transition Bonds is limited
to the availability, timeliness and accuracy of the information provided by
the Servicer pursuant to Section 3.04 and Annex 1 of the Servicing
Agreement.

SECTION 6.07 COMPENSATION AND INDEMNITY. The Issuer shall pay
to the Trustee from time to time reasonable compensation for its services.
The Trustee's compensation shall not be limited by any law on compensation
of a trustee of an express trust. The Issuer shall reimburse the Trustee
for all reasonable out-of-pocket expenses, disbursements and advances
incurred or made by it, including costs of collection, in addition to the
compensation for its services. Such expenses shall include the reasonable
compensation and expenses, disbursements and advances of the Trustee's
agents, counsel, accountants and experts. The Issuer shall indemnify and
hold harmless the Trustee from and against any and all costs, damages,
expenses, losses, liabilities or other amounts whatsoever (including
counsel fees) incurred by the Trustee in connection with the administration
of this trust, the enforcement of this trust and all of the Trustee's
rights, powers and duties under this Indenture and the performance by the
Trustee of the duties and obligations of the Trustee under or pursuant to
this Indenture. The Trustee shall notify the Issuer promptly of any claim
for which it may seek indemnity. Failure by the Trustee to so notify the
Issuer shall not relieve the Issuer of its obligations hereunder. The
Issuer shall defend the claim and the Trustee may have separate counsel and
the Issuer shall pay the fees and expenses of such counsel. The Issuer
need not reimburse any expense or indemnify against any loss, liability or
expense incurred by the Trustee (i) through the Trustee's own wilful
misconduct, negligence or bad faith or (ii) to the extent the Trustee was
reimbursed for or indemnified against any such loss, liability or expense
by the Seller pursuant to the Sale Agreement, by PP&L pursuant to the
Contribution Agreement or by the Servicer pursuant to the Servicing
Agreement.

When the Trustee incurs expenses after the occurrence of a Default
specified in Section 5.01(v) or (vi) with respect to the Issuer, the
expenses are intended to constitute expenses of administration under Title
11 of the United States Code or any other applicable federal or state
bankruptcy, insolvency or similar law.

SECTION 6.08 REPLACEMENT OF TRUSTEE. The Trustee may resign at
any time upon 30 days notice by so notifying the Issuer. The Issuer
shall remove the Trustee if:

(i) the Trustee fails to comply with Section 6.11;

(ii) the Trustee is adjudged a bankrupt or insolvent;

(iii) a receiver or other public officer takes charge of the
Trustee or its property; or

(iv) the Trustee otherwise becomes incapable of acting.

If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred
to herein as the "Retiring Trustee"), the Issuer shall promptly appoint a
successor Trustee.

In addition, the Holders of a majority in Outstanding Amount of the
Transition Bonds of all Series may remove the Trustee by so notifying the
Issuer and the Trustee and may appoint a successor Trustee.

A successor Trustee shall deliver a written acceptance of its
appointment to the Retiring Trustee and to the Issuer. Thereupon the
resignation or removal of the Retiring Trustee shall become effective, and
the successor Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. No resignation or removal of the Trustee
will become effective until the acceptance of the appointment by a
successor Trustee. The successor Trustee shall mail a notice of its
succession to Transition Bondholders. The Retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee.

If a successor Trustee does not take office within 60 days after the
Retiring Trustee resigns or is removed, the Retiring Trustee, the Issuer or
the Holders of a majority in Outstanding Amount of the Transition Bonds of
all Series may petition any court of competent jurisdiction for the
appointment of a successor Trustee.

If the Trustee fails to comply with Section 6.11, any Transition
Bondholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.

Notwithstanding the replacement of the Trustee pursuant to this
Section 6.08, the Issuer's obligations under Section 6.07 shall continue
for the benefit of the Retiring Trustee.

SECTION 6.09 SUCCESSOR TRUSTEE BY MERGER. If the Trustee
consolidates with, merges or converts into, or transfers all or
substantially all its corporate trust business or assets to, another
corporation or banking association, the resulting, surviving or transferee
corporation or banking association shall, without any further act be the
successor Trustee.

In case at the time such successor or successors by merger,
conversion, consolidation or transfer shall succeed to the trusts created
by this Indenture any of the Transition Bonds shall have been authenticated
but not delivered, any such successor to the Trustee may adopt the
certificate of authentication of any Retiring Trustee, and deliver such
Transition Bonds so authenticated; and in case at that time any of the
Transition Bonds shall not have been authenticated, any successor to the
Trustee may authenticate such Transition Bonds either in the name of any
Retiring Trustee hereunder or in the name of the successor to the Trustee;
and in all such cases such certificates shall have the full force and
effect granted by the Transition Bonds or by this Indenture and this force
and effect shall be equal to any certificate issued by the Trustee.

SECTION 6.10 APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE. (a)
Notwithstanding any other provisions of this Indenture, at any time, for
the purpose of meeting any legal requirement of any jurisdiction in which
any part of the Collateral may at the time be located, the Trustee shall
have the power and may execute and deliver all instruments to appoint one
or more Persons to act as a co-trustee or co-trustees, or separate trustee
or separate trustees, of all or any part of the Collateral, and to vest in
such Person or Persons, in such capacity and for the benefit of the
Transition Bondholders, such title to the Collateral, or any part hereof,
and, subject to the other provisions of this Section, such powers, duties,
obligations, rights and trusts as the Trustee may consider necessary or
desirable. No co-trustee or separate trustee hereunder shall be required
to meet the terms of eligibility as a successor trustee under Section 6.11
and no notice to Transition Bondholders of the appointment of any
co-trustee or separate trustee shall be required under Section 6.08 hereof.

(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions
and conditions:

(i) all rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
the Trustee shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Collateral or any portion
thereof in any such jurisdiction) shall be exercised and performed
singly by such separate trustee or co-trustee, but solely at the
direction of the Trustee;

(ii) no trustee hereunder shall be personally liable by reason
of any act or omission of any other trustee hereunder; and

(iii) the Trustee may at any time accept the resignation of or
remove any separate trustee or co-trustee.

(c) Any notice, request or other writing given to the Trustee
shall be deemed to have been given to each of the then separate trustees
and co-trustees, as effectively as if given to each of them. Every
instrument appointing any separate trustee or co-trustee shall refer to
this Indenture and the conditions of this Article VI. Each separate
trustee and co-trustee, upon its acceptance of the trusts conferred, shall
be vested with the estates or property specified in its instrument of
appointment, either jointly with the Trustee or separately, as may be
provided therein, subject to all the provisions of this Indenture,
specifically including every provision of this Indenture relating to the
conduct of, affecting the liability of, or affording protection to, the
Trustee. Every such instrument shall be filed with the Trustee.

(d) Any separate trustee or co-trustee may at any time
constitute the Trustee, its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful act under
or in respect of this Agreement on its behalf and in its name. If any
separate trustee or co-trustee shall die, become incapable of acting,
resign or be removed, all of its estates, properties, rights, remedies and
trusts shall vest in and be exercised by the Trustee, to the extent
permitted by law, without the appointment of a new or successor trustee.

SECTION 6.11 ELIGIBILITY; DISQUALIFICATION. The Trustee shall
at all times satisfy the requirements of TIA Section 310(a). The Trustee
shall have a combined capital and surplus of at least $50,000,000 as set
forth in its most recent published annual report of condition and it shall
have a long term debt rating of "Baa3" or better by Moody's. The Trustee
shall comply with TIA Section 310(b), including the optional provision
permitted by the second sentence of TIA Section 310(b)(9); provided,
however, that there shall be excluded from the operation of TIA Section
310(b)(1) any indenture or indentures under which other securities of the
Issuer are outstanding if the requirements for such exclusion set forth in
TIA Section 310(b)(1) are met.

SECTION 6.12 PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUER.
The Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or
been removed shall be subject to TIA Section 311(a) to the extent
indicated.

ARTICLE VII
TRANSITION BONDHOLDERS' LISTS AND REPORTS
---------------------------------------------------

SECTION 7.01 ISSUER TO FURNISH TRUSTEE NAMES AND ADDRESSES OF
TRANSITION BONDHOLDERS. The Issuer shall furnish or cause to be furnished
to the Trustee (a) not more than five days after the earlier of (i) each
Record Date with respect to each Series and (ii) three months after the
last Record Date with respect to each Series, a list, in such form as the
Trustee may reasonably require, of the names and addresses of the Holders
of Transition Bonds of such Series as of such Record Date, (b) at such
other times as the Trustee may request in writing, within 30 days after
receipt by the Issuer of any such request, a list of similar form and
content as of a date not more than 10 days prior to the time such list is
furnished; provided, however, that so long as the Trustee is the Transition
Bond Registrar, no such list shall be required to be furnished.

SECTION 7.02 PRESERVATION OF INFORMATION; COMMUNICATIONS TO
TRANSITION BONDHOLDERS. (a) The Trustee shall preserve, in as current a
form as is reasonably practicable, the names and addresses of the Holders
of Transition Bonds contained in the most recent list furnished to the
Trustee as provided in Section 7.01 and the names and addresses of Holders
of Transition Bonds received by the Trustee in its capacity as Transition
Bond Registrar. The Trustee may destroy any list furnished to it as
provided in such Section 7.01 upon receipt of a new list so furnished.

(b) Transition Bondholders may communicate with other Transition
Bondholders pursuant to Section 312(b) of the TIA, with respect to their
rights under this Indenture or under the Transition Bonds.

SECTION 7.03 REPORTS BY ISSUER. (a) The Issuer shall:

(i) file with the Trustee, within 15 days after the Issuer
is required to file the same with the Commission, copies of the
annual reports and of the information, documents and other
reports (or copies of such portions of any of the foregoing as
the Commission may from time to time by rules and regulations
prescribe) which the Issuer may be required to file with the
Commission pursuant to Section 13 or 15(d) of the Exchange Act;

(ii) file with the Trustee and the Commission in accordance
with rules and regulations prescribed from time to time by the
Commission such additional information, documents and reports
with respect to compliance by the Issuer with the conditions and
covenants of this Indenture as may be required from time to time
by such rules and regulations; and

(iii) supply to the Trustee (and the Trustee shall transmit
by mail to all Transition Bondholders described in TIA Section
313(c)) such summaries of any information, documents and reports
required to be filed by the Issuer pursuant to clauses (i) and
(ii) of this Section 7.03(a) as may be required by rules and
regulations prescribed from time to time by the Commission.

(b) Unless the Issuer otherwise determines, the fiscal year of
the Issuer shall end on December 31 of each year.

SECTION 7.04 REPORTS BY TRUSTEE. If required by TIA Section
313(a), within 60 days after the end of each fiscal year of the Issuer,
commencing with the year after the issuance of the Transition Bonds of any
Series, the Trustee shall mail to each Holder of Transition Bonds of such
Series as required by TIA Section 313(c) a brief report dated as of such
date that complies with TIA Section 313(a). The Trustee also shall comply
with TIA Section 313(b); provided, however, that the initial report so
issued shall be delivered not more than 12 months after the initial
issuance of each Series.

A copy of each report at the time of its mailing to Transition
Bondholders shall be filed by the Trustee with the Commission and each
stock exchange, if any, on which the Transition Bonds are listed (to the
extent required by the rules of such exchange). The Issuer shall notify
the Trustee if and when the Transition Bonds are listed on any stock
exchange.

SECTION 7.05 PROVISION OF SERVICER REPORTS. Upon the written
request of any Transition Bondholder to the Trustee addressed to the
Corporate Trust Office, the Trustee shall provide such Transition
Bondholder with a copy of the Issuer Officer's Certificate referred to in
Section 3.05 of the Servicing Agreement and the Annual Accountant's Report
referred to in Section 3.06 of the Servicing Agreement.

ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
---------------------------------------------

SECTION 8.01 COLLECTION OF MONEY. Except as otherwise expressly
provided herein, the Trustee may demand payment or delivery of, and shall
receive and collect, directly and without intervention or assistance of any
fiscal agent or other intermediary, all money and other property payable to
or receivable by the Trustee pursuant to this Indenture. The Trustee shall
apply all such money received by it as provided in this Indenture. Except
as otherwise expressly provided in this Indenture, if any default occurs in
the making of any payment or performance under any agreement or instrument
that is part of the Collateral, the Trustee may take such action as may be
appropriate to enforce such payment or performance, including the
institution and prosecution of appropriate Proceedings. Any such action
shall be without prejudice to any right to claim a Default or Event of
Default under this Indenture and any right to proceed thereafter as
provided in Article V.

SECTION 8.02 COLLECTION ACCOUNT. (a) On or prior to the Series
Issuance Date for the first Series issued hereunder, the Issuer shall open,
at the Trustee's Corporate Trust Office, or at another Eligible
Institution, one or more segregated trust accounts in the Trustee's name
(collectively, the "Collection Account"). The Collection Account shall
initially be divided into subaccounts, which need not be separate bank
accounts: a general subaccount (the "General Subaccount"), an
overcollateralization subaccount (the "Overcollateralization Subaccount"),
a capital subaccount (the "Capital Subaccount"), a reserve subaccount (the
"Reserve Subaccount"), and a series subaccount for each Series of
Transition Bonds issued on such date (each a "Series Subaccount"). On or
prior to the Series Issuance Date for each Series issued after the Series
Issuance Date for the first Series issued hereunder, the Issuer shall
establish an additional Series Subaccount therefor as a subaccount of the
Collection Account. Prior to depositing funds or U.S. Government
Obligations in the Collection Account pursuant to Sections 4.01 or 4.02,
the Issuer shall establish defeasance subaccounts (each a "Defeasance
Subaccount") for each Series for which funds shall be deposited, as
subaccounts of the Collection Account. All amounts in the Collection
Account not allocated to any other subaccount shall be allocated to the
General Subaccount. Prior to the initial Payment Date, all amounts in the
Collection Account (other than funds deposited into the Capital Subaccount,
up to the Required Capital Amount) shall be allocated to the General
Subaccount. All references to the Collection Account shall be deemed to
include reference to all subaccounts contained therein. Withdrawals from
and deposits to each of the foregoing subaccounts of the Collection Account
shall be made as set forth in Sections 4.01, 4.02, 4.03 and 8.02(d) and
(e). The Collection Account shall at all times be maintained in an
Eligible Deposit Account and only the Trustee shall have access to the
Collection Account for the purpose of making deposits in and withdrawals
from the Collection Account in accordance with this Indenture. Funds in
the Collection Account shall not be commingled by the Issuer with any other
moneys, and shall not be commingled by the Trustee except to the extent set
forth in Section 6.01(f). All moneys deposited from time to time in the
Collection Account, all deposits therein pursuant to this Indenture, and
all investments made in Eligible Investments with such moneys, including
all income or other gain from such investments, shall be held by the
Trustee in the Collection Account as part of the Collateral as herein
provided.

(b) So long as no Default or Event of Default has occurred and
is continuing, all or a portion of the funds in the Collection Account
shall be invested in Eligible Investments and reinvested by the Trustee
upon Issuer Order; provided, however, that (i) such Eligible Investments
shall not mature later than the Business Day prior to the next Payment Date
(except as otherwise provided in any Series Supplement with respect to
funds in the Series Subaccount for any Series of Transition Bonds), (ii)
such Eligible Investments shall not be sold, liquidated or otherwise
disposed of at a loss prior to the maturity thereof, and (iii) no funds in
the Defeasance Subaccount for any Series of Transition Bonds shall be
invested in Eligible Investments or otherwise, except that U.S. Government
Obligations deposited by the Issuer with the Trustee pursuant to Sections
4.01 or 4.02 shall remain as such. All income or other gain from
investments of moneys deposited in the Collection Account shall be
deposited by the Trustee in the Collection Account, and any loss resulting
from such investments shall be charged to the Collection Account. The
Issuer shall not direct the Trustee to make any investment of any funds or
to sell any investment held in the Collection Account unless the security
interest granted and perfected in such account will continue to be
perfected in such investment or the proceeds of such sale, in either case
without any further action by any Person, and, in connection with any
direction to the Trustee to make any such investment or sale, if requested
by the Trustee, the Issuer shall deliver to the Trustee an Issuer Opinion
of Counsel, acceptable to the Trustee, to such effect. Subject to Section
6.01(c), the Trustee shall not in any way be held liable for the selection
of Eligible Investments or for investment losses incurred thereon except
for losses attributable to the Trustee's failure to make payments on such
Eligible Investments issued by the Trustee, in its commercial capacity as
principal obligor and not as Trustee, in accordance with their terms. The
Trustee shall have no liability in respect of losses incurred as a result
of the liquidation of any Eligible Investment prior to its stated maturity
or the failure of the Issuer to provide timely written investment
direction. The Trustee shall have no obligation to invest or reinvest any
amounts held hereunder in the absence of written investment direction
pursuant to an Issuer Order; provided, however, that if (i) the Issuer
shall have failed to give investment directions for any funds on deposit in
the Collection Account to the Trustee by 11:00 a.m. Eastern Time (or such
other time as may be agreed by the Issuer and Trustee) on any Business Day,
or (ii) a Default or Event of Default shall have occurred and be continuing
but the Transition Bonds shall not have been declared due and payable
pursuant to Section 5.02, then the Trustee shall, to the fullest extent
practicable, invest and reinvest funds in the Collection Account in one or
more Eligible Investments.

(c) Any ITC Collections remitted by the Servicer to the Trustee,
any Indemnity Amounts remitted to the Trustee by PP&L or the Servicer or
otherwise received by the Trustee or the Issuer, and any other proceeds of
Collateral received by the Servicer, the Issuer or the Trustee shall be
deposited in the General Subaccount.

(d) On the Business Day preceding each Payment Date, the Trustee
shall by 12:00 noon (New York City time) apply all amounts on deposit in
the General Subaccount of the Collection Account and any investment
earnings on the subaccounts in the Collections Account in the following
priority:

(i) all amounts owed to the Trustee (including legal fees and
expenses and Indemnity Amounts) shall be paid to the Trustee;

(ii) all amounts owed to the Independent Managers (including
legal fees and expenses and Indemnity Amounts) shall be paid to the
Independent Managers;

(iii) the Servicing Fee and all unpaid Servicing Fees from prior
Payment Dates shall be paid to the Servicer;

(iv) the administration fee payable under the Administration
Agreement between the Issuer and the Administrator shall be paid to
the Administrator;

(v) so long as no Event of Default has occurred and is
continuing or would be caused by such payment, all Operating Expenses
other than (i), (ii), (iii) and (iv) above shall be paid to the
Persons entitled thereto, provided that the amount paid on any Payment
Date pursuant to this clause (v) may not exceed $ in the
aggregate for all Series;

(vi) an amount equal to Interest payable on each Series of
Transition Bonds for the Payment Date shall be allocated on a Pro Rata
Basis to the corresponding Series Subaccount or will be paid to the
counterparty on any interest rate swap agreement between the Issuer
and such counterparty, specified in the related Series Supplement, if
such swap agreement remains in effect for such Payment Date;

(vii) an amount equal to any Principal of any Series or Class of
Transition Bonds payable as a result of acceleration pursuant to
Section 5.02, any Principal of any Series or Class of Transition Bonds
payable on a Series Final Maturity Date or Class Final Maturity Date
for that Series or Class and any Principal of and premium, if any, on
a Series or Class of Transition Bonds payable on a Redemption Date
shall be allocated on a Pro Rata basis to the corresponding Series
Subaccount;

(viii) an amount equal to Principal scheduled to be paid on each
Series of Transition Bonds on the next Payment Date, excluding any
amounts provided for pursuant to clause (vii) above, shall be
allocated on a Pro Rata basis to the corresponding Series Subaccount;

(ix) all remaining unpaid Operating Expenses and Indemnity
Amounts shall be paid to the Persons entitled thereto;

(x) any amount necessary to replenish any withdrawals from the
Capital Subaccount shall be allocated to the Capital Subaccount;

(xi) an amount shall be allocated to the Overcollateralization
Subaccount sufficient to cause the amount in the Overcollateralization
Subaccount to equal the Scheduled Overcollateralization Level;

(xii) an amount equal to investment earnings on amounts in the
Capital Subaccount shall be released to the Issuer;

(xiii) the balance, if any, shall be allocated to the Reserve
Subaccount; and

(xiv) following repayment of the outstanding Series of
Transition Bonds, the balance, if any, shall be released to the Issuer
free from the Lien of the Indenture.

"Pro Rata" means with respect to any Series or Class of Transition
Bonds a ratio, (i) in the case of clause (d)(vi) above, the numerator of
which is the aggregate amount of Interest payable with respect to such
Series or Class on such Payment Date and the denominator of which is the
sum of the aggregate amounts of Interest payable with respect to all
Outstanding Series or Classes on such Payment Date; and (ii) in the case of
clauses (d)(vii) and (d)(viii) above, the numerator of which is the
aggregate amount of Principal scheduled to be paid or payable pursuant to
each such clause with respect to such Series or Class on such Payment Date
and the denominator of which is the sum of the aggregate amounts of
Principal scheduled to be paid or payable pursuant to each such clause with
respect to all Outstanding Series or Classes on such Payment Date, unless
and to the extent, with respect to either clause (i) or (ii) above, in the
case of a Series comprised of two or more Classes, the Series Supplement
for such Series provides otherwise.

If, on any Payment Date, funds on deposit in the General Subaccount
are insufficient to make the payments or transfers contemplated by clauses
(i) through (ix) above, the Trustee shall draw from amounts on deposit in
the following subaccounts in the following order up to the amount of such
shortfall, in order to make such payments and transfers:

(i) from the Reserve Subaccount,

(ii) from the Overcollateralization Subaccount, and

(iii) from the Capital Subaccount.

(e) On each Payment Date for any Series, the amounts on deposit
in the Series Subaccount for that Series shall be applied or transferred as
follows (in the priority indicated): (i) to pay Interest due and payable on
the Transition Bonds of such Series on such Payment Date to the Holders of
Transition Bonds of such Series, (ii) the balance, if any, up to the amount
of Principal scheduled to be paid or payable on the Transition Bonds of
such Series on such Payment Date, to pay such Principal to the Holders of
Transition Bonds of such Series and (iii) the balance, if any, to the
General Subaccount for allocation on the next Payment Date.

All payments to the Transition Bondholders of a Series pursuant to (A)
clause (i) of the preceding paragraph shall be made pro rata based on the
respective aggregate amounts of Interest due and payable with respect to
Outstanding Transition Bonds of such Series held by such Holders, and (B)
clause (ii) of the preceding paragraph shall be made pro rata based on the
respective aggregate amounts of Principal scheduled to be paid or payable
with respect to Outstanding Transition Bonds of such Series held by such
Holders, unless and to the extent, with respect to either clause (i) or
(ii) above, in the case of a Series comprised of two or more Classes, the
Series Supplement for such Series provides otherwise. All payments to
Transition Bondholders of a Class pursuant to clause (i) or (ii) of the
preceding paragraph shall be made pro rata based on the respective
principal amounts of Transition Bonds of such Class held by such Holders.

SECTION 8.03 RELEASE OF COLLATERAL. (a) All money and other
property withdrawn from the Collection Account by the Trustee for payment
to the Issuer as provided in this Indenture in accordance with Section 8.02
hereof shall be deemed released from the Indenture when so withdrawn and
applied in accordance with the provisions of Article VIII, without further
notice to, or release or consent by, the Trustee.

(f) Other than as provided for in clause (a) above, the Trustee
shall release property from the Lien of this Indenture only as and to the
extent permitted by the Basic Documents and only upon receipt of an Issuer
Request accompanied by an Issuer Officer's Certificate, an Issuer Opinion
of Counsel and Independent Certificates in accordance with TIA Sections
314(c) and 314(d)(1) meeting the applicable requirements of Section 11.01
or an Issuer Opinion of Counsel in lieu of such Independent Certificates to
the effect that the TIA does not require any such Independent Certificate.

(g) Subject to the payment of its fees and expenses pursuant to
Section 6.07, the Trustee may, and when required by the provisions of this
Indenture shall, execute instruments to release property from the Lien of
this Indenture, or convey the Trustee's interest in the same, in a manner
and under circumstances that are not inconsistent with the provisions of
this Indenture. No party relying upon an instrument executed by the
Trustee as provided in this Article VIII shall be bound to ascertain the
Trustee's authority, inquire into the satisfaction of any conditions
precedent or see to the application of any moneys.

(h) Subject to Section 8.03(b), the Trustee shall, at such time
as there are no Transition Bonds Outstanding and all sums due the Trustee
pursuant to Section 6.07 have been paid, release any remaining portion of
the Collateral that secured the Transition Bonds from the Lien of this
Indenture and release to the Issuer or any other Person entitled thereto
any funds or investments then on deposit in or credited to the Collection
Account.

SECTION 8.04 ISSUER OPINION OF COUNSEL. The Trustee shall
receive at least five days notice when requested by the Issuer to take any
action pursuant to Section 8.03, accompanied by copies of any instruments
involved, and the Trustee shall also require, as a condition to such
action, an Issuer Opinion of Counsel, in form and substance satisfactory to
the Trustee, stating the legal effect of any such action, outlining the
steps required to complete the same, and concluding that all conditions
precedent to the taking of such action have been complied with and such
action will not materially and adversely impair the security for the
Transition Bonds or the rights of the Transition Bondholders in
contravention of the provisions of this Indenture; provided, however, that
such Issuer Opinion of Counsel shall not be required to express an opinion
as to the fair value of the Collateral. Counsel rendering any such opinion
may rely, without independent investigation, on the accuracy and validity
of any certificate or other instrument delivered to the Trustee in
connection with any such action.

SECTION 8.06 REPORTS BY INDEPENDENT ACCOUNTANTS. The Issuer
shall appoint a firm of Independent certified public accountants of
recognized national reputation for purposes of preparing and delivering the
reports or certificates of such accountants required by this Indenture and
the related Series Supplements. Upon any resignation by such firm, the
Issuer shall promptly appoint a successor thereto that shall also be a firm
of Independent certified public accountants of recognized national
reputation. If the Issuer shall fail to appoint a successor to a firm of
Independent certified public accountants that has resigned within 15 days
after such resignation, the Trustee shall promptly notify the Issuer of
such failure in writing. If the Issuer shall not have appointed a
successor within 10 days thereafter, the Trustee shall promptly appoint a
successor firm of Independent certified public accountants of recognized
national reputation. The fees of such firm of Independent certified public
accountants and its successor shall be payable by the Issuer.

ARTICLE IX
SUPPLEMENTAL INDENTURES
--------------------------------

SECTION 9.01 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF
TRANSITION BONDHOLDERS. (a) Without the consent of the Holders of any
Transition Bonds but with prior notice to the Rating Agencies, the Issuer
and the Trustee, when authorized by an Issuer Order, at any time and from
time to time, may enter into one or more indentures supplemental hereto
(which shall conform to the provisions of the Trust Indenture Act as in
force at the date of the execution thereof), in form satisfactory to the
Trustee, for any of the following purposes:

(i) 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 this Indenture additional property;

(ii) to evidence the succession, in compliance with the
applicable provisions hereof, of another person to the Issuer, and the
assumption by any applicable successor of the covenants of the Issuer
contained herein and in the Transition Bonds;

(iii) to add to the covenants of the Issuer, for the benefit of
the Transition Bondholders, or to surrender any right or power herein
conferred upon the Issuer;

(iv) to convey, transfer, assign, mortgage or pledge any
property to the Trustee;

(v) to cure any ambiguity, to correct or supplement any
provision herein or in any Supplemental Indenture which may be
inconsistent with any other provision herein or in any Supplemental
Indenture or to make any other provisions with respect to matters or
questions arising under this Indenture or in any Supplemental
Indenture; provided, however, that (i) such action shall not, as
evidenced by an Issuer Opinion of Counsel, adversely affect in any
material respect the interests of any Transition Bondholder and (ii)
the Rating Agency Condition shall have been satisfied with respect
thereto;

(vi) to evidence and provide for the acceptance of the
appointment hereunder by a successor Trustee with respect to the
Transition Bonds and to add to or change any of the provisions of this
Indenture as shall be necessary to facilitate the administration of
the trusts hereunder by more than one Trustee, pursuant to the
requirements of Article VI;

(vii) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the
qualification of this Indenture under the TIA or under any similar
federal statute hereafter enacted and to add to this Indenture such
other provisions as may be expressly required by the TIA; or

(viii) 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.

The Trustee is hereby authorized to join in the execution of any such
Supplemental Indenture and to make any further appropriate agreements and
stipulations that may be therein contained.

(b) The Issuer and the Trustee, when authorized by an Issuer
Order, may, also without the consent of any of the Holders of the
Transition Bonds, enter into an indenture or indentures supplemental hereto
for the purpose of adding any provisions to, or changing in any manner or
eliminating any of the provisions of, this Indenture or of modifying in any
manner the rights of the Holders of the Transition Bonds under this
Indenture; provided, however, that (i) such action shall not, as evidenced
by an Issuer Opinion of Counsel, adversely affect in any material respect
the interests of any Transition Bondholder and (ii) the Rating Agency
Condition shall have been satisfied with respect thereto.

SECTION 9.02 SUPPLEMENTAL INDENTURES WITH CONSENT OF TRANSITION
BONDHOLDERS. The Issuer and the Trustee, when authorized by an Issuer
Order, 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, by
Act of such Holders delivered to the Issuer and the Trustee, enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to, or changing in any manner or eliminating any of the
provisions of, this Indenture or of modifying in any manner the rights of
the Holders of the Transition Bonds under this Indenture; provided,
however, that no such Supplemental Indenture shall, without the consent of
the Holder of each Outstanding Transition Bond of each Series or Class
affected thereby:

(i) change the date of payment of any instalment of principal of
or premium, if any, or interest on any Transition Bond, or reduce the
principal amount thereof, the interest rate thereon or the redemption
price or the premium, if any, with respect thereto, change the
provisions of this Indenture and the related applicable Supplemental
Indenture or Series Supplement 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 the currency in which, any Transition Bond
or the interest thereon is payable;

(ii) impair the right to institute suit for the enforcement of
the provisions of this Indenture requiring the application of funds
available therefor, as provided in Article V, to the payment of any
such amount due on the Transition Bonds on or after the respective due
dates thereof (or, in the case of redemption, on or after the
Redemption Date);

(iii) reduce the percentage of the Outstanding Amount of the
Transition Bonds or of a Series or Class thereof, the consent of the
Holders of which is required for any such Supplemental Indenture, or
the consent of the Holders of which is required for any waiver of
compliance with provisions of this Indenture or defaults hereunder and
their consequences provided for in this Indenture or modify or alter
the provisions of the proviso to the definition of the term
"Outstanding";

(iv) 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 pursuant to Section 5.04 or to
preserve the Collateral pursuant to Section 5.05;

(v) modify any provision of this Section 9.02 except to increase
any percentage specified herein or to provide that those provisions of

this Indenture or the Basic Documents referenced in this Section
cannot be modified or waived without the consent of the Holder of each
Outstanding Transition Bond affected thereby;

(vi) modify any of the provisions of this Indenture in such
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;

(vii) decrease the Overcollateralization Amount or Required
Capital Amount with respect to any Series or the Scheduled
Overcollateralization Level with respect to any Payment Date;

(viii) modify or alter the provisions of this Indenture
regarding the voting of Transition Bonds held by the Issuer, the
Seller, an Affiliate of either of them or any obligor on the
Transition Bonds;

(ix) decrease the percentage of the aggregate principal amount
of Transition Bonds required to amend the sections of this Indenture
which specify the applicable percentage of the aggregate principal
amount of the Transition Bonds necessary to amend this Indenture or
any other Basic Documents; or

(x) permit the creation of any Lien ranking prior to or on a
parity with the Lien of this Indenture with respect to any part of the
Collateral or, except as otherwise permitted or contemplated herein,
terminate the Lien of this Indenture on any property at any time
subject hereto or deprive the Holder of any Transition Bond of the
security provided by the Lien of this Indenture.

It shall not be necessary for any Act of Transition Bondholders under
this Section to approve the particular form of any proposed Supplemental
Indenture, but it shall be sufficient if such Act shall approve the
substance thereof.

Promptly after the execution by the Issuer and the Trustee of any
Supplemental Indenture pursuant to this Section, the Trustee shall mail to
the Holders of the Transition Bonds to which such amendment or Supplemental
Indenture relates a notice setting forth in general terms the substance of
such Supplemental Indenture. Any failure of the Trustee to mail such
notice, or any defect therein, shall not, however, in any way impair or
affect the validity of any such Supplemental Indenture.

SECTION 9.03 EXECUTION OF SUPPLEMENTAL INDENTURES. In
executing, or permitting the additional trusts created by, any Supplemental
Indenture permitted by this Article IX or the modifications thereby of the
trusts created by this Indenture, the Trustee shall be entitled to receive,
and subject to Sections 6.01 and 6.02, shall be fully protected in relying
upon, an Issuer Opinion of Counsel stating that the execution of such
Supplemental Indenture is authorized or permitted by this Indenture. The
Trustee may, but shall not be obligated to, enter into any such
Supplemental Indenture that affects the Trustee's own rights, duties,
liabilities or immunities under this Indenture or otherwise.

SECTION 9.04 EFFECT OF SUPPLEMENTAL INDENTURE. Upon the
execution of any Supplemental Indenture pursuant to the provisions hereof,
this Indenture shall be and be deemed to be modified and amended in
accordance therewith with respect to each Series or Class of Transition
Bonds affected thereby, and the respective rights, limitations of rights,
obligations, duties, liabilities and immunities under this Indenture of the
Trustee, the Issuer and the Holders of the Transition Bonds shall
thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments, and all the terms and
conditions of any such Supplemental Indenture shall be and be deemed to be
part of the terms and conditions of this Indenture for any and all
purposes.

SECTION 9.05 CONFORMITY WITH TRUST INDENTURE ACT. Every
amendment of this Indenture and every Supplemental Indenture executed
pursuant to this Article IX shall conform to the requirements of the TIA as
then in effect so long as this Indenture shall then be qualified under the
TIA.

SECTION 9.06 REFERENCE IN TRANSITION BONDS TO SUPPLEMENTAL
INDENTURES. Transition Bonds authenticated and delivered after the
execution of any Supplemental Indenture pursuant to this Article IX may,
and if required by the Trustee shall, bear a notation in form approved by
the Trustee as to any matter provided for in such Supplemental Indenture.
If the Issuer or the Trustee shall so determine, new Transition Bonds so
modified as to conform, in the opinion of the Trustee and the Issuer, to
any such Supplemental Indenture may be prepared and executed by the Issuer
and authenticated and delivered by the Trustee in exchange for Outstanding
Transition Bonds.

ARTICLE X
REDEMPTION OF TRANSITION BONDS;
---------------------------------------

SECTION 10.01 OPTIONAL REDEMPTION BY ISSUER. If so provided in
the related Series Supplement, the Issuer may, at its option, redeem all,
but not less than all, of the Transition Bonds of a Series on any Payment
Date if, after giving effect to payments that would otherwise be made on
such Payment Date, the Outstanding Amount of any such Series of Transition
Bonds has been reduced to less than five percent of the initial principal
balance of suc Series. The redemption price in any case shall be equal to
the outstanding principal amount of the Bonds to be redeemed plus accrued
and unpaid interest thereon at the Bond Rate to the Redemption Date ( the
"Redemption Price"). If the Issuer elects to redeem the Transition Bonds
of a Series pursuant to this Section 10.01, it shall furnish notice of such
election to the Trustee not later than 25 days prior to the Redemption Date
for such redemption and shall deposit with the Trustee the Redemption Price
of the Transition Bonds to be redeemed plus interest accrued thereon to
such Redemption Date on or prior to such Redemption Date whereupon all such
Transition Bonds shall be due and payable on such Redemption Date upon the
furnishing of a notice complying with Section 10.03 hereof to each Holder
of the Transition Bonds of such Series pursuant to this Section 10.01.

SECTION 10.02 MANDATORY REDEMPTION BY ISSUER. The Issuer shall
redeem the Transition Bonds of a Series on the Redemption Date or Dates, if
any, in the amounts required, if any, and at the redemption price specified
in the Series Supplement for such Series, which in any case shall be not
less than the outstanding principal amount of the Bonds to be redeemed,
plus accrued interest thereon to such Redemption Date. If the Issuer is
required to redeem the Transition Bonds of a Series pursuant to this
Section 10.02, it shall furnish notice of such requirement to the Trustee
not later than 25 days prior to the Redemption Date for such redemption and
shall deposit with the Trustee the redemption price of the Transition Bonds
to be redeemed whereupon all such Transition Bonds shall be due and payable
on the Redemption Date upon the furnishing of a notice complying with
Section 10.03 hereof to each Holder of the Transition Bonds of such Series
pursuant to this Section 10.02.

SECTION 10.03 FORM OF REDEMPTION NOTICE. Unless otherwise
specified in the Series Supplement relating to a Series of Transition
Bonds, notice of redemption under Section 10.01 or 10.02 hereof shall be
given by the Trustee by first-class mail, postage prepaid, mailed not less
than five days nor more than 45 days prior to the applicable Redemption
Date to each Holder of Transition Bonds to be redeemed, as of the close of
business on the Record Date preceding the applicable Redemption Date at
such Holder's address appearing in the Transition Bond Register.

All notices of redemption shall state:

(1) the Redemption Date;

(2) the amount of such Transition Bonds to be redeemed;

(3) the Redemption Price; and

(4) the place where such Transition Bonds are to be surrendered
for payment of the Redemption Price and accrued interest (which
shall be the office or agency of the Issuer to be maintained as
provided in Section 3.02 hereof).

Notice of redemption of the Transition Bonds to be redeemed shall be
given by the Trustee in the name and at the expense of the Issuer. Failure
to give notice of redemption, or any defect therein, to any Holder of any
Transition Bond selected for redemption shall not impair or affect the
validity of the redemption of any other Transition Bond. [Any notice of
optional redemption may be conditioned upon the deposit of sufficient
moneys to pay the Redemption Price and accrued interest with the Trustee
before the date fixed for redemption and such notice shall be of no effect
unless such moneys are so deposited.]

SECTION 10.04 PAYMENT OF REDEMPTION PRICE. If (a) unconditional
notice of redemption has been duly mailed or duly waived by the Holders of
all Transition Bonds called for redemption or (b) conditional notice of
redemption has been so mailed or waived and the redemption moneys have been
duly deposited with the Trustee, then in either case the Transition Bonds
called for redemption shall be payable on the applicable Redemption Date at
the applicable Redemption Price plus accrued interest thereon. No further
interest will accrue on the principal amount of any Transition Bonds called
for redemption after the Redemption Date for such redemption if payment of
the Redemption Price thereof plus accrued interest thereon has been duly
provided for, and the Holder of such Transition Bonds will have no rights
with respect thereto, except to receive payment of the Redemption Price
thereof and unpaid interest accrued to the Redemption Date. Payment of the
Redemption Price together with accrued interest shall be made by the
Trustee to or upon the order of the Holders of the Transition Bonds called
for redemption upon surrender of such Transition Bonds, and the Transition
Bonds so redeemed shall cease to be of further effect and the Lien
hereunder shall be released with respect to such Transition Bonds.

ARTICLE XI
MISCELLANEOUS
-----------------

SECTION 11.01 COMPLIANCE CERTIFICATES AND OPINIONS, ETC. Upon
any application or request by the Issuer to the Trustee to take any action
under any provision of this Indenture, the Issuer shall furnish to the
Trustee (i) an Issuer Officer's Certificate stating that all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with, (ii) an Issuer Opinion of Counsel stating
that in the opinion of such counsel all such conditions precedent, if any,
have been complied with and (iii) (if required by the TIA) an Independent
Certificate from a firm of certified public accountants meeting the
applicable requirements of this Section, except that, in the case of any
such application or request as to which the furnishing of such documents is
specifically required by any provision of this Indenture, no additional
certificate or opinion need be furnished.

Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:

(a) statement that each signatory of such certificate or opinion
has read or has caused to be read such covenant or condition and the
definitions herein relating thereto;

(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;

(c) a statement that, in the opinion of each such signatory,
such signatory has made such examination or investigation as is necessary
to enable such signatory to express an informed opinion as to whether or
not such covenant or condition has been complied with; and

(d) a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied with.

SECTION 11.02 FORM OF DOCUMENTS DELIVERED TO TRUSTEE. In any
case where several matters are required to be certified by, or covered by
an opinion of, any specified Person, it is not necessary that all such
matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but
one such Person may certify or give an opinion with respect to some matters
and one or more other such Persons as to other matters, and any such Person
may certify or give an opinion as to such matters in one or several
documents.

Any certificate or opinion of an Authorized Officer of the Issuer may
be based, insofar as it relates to legal matters, upon a certificate or
opinion of, or representations by, counsel, unless such officer knows, or
in the exercise of reasonable care should know, that the certificate or
opinion or representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any such certificate of an
Authorized Officer or Issuer Opinion of Counsel may be based, insofar as it
relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Servicer, the Seller or
the Issuer, stating that the information with respect to such factual
matters is in the possession of the Servicer, the Seller or the Issuer,
unless such Authorized Officer or counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous.

Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be
consolidated and form one instrument.

Whenever in this Indenture, in connection with any application or
certificate or report to the Trustee, it is provided that the Issuer shall
deliver any document as a condition of the granting of such application, or
as evidence of the Issuer's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such
application or at the effective date of such certificate or report (as the
case may be), of the facts and opinions stated in such document shall in
such case be conditions precedent to the right of the Issuer to have such
application granted or to the sufficiency of such certificate or report.
The foregoing shall not, however, be construed to affect the Trustee's
right to rely upon the truth and accuracy of any statement or opinion
contained in any such document as provided in Article VI.

SECTION 11.03 ACTS OF TRANSITION BONDHOLDERS.

(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or
taken by Transition Bondholders may be embodied in and evidenced by one or
more instruments of substantially similar tenor signed by such Transition
Bondholders in person or by agents duly appointed in writing; and except as
herein otherwise expressly provided such action shall become effective when
such instrument or instruments are delivered to the Trustee, and, where it
is hereby expressly required, to the Issuer. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are
herein sometimes referred to as the "Act" of the Transition Bondholders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture and (subject to Section 6.01) conclusive
in favor of the Trustee and the Issuer, if made in the manner provided in
this Section.

(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any manner that the Trustee deems
sufficient.

(d) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Holder of any Transition Bonds shall
bind the Holder of every Transition Bond issued upon the registration
thereof or in exchange therefor or in lieu thereof, in respect of anything
done, omitted or suffered to be done by the Trustee or the Issuer in
reliance thereon, whether or not notation of such action is made upon such
Transition Bond.

SECTION 11.04 NOTICES, ETC., TO TRUSTEE, ISSUER AND RATING
AGENCIES. Any request, demand, authorization, direction, notice, consent,
waiver or Act of Transition Bondholders or other documents provided or
permitted by this Indenture to be made upon, given or furnished to or filed
with:

(a) the Trustee by any Transition Bondholder or by the Issuer
shall be sufficient for every purpose hereunder if made, given, furnished
or filed in writing, delivered personally, via facsimile transmission, by
reputable overnight courier or by first-class mail, postage prepaid, to the
Trustee at its Corporate Trust Office, or

(b) the Issuer by the Trustee or by any Transition Bondholder
shall be sufficient for every purpose hereunder if in writing, delivered
personally, via facsimile transmission, by reputable overnight courier or
by first-class mail, postage prepaid, to the Issuer addressed to: ______,
Two North Ninth Street, Allentown, Pennsylvania 18101, Attention: Managers,
or at any other address previously furnished in writing to the Trustee by
the Issuer. The Issuer shall promptly transmit any notice received by it
from the Transition Bondholders to the Trustee.

Notices required to be given to the Rating Agencies by the Issuer, the
Trustee or a Manager shall be in writing, delivered personally, via
facsimile transmission, by reputable overnight courier or by first-class
mail, postage prepaid, to: (i) in the case of Moody's: Moody's Investors
Service, Inc., Attention: ABS Monitoring Department, 99 Church Street, New
York, New York 10007; (ii) in the case of Standard & Poor's: Standard &
Poor's Corporation, 55 Water Street New York, NY 10041, Attention: Asset
Backed Surveillance Department and (iii) in the case of Fitch: Fitch IBCA,
Inc., 1 State Street Plaza, New York, New York 10004.

SECTION 11.05 NOTICES TO TRANSITION BONDHOLDERS; WAIVER. Where
this Indenture provides for notice to Transition Bondholders of any event,
such notice shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and delivered by first-class mail, postage prepaid,
to each Transition Bondholder affected by such event, at the address of
such Transition Bondholder as it appears on the Transition Bond Register,
not later than the latest date, and not earlier than the earliest date,
prescribed for the giving of such notice. In any case where notice to
Transition Bondholders is given by mail, neither the failure to mail such
notice nor any defect in any notice so mailed to any particular Transition
Bondholder shall affect the sufficiency of such notice with respect to
other Transition Bondholders, and any notice that is mailed in the manner
herein provided shall conclusively be presumed to have been duly given.

Where this Indenture provides for notice in any manner, such notice
may be waived in writing by any Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent
of such notice. Waivers of notice by Transition Bondholders shall be filed
with the Trustee but such filing shall not be a condition precedent to the
validity of any action taken in reliance upon such a waiver.

In case it shall be impractical to deliver notice in accordance with
the first paragraph of this Section 11.05 to the Holders of Transition
Bonds when such notice is required to be given pursuant to any provision of
this Indenture, then any manner of giving such notice as shall be
satisfactory to the Trustee shall be deemed to be a sufficient giving of
such notice.

Where this Indenture provides for notice to the Rating Agencies,
failure to give such notice shall not affect any other rights or
obligations created hereunder, and shall not under any circumstance
constitute a Default or Event of Default.

SECTION 11.06 ALTERNATE PAYMENT AND NOTICE PROVISIONS.
Notwithstanding any provision of this Indenture or any of the Transition
Bonds to the contrary, the Issuer may enter into any agreement with any
Holder of a Transition Bond providing for a method of payment, or notice by
the Trustee or any Paying Agent to such Holder, that is different from the
methods provided for in this Indenture for such payments or notices. The
Issuer will furnish to the Trustee a copy of each such agreement and the
Trustee will cause payments to be made and notices to be given in
accordance with such agreements.

SECTION 11.07 CONFLICT WITH TRUST INDENTURE ACT. If any
provision hereof limits, qualifies or conflicts with another provision
hereof that is required to be included in this Indenture by any of the
provisions of the TIA, such required provision shall control.

The provisions of TIA Sections 310 through 317 that impose duties on
any person (including the provisions automatically deemed included herein
unless expressly excluded by this Indenture) are a part of and govern this
Indenture, whether or not physically contained herein.

SECTION 11.08 EFFECT OF HEADINGS AND TABLE OF CONTENTS. The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.

SECTION 11.09 SUCCESSORS AND ASSIGNS. All covenants and
agreements in this Indenture and the Transition Bonds by the Issuer shall
bind its successors and permitted assigns, whether so expressed or not.

All agreements of the Trustee in this Indenture shall bind its
successors.

SECTION 11.10 SEPARABILITY. In case any provision in this
Indenture or in the Transition Bonds shall be invalid, illegal or
unenforceable, the validity, legality, and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.

SECTION 11.11 BENEFITS OF INDENTURE. Nothing in this Indenture
or in the Transition Bonds, express or implied, shall give to any Person,
other than the parties hereto and their successors hereunder, and the
Transition Bondholders, and any other party secured hereunder, and any
other Person with an ownership interest in any part of the Collateral, any
benefit or any legal or equitable right, remedy or claim under this
Indenture.

SECTION 11.12 LEGAL HOLIDAYS. In any case where the date on
which any payment is due shall not be a Business Day, then (notwithstanding
any other provision of the Transition Bonds or this Indenture) payment need
not be made on such date, but may be made on the next succeeding Business
Day with the same force and effect as if made on the date on which
nominally due, and no interest shall accrue for the period from and after
any such nominal date.

SECTION 11.13 GOVERNING LAW. THIS INDENTURE SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF
PENNSYLVANIA, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.

SECTION 11.14 COUNTERPARTS. This Indenture may be executed in
any number of counterparts, each of which so executed shall be deemed to be
an original, but all such counterparts shall together constitute but one
and the same instrument.

SECTION 11.15 ISSUER OBLIGATION. No recourse may be taken,
directly or indirectly, with respect to the obligations of the Issuer or
the Trustee on the Transition Bonds or under this Indenture or any
certificate or other writing delivered in connection herewith or therewith,
against (i) the Member or any Manager, employee or agent of the Issuer or
(ii) any stockholder, officer, director, employee or agent of the Trustee
(it being understood that all of the Trustee's obligations are in its
individual capacity).

SECTION 11.16 NO PETITION. The Trustee, by entering into this
Indenture, and each Transition Bondholder, by accepting a Transition Bond,
hereby covenant and agree that they will not at any time institute against
the Issuer, or join in the institution against the Issuer of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation
Proceeding, or other Proceeding under any United States federal or state
bankruptcy or similar law in connection with any obligations relating to
the Transition Bonds, this Indenture or any of the Basic Documents.

IN WITNESS WHEREOF, the Issuer and the Trustee have caused this
Indenture to be duly executed by their respective Manager and officer,
respectively, thereunto duly authorized, all as of the day and year first
above written.

PP&L TRANSITION BOND
COMPANY LLC,

By:__________________________
Name:
Title: Manager

THE BANK OF NEW YORK,
not in its individual capacity,
but solely as Trustee,

By:__________________________
Name:
Title: Trust Officer

EXHIBIT A

PP&L TRANSITION BOND COMPANY LLC

Issuer

and

THE BANK OF NEW YORK

Trustee

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

1999-1 SERIES SUPPLEMENT

Dated as of July , 1999

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

1999-1 SERIES SUPPLEMENT dated as of July , 1999 (this "Supplement"),
by and between PP&L TRANSITION BOND COMPANY LLC, a Delaware limited
liability company (the "Issuer"), and THE BANK OF NEW YORK, a New York
banking corporation (the "Trustee"), as Trustee under the Indenture dated
as of July , 1999, between the Issuer and the Trustee (the "Indenture").

PRELIMINARY STATEMENT

Section 9.01 of the Indenture provides, among other things, that the
Issuer and the Trustee may at any time and from time to time enter into
one or more indentures supplemental to the Indenture for the purposes of
authorizing the issuance by the Issuer of a Series of Transition Bonds and
specifying the terms thereof. The Issuer has duly authorized the execution
and delivery of this Supplement and the creation of a Series of Transition
Bonds with an initial aggregate principal amount of $[ ] to be known as
the Issuer's Transition Bonds, Series 1999-1 (the "Series 1999-1
Transition Bonds"). All acts and all things necessary to make the Series
1999-1 Transition Bonds, when duly executed by the Issuer and
authenticated by the Trustee as provided in the Indenture and this
Supplement and issued by the Issuer, the valid, binding and legal
obligations of the Issuer and to make this Supplement a valid and
enforceable supplement to the Indenture have been done, performed and
fulfilled and the execution and delivery hereof have been in all respects
duly and lawfully authorized. The Issuer and the Trustee are executing and
delivering this Supplement in order to provide for the Series 1999-1
Transition Bonds.

In order to secure the payment of principal of and interest on the
Series 1999-1 Transition Bonds issued and to be issued under the Indenture
and/or any Series Supplement, the Issuer hereby confirms the Grant to the
Trustee for the benefit of the Holders of the Series 1999-1 Transition
Bonds from time to time issued and outstanding, all of the Issuer's right,
title and interest in, to and under the Collateral, including without
limitation, the Intangible Transition Property transferred by the Seller
to the Issuer as of the Initial Transfer Date pursuant to the Sale
Agreement and all proceeds thereof.

The Trustee, on behalf of the Holders of the Series 1999-1 Transition
Bonds, acknowledges the confirmation of such Grant, accepts the trusts
hereunder in accordance with the provisions hereof and agrees to perform
its duties required in the Indenture and this Supplement.

SECTION 1. DEFINITIONS.

All terms used in this Supplement that are defined in the Indenture,
either directly or by reference therein, have the meanings assigned to
them therein, except to the extent such terms are defined or modified in
this Supplement or the context clearly requires otherwise.

SECTION 2. OTHER DEFINITIONAL PROVISIONS.

Authorized Denominations shall mean $1,000 and integral multiples
thereof.

Bond Rate has the meaning set forth in Section 4 of this Supplement.

Class Final Maturity Date means, with respect to any Class of the
Series 1999-1 Transition Bonds, the final maturity date thereof, as
specified in Section 4 of this Supplement.

Expected Amortization Schedule means Schedule A to this Supplement.

Expected Final Payment Date means, with respect to any Class of the
Series 1999-1 Transition Bonds, the expected final payment date therefor,
as specified in Section 4 of this Supplement.

Interest Accrual Period means, with respect to any Payment Date, the
period from and including the preceding Payment Date (or, in the case of
the first Payment Date, from and including the Series Issuance Date) to
and excluding such Payment Date.

Overcollateralization Amount has the meaning set forth in Section
5(e) of this Supplement.

Payment Date has the meaning set forth in Section 5(a) of this
Supplement.

Record Date shall mean, with respect to any Payment Date, the close
of business on the Business Day prior to such Payment Date.

Required Capital Amount has the meaning set forth in Section 5(e) of
this Series Supplement.

Series Issuance Date has the meaning set forth in Section 3(b) of
this Supplement.

Series Final Maturity Date has the meaning set forth in Section 4 of
this Supplement.

SECTION 3. DESIGNATION; SERIES ISSUANCE DATES.

(a) Designation. The Series 1999-1 Transition Bonds shall be
designated generally as the Issuer's Transition Bonds, Series 1999-1 and
further denominated as Classes through .

(b) Series Issuance Date. The Series 1999-1 Transition Bonds that are
authenticated and delivered by the Trustee to or upon the order of the
Issuer on July , 1999 (the "Series Issuance Date") shall have as their
date of authentication July , 1999. Each other Series 1999-1Transition
Bond shall be dated the date of its authentication.

SECTION 4. INITIAL PRINCIPAL AMOUNT; BOND RATE; EXPECTED FINAL
PAYMENT DATE; CLASS FINAL MATURITY DATES.

(a) The Transition Bonds of each Class of the Series 1999-1
Transition Bonds shall have the initial principal amounts, bear interest
at the rates per annum and have Expected Final Payment Dates and Class
Final Maturity Dates as set forth below:

Initial
Principal Bond Expected Final Class
Class Amount Rate Payment Date Final Maturity Date
----- ---------- ----- ------------------ -------------------

The Bond Rate for Classes ___, ___, ____, ___ and ___ shall be
computed on the basis of a 360-day year of twelve 30-day months.

SECTION 5. PAYMENT DATES; EXPECTED AMORTIZATION SCHEDULE FOR
PRINCIPAL; INTEREST; OVERCOLLATERALIZATION AMOUNT; REQUIRED CAPITAL
AMOUNT.

(a) Payment Dates. The Payment Dates for each Class of the Series
1999-1 Transition Bonds are March 25, June 25, September 25 and December 26
of each year or, if any such date is not a Business Day, the next
succeeding Business Day, commencing on December 26, 1999 and continuing
until the earlier of repayment of such Class in full and the applicable
Class Final Maturity Date.

(b) Expected Amortization Schedule for Principal. Unless an Event of
Default has incurred and is continuing and the unpaid principal amount of
all Series of Transition Bonds has been declared to be due and payable
together with accrued and unpaid interest thereon, on each Payment Date the
Trustee shall distribute to the Series 1999-1 Transition Bondholders of
record as of the related Record Date amounts payable in respect of the
Series 1999-1 Transition Bonds pursuant to Section 8.02(e) of the Indenture
as principal, in accordance with the Expected Amortization Schedule. To the
extent that more than one Class of the Series 1999-1 Transition Bonds is to
receive payments of principal in accordance with the Expected Amortization
Schedule on any Payment Date, such amounts will be allocated pro rata
between such Classes based on the principal scheduled to be paid to such
Classes in accordance with the Expected Amortization Schedule on such
Payment Date; provided, however, that if one or more Classes did not
receive principal on the prior Payment Date and as a result the aggregate
Outstanding Amount of such Class or Classes was not reduced to the balance
indicated in the Expected Amortization Schedule on such Payment Date, then
such Classes will be

(i) allocated funds from the Series 1999-1 Subaccount to make up such
shortfalls prior to any Classes receiving funds in respect of
principal scheduled to be paid on the current Payment Date and

(ii) allocated funds from the Series 1999-1 Subaccount in respect of
prior shortfalls on a pro rata basis based on the amount of such
shortfalls;

provided, however, that other than in the event of a redemption in no event
shall a principal payment pursuant to this Section 5(b) on any Class on a
Payment Date be greater than the amount that reduces the Outstanding Amount
of such Class of Series 1999-1 Transition Bonds to the amount specified in
the Expected Amortization Schedule for such Class and Payment Date.

(c) Interest. Interest will be payable on each Class of the Series
1999-1 Transition Bonds on each Payment Date in an amount equal to one-
quarter of the product of

(i) the applicable Bond Rate and

(ii) the Outstanding Amount of the related Class of Transition Bonds
as of the close of business on the preceding Payment Date after giving
effect to all payments of principal made to the holders of the related
Class of Series 1999-1 Transition Bonds on such preceding Payment
Date;

provided that, with respect to the initial Payment Date or if no payment
has yet been made, interest on the outstanding principal balance shall
accrue from and including the Series Issuance Date to, but excluding, the
following Payment Date.

(d) Overcollateralization Amount. The Overcollateralization Amount for
the Series 1999-1 Transition Bonds shall be $ .

(e) Required Capital Amount. The Required Reserve Amount for the
Series 1999-1 Transition Bonds shall be $___________.

(f) Issuer to Deliver Revised Schedule A. Not later than the date of
any partial redemption of the Series 1999-1 Transition Bonds, the Issuer
shall deliver to the Trustee a replacement Schedule A hereto, adjusted to
reflect such partial redemption and setting forth the revised Expected
Amortization Schedule for each Payment Date.

SECTION 6. AUTHORIZED DENOMINATIONS. The Series 1999-1 Transition
Bonds shall be issuable in the Authorized Denominations.

SECTION 7. REDEMPTION.

(a) Mandatory Redemption. The Series 1999-1 Transition Bonds shall not
be subject to mandatory redemption.

(b) Optional Redemption. [The Series 1999-1 Transition Bonds of all
Classes shall not be subject to optional redemption by the Issuer.] [The
Issuer may, at its option, redeem all, but not less than all, of the
Transition Bonds of Series 1999-1 on any Payment Date in accordance with
Section 10.01 of the Indenture if, after giving effect to payments that
would otherwise be made on such Payment Date, the Outstanding Amount of
such Series has been reduced to less than five percent of the initial
principal balance of such Series.]

[SECTION 8. CREDIT ENHANCEMENT. No credit enhancement (other than the
Overcollateralization Amount and the Required Capital Amount) is provided
for the Series 1999-1Transition Bonds.]

SECTION 9. DELIVERY AND PAYMENT FOR THE SERIES 1999-1 TRANSITION
BONDS; FORM OF THE SERIES 1999-1 TRANSITION BONDS. The Trustee shall
deliver the Series 1999-1 Transition Bonds to the Issuer when authenticated
in accordance with Section 2.02 of the Indenture. The Series 1999-1
Transition Bonds of each Class shall be in the form of Exhibits __ through __
hereto.

SECTION 10. CONFIRMATION OF INDENTURE. As supplemented by this
Supplement, the Indenture is in all respects ratified and confirmed and the
Indenture, as so supplemented by this Supplement, shall be read, taken, and
construed as one and the same instrument.

SECTION 11. COUNTERPARTS. This Supplement may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all of such counterparts shall together constitute but one
and the same instrument.

SECTION 12. GOVERNING LAW. This Supplement shall be construed in
accordance with the laws of the Commonwealth of Pennsylvania, without
reference to its conflict of law provisions, and the obligations, rights
and remedies of the parties hereunder shall be determined in accordance
with such laws.

IN WITNESS WHEREOF, the Issuer and the Trustee have caused this
Supplement to be duly executed by their respective officers thereunto duly
authorized as of the first day of the month and year first above written.

PP&L TRANSITION BOND COMPANY LLC,
as Issuer

By:___________________________
Name:
Title:

THE BANK OF NEW YORK,
not in its individual capacity but
solely as Trustee on behalf
on behalf of the Transition Bondholders,

By:___________________________
Name:
Title:

SCHEDULE A

Expected Amortization Schedule

Outstanding Principal Balance

------------ -------- -------- -------- -------- -------- --------
Payment Date Class __ Class __ Class __ Class __ Class __ Class __
------------ -------- -------- -------- -------- -------- --------

Series Issuance Date..

October __, 1999

January __, 2000

April __, 2000

July __, 2000

October __, 2000

January __, 2001

April __, 2001

July __, 2001

October __, 2001

January __, 2002

April __, 2002

July __, 2002

October __, 2002

January __, 2003

April __, 2003

July __, 2003

October __, 2003

January __, 2004

April __, 2004

July __, 2004

October __, 2004

January __, 2005

April __, 2005

July __, 2005

October __, 2005

January __, 2006

April __, 2006

July __, 2006

October __, 2006

January __, 2007

April __, 2007

July __, 2007

October __, 2007

January __, 2008

April __, 2008

July __, 2008

October __, 2008

January __, 2009

April __, 2009

July __, 2009

Exhibit A to Series Supplement

REGISTERED $

No. ______

SEE REVERSE FOR CERTAIN DEFINITIONS

CUSIP NO.

THE PRINCIPAL OF THIS CLASS __ TRANSITION BOND WILL BE PAID IN
INSTALMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL
AMOUNT OF THIS CLASS __ TRANSITION BOND AT ANY TIME MAY BE LESS THAN THE
AMOUNT SHOWN ON THE FACE HEREOF.

PP&L TRANSITION BOND COMPANY LLC

TRANSITION BONDS, SERIES 1999-1, Class _____.

Bond Original Principal Expected Final Class Final
Rate Amount Payment Date Maturity Date

_____% $_________________ ______________ ______________

PP&L Transition Bond Company LLC, a limited liability company
organized and existing under the laws of the State of Delaware (herein
referred to as the "Issuer"), for value received, hereby promises to pay to
the Registered Holder hereof, or registered assigns, the Original Principal
Amount shown above in quarterly instalments on the Payment Dates (as
defined below) and in the amounts specified on the reverse hereof or, if
less, the amounts determined pursuant to Section 8.02(e) of the Indenture,
in each year, commencing on the date determined as provided on the reverse
hereof and ending on or before the Class Final Maturity Date, to pay the
entire unpaid principal hereof on the Class Final Maturity Date and to pay
interest, at the Bond Rate shown above at a [floating] [fixed] rate
calculated as follows [insert rate or formula], on each January __, April
__, July __ and October __, and or if any such day is not a Business Day,
the next succeeding Business Day, commencing on , 1999 and continuing
until the earlier of the payment of the principal hereof and the Class
Final Maturity Date (each a "Payment Date"), on the principal amount of
this Series 1999-1, Class __ Transition Bond outstanding from time to time.
Interest on this Series 1999-1, Class __ Transition Bond will accrue for
each Payment Date from the most recent Payment Date on which interest has
been paid to but excluding such Payment Date or, if no interest has yet
been paid, from July , 1999. Interest will be computed on the basis of a
360-day year of twelve 30-day months the actual number of days from the
preceding Payment Date, to but excluding the next Payment Date, divided by
360 . Such principal of and interest on this Series 1999-1, Class __
Transition Bond shall be paid in the manner specified on the reverse
hereof.

The principal of and interest on this Series 1999-1, Class __
Transition Bond are payable in such coin or currency of the United States
of America as at the time of payment is legal tender for payment of public
and private debts. All payments made by the Issuer with respect to this
Class Transition Bond shall be applied first to interest due and
payable on this Class Transition Bond as provided above and then to the
unpaid principal of and premium, if any, on this Class Transition Bond,
all in the manner set forth in Section 8.02(e) of the Indenture.

Reference is made to the further provisions of this Class
Transition Bond set forth on the reverse hereof, which shall have the same
effect as though fully set forth on the face of this Class Transition
Bond.

Unless the certificate of authentication hereon has been executed by
the Trustee whose name appears below by manual signature, this Class
Transition Bond shall not be entitled to any benefit under the Indenture
referred to on the reverse hereof, or be valid or obligatory for any
purpose.

IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by an Authorized Officer of the Member.

Date:

PP&L TRANSITION BOND
COMPANY LLC,

By:________________________
Name:
Title:

TRUSTEE'S CERTIFICATE OF AUTHENTICATION

Dated: July __, 1999

This is one of the Class _____ Transition Bonds of the Series 1999-1
Transition Bonds, designated above and referred to in the within-mentioned
Indenture.

THE BANK OF NEW YORK,
not in its individual capacity but
solely as Trustee on behalf of the
Transition Bondholders,

By:_______________________
Name:
Title:

REVERSE OF TRANSITION BOND

This Series ___, Class __ Transition Bond is one of a duly
authorized issue of Transition Bonds of the Issuer, designated as its
Transition Bonds (herein called the "Transition Bonds"), issued and to be
issued in one or more Series, which Series are issuable in one or more
Classes, and this Series Transition Bond, in which this Series 1999-1,
Class __ Transition Bond represents an interest, consists of Classes,
including the Class __ Transition Bonds (herein called the "Class __
Transition Bonds"), all issued and to be issued under an indenture dated as
of July __, 1999, and a series supplement thereto dated as of July __, 1999
(such series supplement, as supplemented or amended, the "Supplement" and,
collectively with such indenture, as supplemented or amended, the
"Indenture"), each between the Issuer and The Bank of New York, as Trustee
(the "Trustee", which term includes any successor trustee under the
Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the Collateral property
pledged, the nature and extent of the security, the respective rights,
obligations and immunities thereunder of the Issuer, the Trustee and the
Holders of the Transition Bonds and the terms and conditions under which
additional Transition Bonds may be issued. All terms used in this Class
Transition Bond that are defined in the Indenture, as supplemented or
amended, shall have the meanings assigned to them in the Indenture.

The Class __ Transition Bonds, the other Classes of Series __
Transition Bonds and any other Series of Transition Bonds issued by the
Issuer are and will be equally and ratably secured by the Collateral
pledged as security therefor as provided in the Indenture or the Series
1999-1 Supplement.

The principal of this Class __ Transition Bond shall be payable on
each Payment Date only to the extent that amounts in the Collection Account
are available therefor, and only until the outstanding principal balance
thereof on such Payment Date (after giving effect to all payments of
principal, if any, made on such Payment Date) has been reduced to the
principal balance specified in the Expected Amortization Schedule which is
attached to the Supplement as Schedule A, unless payable earlier either
because

(i) an Event of Default shall have occurred and be continuing and the
Trustee or the Holders of Transition Bonds representing not less than
a majority of the Outstanding Amount of the Transition Bonds of all
Series have declared the Transition Bonds to be immediately due and
payable in accordance with Section 5.02 of the Indenture,

(ii) [the Issuer, at its option, shall have called for the redemption
of the Series Transition Bonds in whole or from time to time in part
pursuant to Section 10.01 of the Indenture,]

(iii)[the Issuer shall redeem the Series 1999-1 Transition Bonds
pursuant to Section 10.02 of the Indenture] or

(iv) [the Issuer shall have called for the redemption of the Series
1999-1 Transition Bond in whole or from time to time in part pursuant
to Section 7(a) or 7(b) of the Supplement.]

However, actual principal payments may be made in lesser than expected
amounts and at later than expected times as determined pursuant to Section
8.02(e) of the Indenture. The entire unpaid principal amount of this Series
1999-1, Class __ Transition Bond shall be due and payable on the earlier of
the Class Final Maturity Date hereof and the Redemption Date, if any,
herefor. Notwithstanding the foregoing, the entire unpaid principal amount

of the Transition Bonds shall be due and payable, if not then previously
paid, on the date on which an Event of Default shall have occurred and be
continuing and the Trustee or the Holders of the Transition Bonds of all
Series representing not less than a majority of the Outstanding Amount of
the Transition Bonds have declared the Transition Bonds to be immediately
due and payable in the manner provided in Section 5.02 of the Indenture.
All principal payments on the Class __ Transition Bonds shall be made pro
rata to the Class __ Transition Bondholders entitled thereto based on the
respective principal amounts of the Series 1999-1, Class __ Transition
Bonds held by them.

Payments of interest on this Class __ Transition Bond due and payable
on each Payment Date, together with the instalment of principal or premium,
if any, due on this Class __ Transition Bond on such Payment Date shall be
made by check mailed first-class, postage prepaid, to the Person whose name
appears as the Registered Holder of this Class __ Transition Bond (or one
or more predecessor of such Transition Bond) in the Transition Bond
Register as of the close of business on the Record Date or in such other
manner as may be provided in the Supplement, except that with respect to
Class __ Transition Bonds registered on the Record Date in the name of a
Clearing Agency, payments will be made by wire transfer in immediately
available funds to the account designated by such Clearing Agency and
except for the final instalment of principal and premium, if any, payable
with respect to this Class __ Transition Bond on a Payment Date which shall
be payable as provided below. Such checks shall be mailed to the Person
entitled thereto at the address of such Person as it appears in the
Transition Bond Register as of the applicable Record Date without requiring
that this Class __ Transition Bond be submitted for notation of payment.
Any reduction in the principal amount of this Class __ Transition Bond (or
any one or more predecessor to such Transition Bond) effected by any
payments made on any Payment Date shall be binding upon all future Holders
of this Class __ Transition Bond and of any Class __ Transition Bond
issued upon the registration of transfer hereof or in exchange hereof or in
lieu hereof, whether or not noted hereon. If funds are expected to be
available, as provided in the Indenture, for payment in full of the then
remaining unpaid principal amount of this Class __ Transition Bond on a
Payment Date, then the Trustee, in the name of and on behalf of the Issuer,
will notify the Person who was the Registered Holder hereof as of the
second preceding Record Date to such Payment Date by notice mailed no later
than five days prior to such final Payment Date and shall specify that such
final instalment will be payable to the Registered Holder hereof as of the
Record Date immediately preceding such final Payment Date and only upon
presentation and surrender of this Class __ Transition Bond and shall
specify the place where this Series 1999-1, Class __ Transition Bond may be
presented and surrendered for payment of such instalment.

The Issuer shall pay interest on overdue instalments of interest on
this Class __ Transition Bond at the Bond Rate for Class __ to the extent
lawful.

[As provided in the Indenture, the Class __ Transition Bonds may be
redeemed, in whole or from time to time in part, at the option of the
Issuer on any Redemption Date at the Redemption Price. The Issuer will
also be required to redeem the Series 1999-1, Class __ Transition Bonds in
certain circumstances as provided in Sections 7(a) and 7(b) of the
Supplement.]

As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Class __ Transition Bond may be
registered in the Transition Bond Register upon surrender of this Class __
Transition Bond for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by the Holder hereof or his attorney duly authorized

in writing, with such signature guaranteed by an Eligible Guarantor
Institution, and thereupon one or more new Class __ Transition Bonds of any
Authorized Denominations and in the same aggregate initial principal amount
will be issued to the designated transferee or transferees. No service
charge will be charged for any registration of transfer or exchange of this
Class __ Transition Bond, but the transferor may be required to pay a sum
sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or exchange.

Prior to the due presentment for registration of transfer of this
Class __ Transition Bond, the Issuer, the Trustee and any agent of the
Issuer or the Trustee may treat the Person in whose name this Class __
Transition Bond is registered (as of the day of determination) as the owner
hereof for the purpose of receiving payments of principal of and premium,
if any, and interest on this Class __ Transition Bond and for all other
purposes whatsoever, whether or not this Class __ Transition Bond be
overdue, and neither the Issuer, the Trustee nor any such agent shall be
affected by notice to the contrary.

The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of
the Issuer and the rights of the Holders of the Transition Bonds under the
Indenture at any time by the Issuer with the consent of the Holders of
Transition Bonds representing a majority of the Outstanding Amount of all
Transition Bonds at the time Outstanding of each Series or Class to be
affected. The Indenture also contains provisions permitting the Holders of
Transition Bonds representing specified percentages of the Outstanding
Amount of the Transition Bonds of all Series, on behalf of the Holders of
all the Transition Bonds, to waive compliance by the Issuer with certain
provisions of the Indenture and certain past defaults under the Indenture
and their consequences. Any such consent or waiver by the Holder of this
Class __ Transition Bond (or any one of more predecessor of such transition
bonds) shall be conclusive and binding upon such Holder and upon all future
Holders of this Class __ Transition Bond and of any Class __ Transition
Bond issued upon the registration of transfer hereof or in exchange hereof
or in lieu hereof whether or not notation of such consent or waiver is made
upon this Class __ Transition Bond. The Indenture also permits the Trustee
to amend or waive certain terms and conditions set forth in the Indenture
without the consent of Holders of the Transition Bonds issued thereunder.

The term "Issuer" as used in this Series 1999-1, Class __ Transition
Bond includes any successor to the Issuer under the Indenture.

The Issuer is permitted by the Indenture, under certain circumstances,
to merge or consolidate, subject to the rights of the Trustee and the
Holders of Transition Bonds under the Indenture.

The Class __ Transition Bonds are issuable only in registered form in
Authorized Denominations as provided in the Indenture and the Supplement,
subject to certain limitations therein set forth.

This Class __ Transition Bond, the Indenture and the Supplement shall
be construed in accordance with the laws of the Commonwealth of
Pennsylvania, without reference to its conflict of law provisions, and the
obligations, rights and remedies of the parties hereunder and thereunder
shall be determined in accordance with such laws.

No reference herein to the Indenture and no provision of this Class
Transition Bond or of the Indenture shall alter or impair the obligation of
the Issuer, which is absolute and unconditional, to pay the principal of
and interest on this Class __ Transition Bond at the times, place, and
rate, and in the coin or currency herein prescribed.

ASSIGNMENT

Social Security or taxpayer I.D. or other identifying number of assignee

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto ___

(name and address of assignee)

the within Class ____ Transition Bond and all rights thereunder, and
hereby irrevocably constitutes and appoints

(name and address of appointee)

attorney, to transfer said Class ____ Transition Bond on the books kept for
registration thereof, with full power of substitution in the premises.

Dated:

___________ _________________________________*
Signature Guaranteed:

___________ _________________________________

* NOTE: The signature to this assignment must correspond with the name
of the registered owner as it appears on the face of the within Class
Transition Bond in every particular, without alteration, enlargement
or any change whatsoever.

EXHIBIT B

APPENDIX A

MASTER DEFINITIONS

[To be used in connection with the Servicing Agreement,
the Administration Agreement and the Indenture]

The definitions contained in this Appendix A are applicable to the singular
as well as the plural forms of such terms.

Act has the meaning specified in Section 11.03 of the Indenture.

Adjustment Date means (i) January 1 of each year through January 1,
2008 and (ii) the first day of each month or calendar quarter

thereafter in respect of which the Servicer requests the PUC to
approve an Intangible Transition Charge Adjustment.

Administration Agreement means the Administration Agreement dated as
of July __, 1999, between PP&L, as Administrator, and the Issuer.

Administrator means PP&L as administrator under the Administration
Agreement.

Affiliate means, with respect to any specified Person, any other
Person controlling or controlled by or under common control with such
specified Person. For the purposes of this definition, control when
used with respect to any specified Person means the power to direct
the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or
otherwise; and the terms controlling and controlled have meanings
correlative to the foregoing.

Annual Accountant's Report has the meaning assigned to that term
in Section 3.07 of the Servicing Agreement.

Assignment means the Assignment executed and delivered by PP&L in
favor of CEP Securities Co. LLC pursuant to, and in the form set forth
in Exhibit A of, the Contribution Agreement.

Authorized Denominations means, with respect to any Series or Class of
Transition Bonds, $1,000 and integral multiples thereof, or such other
denominations as may be specified in the Series Supplement therefor.

[Authorized Officer means, with respect to the Issuer, any Manager or
the Member of the Issuer and, with respect to the Member of the
Issuer, any officer who is authorized to act for the Member in matters
relating to the Issuer and who is identified on the list of Authorized
Officers delivered by the Member to the Trustee as of the date hereof
(as such list may be modified or supplemented from time to time
thereafter).]

Basic Documents means the Issuer LLC Agreement, the Issuer Certificate
of Formation, the Contribution Agreement, the Assignment, the Sale
Agreement, the Servicing Agreement, the Administration Agreement, the
Indenture and any Bills of Sale.

Billing Month means a particular calendar month during which
Intangible Transition Charges are billed to Customers.

Bill of Sale means any bill of sale issued by CEP Securities to the
Issuer pursuant to the Sale Agreement evidencing the sale of
Intangible Transition Property by CEP Securities to the Issuer.

Bond Rate means, with respect to each Series or, if applicable, each
Class of Transition Bonds, the rate at which interest accrues on the
principal balance of Transition Bonds of such Series or Class, as
specified in the Series Supplement therefor.

Book-Entry Transition Bonds means beneficial interests in the
Transition Bonds, ownership and transfers of which shall be made
through book entries by a Clearing Agency as described in Section 2.11
of the Indenture.

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, New York are required
or authorized by law or executive order to remain closed.

Calculation Date means, with respect to any Adjustment Date, (i)
________ of each year through [2008] and (ii) thereafter, the
fifteenth day of the month preceding such Adjustment Date.

Capital Subaccount has the meaning specified in Section 8.02(a) of the
Indenture.

CEP Securities means CEP Securities Co. LLC, a Delaware limited
liability company, or its successor.

Class means, with respect to any Series, any one of the classes
of Transition Bonds of that Series, as specified in the Series
Supplement for that Series.

Class Final Maturity Date in relation to the Notes issued means the
Final Maturity Date of a Class, as specified in the Series Supplement
for the related Series.

Clearing Agency means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.

Clearing Agency Participant means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a
Clearing Agency effects book-entry transfers and pledges of securities
deposited with the Clearing Agency.

Code means the Internal Revenue Code of 1986, as amended from time to
time, and Treasury Regulations promulgated thereunder.

Collateral has the meaning specified in the Granting Clause of the
Indenture.

Collection Account has the meaning specified in Section 8.02(a) of the
Indenture.

Collection Period means the period from and including the first
day of a calendar month to but excluding the first day of the
next calendar month.

Collections Curve means a separate forecast prepared by the Servicer
for each Customer Class of the percentages of amounts billed in a
Billing Month that are expected to be received during each of the
following seven months.

Collections Curve Payment means, with respect to a Billing Month, the
sum of the amounts paid to the Trustee over a seven-month period
following that Billing Month based on the Collections Curves for that
Billing Month.

Commission means the U.S. Securities and Exchange Commission, and any
successor thereof.

Competition Act means the Pennsylvania Electricity Generation
Customer Choice and Competition Act, Chapter 28 of Title 66 of
the Pennsylvania Consolidated Statutes, 66 Pa. C.S., Sections
2801, et seq.

Competitive Transition Charges means the competitive transition
charges that PP&L may impose on Customers pursuant to the Competition
Act and the Qualified Rate Order.

Contract Rights has the meaning specified in Section 2.01 of the
Contribution Agreement.

Contributed Property has the meaning specified in Section 2.01 of the
Contribution Agreement.

Contribution Agreement means the Contribution Agreement, dated as
of May 13, 1999, among PP&L, Group, Reserves and CEP Securities,
as amended by the Amendment thereto dated July __, 1999, as the
same may be further amended and supplemented from time to time.

Corporate Trust Office means the principal office of the Trustee at
which at any particular time its corporate trust business shall be
administered, which office at date of the execution of this Indenture
is located at ___________________, New York, NY _____, Attention:
_______ or at such other address as the Trustee may designate from
time to time by notice to the Transition Bondholders and the Issuer,
or the principal corporate trust office of any successor Trustee (the
address of which the successor Trustee will notify the Transition
Bondholders and the Issuer).

Covenant Defeasance Option has the meaning specified in Section 4.01
of the Indenture.

Curve Payment Shortfall means, with respect to each Billing Month and
the Reconciliation Date for such Billing Month, the excess of actual
ITC Collections the Servicer has received for that Billing Month over
the Collections Curve Payments previously made to the Trustee for that
Billing Month.

Customer Class means each of the customer classes specified in the
Qualified Rate Order.

Customers means each person that

(a) 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
retail customer of electric service of PP&L located within PP&L's
service territory after January 1, 1997,

(b) is still located within PP&L's service territory, and

Daily Remittance Date means, if the Servicer has not satisfied
the conditions of Section 5.10(b) of the Servicing Agreement,
each Business Day of each calendar month.

Default means any occurrence that is, or with notice or the lapse of
time or both would become, an Event of Default.

Defeasance Subaccount has the meaning specified in Section 8.02(a) of
the Indenture.

Definitive Transition Bonds has the meaning specified in Section 2.11
of the Indenture.

DTC Agreement means the agreement between the Issuer, the Trustee and
The Depository Trust Company, as the initial Clearing Agency, dated as
of the Closing Date, relating to the Transition Bonds, substantially
in the form of Exhibit C of the Indenture, as the same may be amended
and supplemented from time to time.

Eligible Deposit Account means either:

(a) a segregated account with an Eligible Institution or

(b) a segregated trust account with the corporate trust department
of a depository institution organized under the laws of the United
States of America or any State (or any domestic branch of a foreign
bank), having corporate trust powers and acting as trustee for
funds deposited in such account, so long as any of the securities
of such depository institution shall have a credit rating from each
Rating Agency in one of its generic rating categories which
signifies investment grade.

Eligible Guarantor Institution means a firm or other entity identified
in Rule 17Ad-15 under the Exchange Act as "an eligible guarantor
institution," including (as such terms are defined therein):

(a) a bank;

(b) a broker, dealer, municipal securities broker or dealer or
government securities broker or dealer;

(d) a national securities exchange, registered securities
association or clearing agency; or

(e) a savings association that is a participant in a securities
transfer association.

Eligible Institution means:

(a) the corporate trust department of the Trustee or

(b) 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

(i) has either

(A) a long-term unsecured debt rating of "AAA" by Standard &
Poor's and "Al" by Moody's or

(B) a certificate of deposit rating of "A-1+" by Standard &
Poor's and "P-1" by Moody's, or any other long-term,
short-term or certificate of deposit rating acceptable to the
Rating Agencies and

(ii) whose deposits are insured by the FDIC.

Eligible Investments mean book-entry securities, negotiable
instruments or securities represented by instruments in bearer or
registered form which evidence:

(a) direct obligations of, and obligations fully guaranteed as
to timely payment by, the United States of America;

(b) demand deposits, time deposits or certificates of deposit
of any depositors institution or trust company incorporated
under the laws of the United States of America or any State
thereof (or any domestic branch of a foreign bank) and subject
to supervision and examination by Federal or State banking or
depository institution authorities; provided, however, that at
the time of the investment or contractual commitment to invest
therein, the commercial paper or other short-term unsecured
debt obligations (other than such obligations the rating of
which is based on the credit of a Person other than such
depository institution or trust company) thereof shall have a
credit rating from each of the Rating Agencies in the highest
investment category granted thereby;

(c) commercial paper or other short term obligations of any
corporation organized under the laws of the United States of
America (other than PP&L) whose ratings, at the time of the
investment or contractual commitment to invest therein, from
each of the Rating Agencies are in the highest investment
category granted thereby;

(d) investments in money market funds having a rating from
each of the Rating Agencies in the highest investment category
granted thereby (including funds for which the Trustee or any
of its Affiliates act as investment manager or advisor);

(e) bankers' acceptances issued by any depository institution
or trust company referred to in clause (b) above;

(f) repurchase obligations with respect to any security that
is a direct obligation of, or fully guaranteed by, the United
States of America or any agency or instrumentality thereof the
obligations of which are backed by the full faith and credit
of the United States of America, in either case entered into
with a depository institution or trust company (acting as
principal) described in clause (b) above;

(g) repurchase obligations with respect to any security or
whole loan entered into with

(i) a depository institution or trust company (acting as
principal) described in clause (b) above (except that the
rating referred to in the proviso in this clause (b) shall
be A-1 or higher in the case of Standard & Poor's) (any
depository institution or trust company being referred to
in this definition as a "financial institution"),

(ii) a broker/dealer (acting as principal) registered as a
broker or dealer under Section 15 of the Exchange Act (any
broker/dealer being referred to in this definition as a
"broker/dealer"), the unsecured short-term debt obligations
of which are rated P-1 by Moody's and at least A-1 by
Standard & Poor's at the time of entering into this
repurchase obligation, or

(iii) an unrated broker/dealer, acting as principal, that
is a wholly-owned subsidiary of a non-bank or bank holding
company the unsecured short-term debt obligations of which
are rated P-1 by Moody's and at least A-1 by Standard &
Poor's at the time of purchase; or

(h) any other investment permitted by each of the Rating
Agencies;

provided, however, that:

(i) 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 such 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

(ii) 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 such 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).

Event of Default has the meaning specified in Section 5.01 of the
Indenture.

Excess Curve Payment means, with respect to each Billing Month and the
Reconciliation Date for such Billing Month, the excess of the
Collections Curve Payments previously made to the Trustee for that
Billing Month over actual ITC Collections the Servicer has received
for that Billing Month.

Exchange Act means the Securities Exchange Act of 1934, as amended.

Executive Officer means, with respect to any corporation, the Chief
Executive Officer, Chief Operating Officer, Chief Financial Officer,
Chief Information Officer, President, Executive Vice President, any
Vice President, the Secretary or the Treasurer of such corporation;
and with respect to any limited liability company, any manager
thereof.

Expected Amortization Schedule means, with respect to each Series or,
if applicable, each Class of Transition Bonds, the expected
amortization schedule for principal thereof, as specified in the
Series Supplement therefor.

Expected Final Payment Date means, with respect to each Series or, if
applicable, each Class of Transition Bonds, the date when all interest
and principal is scheduled to be paid for that Series or Class in
accordance with the Expected Amortization Schedule, as specified in
the Series Supplement therefor.

FDIC means the Federal Deposit Insurance Corporation or any successor.

Final Maturity Date means, for each Series or, if applicable, each
Class of Transition Bonds, the date by which all principal and
interest on the Transition Bonds is required to be paid, as specified
in the Series Supplement therefor.

Financing Issuance means an issuance of a new Series of Transition
Bonds under the Indenture to provide funds to finance the purchase by
the Issuer of Intangible Transition Property.

Fitch means Fitch IBCA, Inc., or its successor.

Formation Documents means, collectively, the Issuer LLC
Agreement, the Issuer Certificate of Formation and any other
document pursuant to which the Issuer is formed or governed, as
the same may be amended and supplemented from time to time.

General Subaccount has the meaning specified in Section 8.02(a) of the
Indenture.

Grant means mortgage, pledge, bargain, sell, warrant, alienate,
remise, release, convey, assign, transfer, create, and grant a lien
upon and a security interest in and right of set-off against, deposit,
set over and confirm pursuant to this Indenture. A Grant of the
Collateral or of any other agreement or instrument shall include all
rights, powers and options (but none of the obligations) of the
Granting party thereunder, including the immediate and continuing
right to claim for, collect, receive and give receipt for principal,
interest and other payments in respect of the Collateral and all other
moneys payable thereunder, to give and receive notices and other
communications, to make waivers or other agreements, to exercise all
rights and options, to bring Proceedings in the name of the Granting
party or otherwise and generally to do and receive anything that the
Granting party is or may be entitled to do or receive thereunder or
with respect thereto.

Group means CEP Group, Inc., a Pennsylvania corporation, or its
successor.

Holder or Transition Bondholder means the Person in whose name a
Transition Bond of any Series or Class is registered on the Transition
Bond Register.

Indemnification Event means an event which triggers PP&L's obligation
to indemnify CEP Securities, the Issuer and the Trustee, for itself
and on behalf of the Transition Bondholders, and each of their
respective managers, officers, directors and agents, pursuant to
Section 5.01 of the Contribution Agreement.

Indemnity Amounts means any indemnification obligations payable by
PP&L pursuant to Section 5.01 of the Contribution Agreement or the
Servicer pursuant to Section 5.01 of the Servicing Agreement, as
applicable.

Indenture means the Indenture dated as of July __, 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 hereto, and shall include the forms and terms of the
Transition Bonds established thereunder.

Independent means, when used with respect to any specified Person,
that the Person

(a) is in fact independent of the Issuer, any other obligor upon
the Transition Bonds, PP&L, Group, Reserves, CEP Securities and any
Affiliate of any of the foregoing Persons,

(b) does not have any direct financial interest or any material
indirect financial interest in the Issuer, any such other obligor,
PP&L, Group, Reserves, CEP Securities or any Affiliate of any of
the foregoing Persons and

(c) is not connected with the Issuer, any such other obligor, PP&L,
Group, Reserves, CEP Securities or any Affiliate of any of the
foregoing Persons as an officer, employee, promoter, underwriter,
trustee, partner, director or person performing similar functions.

Independent Certificate means a certificate or opinion to be delivered
to the Trustee under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.01 of the
Indenture, made by an Independent appraiser or other expert appointed
by an Issuer Order and approved by the Trustee in the exercise of
reasonable care, and such opinion or certificate shall state that the
signer has read the definition of "Independent" in this Appendix A and
that the signer is Independent within the meaning thereof.

Initial Intangible Transition Property means the Intangible
Transaction Property sold by the Seller to the Issuer as of the
Initial Transfer Date pursuant to the Sale Agreement.

Initial Transfer Date means the Series Issuance Date for the first
Series of Transition Bonds.

Insolvency Event means, with respect to a specified Person,

(a) the filing of a decree or order for relief by a court
having jurisdiction in the premises in respect of such Person
or any substantial part of its property in an involuntary case
under any applicable federal or state bankruptcy, insolvency
or other similar law now or hereafter in effect, or appointing
a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official for such Person or for any
substantial part of its property, or ordering the winding-up
or liquidation of such Person's affairs, and such decree or
order shall remain unstayed and in effect for a period of 90
consecutive days or

(b) the commencement by such Person of a voluntary case under
any applicable federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect, or the consent
by such Person to the entry of an order for relief in an
involuntary case under any such law, or the consent by such
Person to the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official for such Person or for any
substantial part of its property, or the making by such Person
of any general assignment for the benefit of creditors, or the
failure by such Person generally to pay its debts as such
debts become due, or the taking of action by such Person in
furtherance of any of the foregoing.

Intangible Transition Charge Adjustment means each adjustment to
Intangible Transition Charges related to the Transferred
Intangible Transition Property made in accordance with Section
4.01 of the Servicing Agreement and the Issuer Annex [or in
connection with the conveyance to the Issuer of Intangible
Transition Property or the redemption or refunding by the Issuer
of Transition Bonds].

Intangible Transition Charge Adjustment Process means the process by
which Intangible Transition Charges are adjusted pursuant to the
Servicing Agreement and the Competition Act.

Intangible Transition Charges means the intangible transition
charges authorized by the PUC to be imposed on all Customers by
PP&L or its successor to recover Qualified Transition Expenses
pursuant to the Competition Act and the Qualified Rate Order.

Intangible Transition Property means the irrevocable right of
PP&L or its successor or assignee to collect Intangible
Transition Charges from Customers to recover through the issuance
of Transition Bonds the Qualified Transition Expenses described
in the Qualified Rate Order, including all right, title and
interest of PP&L or its successor or assignee in such order and
in all revenues, collections, claims, payments, money or proceeds
of or arising from Intangible Transition Charges pursuant to such
order, and all proceeds of any of the foregoing.

Intangible Transition Property Documentation means all documents
relating to the Intangible Transition Property, including copies
of the Qualified Rate Order and all documents filed with the PUC
in connection with any Intangible Transition Charges Adjustment,
as described in Section 3.08 of the Servicing Agreement.

Interest means, for any Payment Date for any Series or Class of
Transition Bonds, the sum, without duplication, of:

(a) an amount equal to the amount of interest accrued at the
applicable interest rates from the prior Payment Date
with respect to that Series or Class;

(b) any unpaid interest, to the extent permitted by law, plus
any interest accrued on this unpaid interest;

(d) with respect to a Series or Class 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.

Issuer Annex means, Annex 1 of the Servicing Agreement.

Issuer Certificate of Formation means the Certificate of Formation of
the Issuer which was filed with the Delaware Secretary of State's
Office on March 25, 1999.

Issuer LLC Agreement means the Amended and Restated Limited
Liability Company Agreement between the Issuer and PP&L, as sole
Member, dated as of July __, 1999.

Issuer Officer's Certificate means a certificate signed by any
Authorized Officer of the Issuer, under the circumstances described
in, and otherwise complying with, the applicable requirements of
Section 11.01 of the Indenture, and delivered to the Trustee. Unless
otherwise specified, any reference in the Indenture to an Officer's
Certificate shall be to an Officer's Certificate of any Authorized
Officer of the Issuer.

Issuer Opinion of Counsel means one or more written opinions of
counsel who may, except as otherwise expressly provided in the
Indenture, be employees of or counsel to the Issuer and who shall be
reasonably satisfactory to the Trustee, and which opinion or opinions
shall be addressed to the Trustee, as Trustee, and shall comply with
any applicable requirements of Section 11.01 of the Indenture, and
shall be in a form reasonably satisfactory to the Trustee.

Issuer Order and Issuer Request means a written order or request
signed in the name of the Issuer by any one of its Authorized Officers
and delivered to the Trustee.

ITC Collections means amounts collected in respect of Intangible
Transition Charges.

Legal Defeasance Option has the meaning specified in Section 4.01(b)
of the Indenture.

Lien means a security interest, lien, charge, pledge, equity or
encumbrance of any kind.

[Losses means collectively, any and all liabilities, obligations,
losses, damages, payments, costs or expenses of any kind
whatsoever.]

Manager means any manager of the Issuer.

Member means PP&L, as the sole member of the Issuer.

Monthly Remittance Date means, if the Servicer has satisfied the
conditions of Section 5.10(b) of the Servicing Agreement, the
twentieth day of each calendar month (or if such twentieth day is not
a Business Day, the next Business day).

Moody's means Moody's Investors Service Inc., or its successor.

Officers' Certificate means a certificate signed, in the case of
PP&L, by

(a) the chairman of the board, the president, the vice
chairman of the board, the executive vice president or any
vice president; and

(b) a treasurer, assistant treasurer, secretary or assistant
secretary

and, in the case of CEP Securities, by two of the Managers of CEP
Securities.

Operating Expenses means, with respect to the Issuer, all fees, costs,
expenses and indemnity payments owed by the Issuer, including all
amounts owed by the Issuer to the Trustee, the Quarterly Servicing
Fee, the quarterly fee payable by the Issuer to the Administrator
under the Administration Agreement, the fees and expenses payable by
the Issuer to the independent managers of the Issuer, legal fees and
expenses of the Servicer pursuant to Section 3.09 of the Servicing
Agreement, and legal and accounting fees, costs and expenses of the
Issuer.

Opinion of Counsel means one or more written opinions of counsel
who may be an employee of or counsel to CEP Securities or PP&L,
which counsel shall be reasonably acceptable to the Trustee, the
Issuer or the Rating Agencies, as applicable, and which shall be
in form reasonably satisfactory to the Trustee, if applicable.

Outstanding with respect to Transition Bonds means, as of the date of
determination, all Transition Bonds theretofore authenticated and
delivered under the Indenture except:

(a) Transition Bonds theretofore canceled by the Transition Bond
Registrar or delivered to the Transition Bond Registrar for
cancellation;

(b) Transition Bonds or portions thereof the payment for which
money in the necessary amount has been theretofore deposited with
the Trustee or any Paying Agent in trust for the Holders of such
Transition Bonds; provided, however, that if such Transition Bonds
are to be redeemed, notice of such redemption has been duly given
pursuant to the Indenture or provision therefor, satisfactory to
the Trustee, made; and

(c) Transition Bonds in exchange for or in lieu of other Transition
Bonds which have been authenticated and delivered pursuant to the
Indenture unless proof satisfactory to the Trustee is presented
that any such Transition Bonds are held by a bona fide purchaser;

provided that in determining whether the Holders of the requisite
Outstanding Amount of the Transition Bonds or any Series or Class
thereof have given any request, demand, authorization, direction,
notice, consent or waiver hereunder or under any Basic Document,
Transition Bonds owned by the Issuer, any other obligor upon the
Transition Bonds, PP&L, Group, Reserves, CEP Securities or any
Affiliate of any of the foregoing Persons shall be disregarded and
deemed not to be Outstanding, except that, in determining whether the
Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Transition
Bonds that the Trustee knows to be so owned shall be so disregarded.
Transition Bonds so owned that have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the satisfaction
of the Trustee the pledgee's right so to act with respect to such
Transition Bonds and that the pledgee is not the Issuer, any other
obligor upon the Transition Bonds, PP&L, Group, Reserves, CEP
Securities or any Affiliate of any of the foregoing Persons.

Outstanding Amount means the aggregate principal amount of all
Outstanding Transition Bonds or, if the context requires, all
Outstanding Transition Bonds of a Series or Class Outstanding at the
date of determination.

Overcollateralization means, with respect to any Payment Date, an
amount that, if deposited to the Overcollateralization Subaccount,
would cause the balance in such subaccount to equal the Scheduled
Overcollateralization Level for such Payment Date, without regard to
investment earnings.

Overcollateralization Amount means, with respect to any Series of
Transition Bonds, the amount specified as such in the Series
Supplement therefor.

Overcollateralization Subaccount has the meaning specified in Section
8.02(a) of the Indenture.

Paying Agent means the Trustee or any other Person that meets the
eligibility standards for the Trustee specified in Section 6.11 of the
Indenture and is authorized by the Issuer to make the payments of
principal of or premium, if any, or interest on the Transition Bonds
on behalf of the Issuer.

Payment Date means, with respect to each Series or, if applicable,
each Class of Transition Bonds, each date or dates specified as
Payment Dates for such Series or Class in the Series Supplement
therefor.

Person means any individual, corporation, estate, partnership, joint
venture, association, joint stock company, trust (including any
beneficiary thereof), business trust, limited liability company,
unincorporated organization or government or any agency or political
subdivision thereof.

PP&L means PP&L, Inc., a Pennsylvania corporation, or its successor.

Predecessor Transition Bond means, with respect to any particular
Transition Bond, every previous Transition Bond evidencing all or a
portion of the same debt as that evidenced by such particular
Transition Bond; and, for the purpose of this definition, any
Transition Bond authenticated and delivered under Section 2.06 in lieu
of a mutilated, lost, destroyed or stolen Transition Bond shall be
deemed to evidence the same debt as the mutilated, lost, destroyed or
stolen Transition Bond.

Post-Retail Access means any period after the time that a Customer was
permitted to choose its electricity generation supplier.

Pre-Retail Access means any period prior to the time that a Customer
was permitted to choose its electricity generation supplier.

Principal means, with respect to any Payment Date and each Series or,
if applicable, each Class of Transition Bonds:

(a) the amount of principal scheduled to be paid on such
Payment Date in accordance with the Expected
Amortization Schedule;

(b) the amount of principal due on the Final Maturity Date of
any Series or Class on such Payment Date;

(c) the amount of principal due as a result of the
occurrence and continuance of an Event of Default
and acceleration of the Transition Bonds;

(d) the amount of principal and premium, if any, due as
a result of a redemption of Transition Bonds on such
Payment Date; and

(e) any overdue payments of principal.

Proceeding means any suit in equity, action at law or other judicial
or administrative proceeding.

Projected Transition Bond Balance means, as of any date, the sum of
the amounts provided for in the Expected Amortization Schedules for
each outstanding Series of Transition Bonds and such date.

PUC means the Pennsylvania Public Utility Commission or any
successor.

PUC Regulations means any regulations, orders or directives
promulgated, issued or adopted by the PUC.

Qualified Rate Order means the Final Order issued by the PUC on
August 27, 1998 pursuant to the Competition Act, as such order
has been supplemented by the Supplemental Order issued by the PUC
on May 21, 1999, and as such order may hereafter be further
supplemented by an order of the PUC issued pursuant to paragraph
19 of the August 27, 1998 order.

Qualified Transition Expenses has the meaning assigned to that
term in the Competition Act and the Qualified Rate Order.

Quarterly Servicing Fee means the fee payable to the Servicer on [the
Business Day preceding] each Payment Date for services rendered, in
accordance with Section 5.07 of the Servicing Agreement.

Rating Agency means any rating agency rating the Transition Bonds of
any Class or Series at the time of issuance thereof at the request of
the Issuer. If no such organization or successor is any longer in
existence, "Rating Agency" shall be a nationally recognized
statistical rating organization or other comparable Person designated
by the Issuer, notice of which designation shall be given to the
Trustee under the Indenture, the Member of the Issuer and the
Servicer.

Rating Agency Condition means, with respect to any action, the
notification in writing by each Rating Agency to the Trustee and the
Issuer that such action will not result in a reduction or withdrawal
of the then current rating by such Rating Agency of any outstanding
Series or Class of Transition Bonds.

Reconciliation Date means, with respect to any Billing Month, the
twentieth day (or if such twentieth day is not a Business Day, the
next Business day) in the eighth month after such Billing Month.

Record Date means, with respect to any Payment Date for a Series or
Class, the date set forth as such in the Series Supplement therefor.

Redemption Date means, with respect to each Series or, if applicable,
each Class of Transition Bonds, the date for the redemption of the
Transition Bonds of such Series or Class pursuant to Sections 10.01 or
10.02 of the Indenture or the Series Supplement for such Series or
Class, which in each case shall be a Payment Date.

Redemption Price has the meaning set forth in Section 10.01 of the
Indenture.

Refunding Issuance means issuance of a new Series of Transition Bonds
hereunder to pay the cost of refunding, through redemption or payment
on the Expected Final Payment Date for a Series or Class of Transition
Bonds, all or part of the Transition Bonds of such Series or Class to
the extent permitted by the terms thereof.

Registered Holder means, as of any date, the Person in whose name a
Transition Bond is registered on the Transition Bond Register on such
date.

Released Parties has the meaning specified in Section 5.02(f) of
the Servicing Agreement.

Remittance Date means a Daily Remittance Date or a Monthly Remittance
Date, as applicable.

Required Capital Amount means a capital contribution in an amount
equal to the amount specified in the related Series Supplement,
representing a capital contribution from PP&L.

Reserve Subaccount has the meaning specified in Section 8.02(a) of the
Indenture.

Reserves means CEP Reserves, Inc., a Delaware corporation, or its
successor.

Responsible Officer means, with respect to the Trustee, any officer
within the Corporate Trust Office of the Trustee, including any Vice
President, Assistant Vice President, Secretary, Assistant Secretary,
or any other officer of the Trustee customarily performing functions
similar to those performed by any of the above designated officers and
also, with respect to a particular matter, any other officer to whom
such matter is referred because of such officer's knowledge of and
familiarity with the particular subject.

Retiring Trustee means a Trustee that resigns or vacates the office of
Trustee for any reason.

Sale Agreement means the Intangible Transition Property Sale
Agreement dated July __, 1999, between the Seller and the Issuer.

Sale Date means each date on which the Seller sells, transfers,
assigns and conveys the Intangible Transition Property to the
Issuer.

Scheduled Overcollateralization Level means, with respect to any
Payment Date, the amount set forth as such in [Schedule 1 of the
Indenture], as such Schedule has been adjusted in accordance with
Section 3.19 of the Indenture to reflect redemptions or defeasances of
Transition Bonds and issuances of additional Series of Transition
Bonds.

Seller means CEP Securities Co. LLC, a Delaware limited liability
company, or its successor, in its capacity as seller of the Intangible
Transition Property to the Issuer pursuant to the Sale Agreement.

Series means any series of Transition Bonds issued and authenticated
by the Issuer pursuant to the Indenture, as specified in the Series
Supplement therefor.

Series Final Maturity Date means the Final Maturity Date for a Series.

Series Issuance Date means, with respect to any Series, the date on
which the Transition Bonds of such Series are to be originally issued
in accordance with Section 2.10 of the Indenture and the Series
Supplement for such Series.

Series Subaccount has the meaning specified in Section 8.02(a) of the
Indenture.

Series Supplement means an indenture supplemental to the
Indenture that authorizes a particular Series of Transition
Bonds.

Servicer means PP&L, as the servicer of the Intangible Transition
Property, and each successor to PP&L (in the same capacity)
pursuant to Section 5.03 or 6.04 of the Servicing Agreement.

Servicer Default means an event specified in Section 6.01 of the
Servicing Agreement.

Servicing Agreement means the Servicing Agreement dated as of
July __, 1999, between the Issuer and the Servicer, as the same
may be amended and supplemented from time to time.

Standard & Poor's, or S&P, means Standard & Poor's Rating Group,
a division of The McGraw-Hill Companies, or its successor.

State means any one of the 50 states of the United States of America
or the District of Columbia.

Subsequent Intangible Transition Property means Intangible Transition
Property sold by the Seller to the Issuer as of a Subsequent Transfer
Date pursuant to the Sale Agreement.

Subsequent Sale means the sale of additional Intangible Transition
Property by the Seller to the Issuer after the Initial Transfer Date,
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 pursuant to the Sale Agreement.

Successor Servicer means a successor Servicer appointed by the Trustee
pursuant to Section 6.01 of the Servicing Agreement which will succeed
to all the rights and duties of the Servicer under the Servicing
Agreement.

[Supplemental Indenture means a supplemental indenture entered into by
the Issuer and the Trustee pursuant to Article IX of the Indenture.]

Supplemental Order means the Order of the PUC dated May 21, 1999,
supplementing the Qualified Rate Order.

Termination Notice has the meaning specified in Section 6.01 of
the Servicing Agreement.

Third Party means any third party, including any electric
generation supplier, providing billing or metering services,
licensed by the PUC pursuant to relevant provisions of the
Competition Act and any PUC order.

Transfer Date means the Initial Transfer Date or any Subsequent
Transfer Date, as applicable.

Transferred Intangible Transition Property means Intangible Transition
Property which has been sold, assigned and transferred to the Issuer
pursuant to the Sale Agreement.

Transition Bond means any of the transition bonds (as defined in the
Competition Act) issued by the Issuer pursuant to the Indenture.

Transition Bond Balance means, as of any date, the aggregate
Outstanding Amount of all Series of Transition Bonds on such date.

Transition Bond Owner means, with respect to a Book-Entry Transition
Bond, the Person who is the beneficial owner of such Book-Entry
Transition Bond, as reflected on the books of the Clearing Agency, or
on the books of a Person maintaining an account with such Clearing
Agency (directly as a Clearing Agency Participant or as an indirect
participant, in each case in accordance with the rules of such
Clearing Agency).

Transition Bond Register means a register, kept by the Transition Bond
Registrar on behalf of the Issuer in which, subject to such reasonable
regulations as it may prescribe, the Transition Bond Registrar shall
provide for the registration of Transition Bonds and the registration
of transfers of Transition Bonds.

Transition Bond Registrar means the Trustee, in its capacity as keeper
of the Transition Bond Register, or any successor to the Trustee in
such capacity.

Trust Indenture Act or TIA means the Trust Indenture Act of 1939 as in
force on the date hereof, unless otherwise specifically provided.

Trustee means The Bank of New York, a New York banking corporation, or
its successor or any successor Trustee under the Indenture.

UCC means, unless the context otherwise requires, the Uniform
Commercial Code, as in effect in the relevant jurisdiction, as amended
from time to time

U.S. Government Obligations means direct obligations (or certificates
representing an ownership interest in such 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.

EXHIBIT 8.2

OPINION OF MORGAN, LEWIS & BOCKIUS LLP WITH RESPECT TO MATERIAL
COMMONWEALTH OF PENNSYLVANIA TAX MATTERS

July 14, 1999

PP&L Transition Bond Company LLC
Two North Ninth Street
Allentown, Pennsylvania 18101

Re: PP&L Transition Bond Company LLC, Transition Bonds

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 in connection with the registration under the
Securities Act of 1933, as amended, of Transition Bonds of the Company to
be offered from time to time as described in the prospectus (the
"Prospectus") included as part of the Registration Statement.

We hereby adopt and confirm to you our opinion as set forth under the
headings "Summary of Terms - Prospectus -- Tax Status" and "Material Income
Tax Matters for the Transition Bondholders -- Material Commonwealth of
Pennsylvania Tax Matters" in the Prospectus, and hereby consent to the
filing of this opinion as an exhibit to the Registration Statement and the
reference to this firm under the headings "Summary of Terms - Prospectus --
Tax Status" and "Material Income Tax Matters for the Transition Bondholders
-- Material Commonwealth of Pennsylvania Tax Matters" in the Prospectus.

Very truly yours,

MORGAN, LEWIS & BOCKIUS LLP

EXHIBIT 10.1

INTANGIBLE TRANSITION PROPERTY SALE AGREEMENT

between

PP&L TRANSITION BOND COMPANY LLC

Issuer

and

CEP SECURITIES CO. LLC

Seller

Dated as of July __, 1999

TABLE OF CONTENTS

ARTICLE I
Definitions

SECTION 1.01 Definitions....................................................1
SECTION 1.02 Other Definitional Provisions..................................1

ARTICLE II
Conveyance of Intangible Transition Property

SECTION 2.01 Conveyance of Initial Intangible Transition Property...........2
SECTION 2.02 Conditions to Conveyance of Intangible Transition Property.....3

ARTICLE III
Representations and Warranties of Seller

SECTION 3.01 Organization and Good Standing.................................5
SECTION 3.02 Due Qualification..............................................5
SECTION 3.03 Power and Authority............................................5
SECTION 3.04 Binding Obligation.............................................5
SECTION 3.05 No Violation...................................................5
SECTION 3.06 No Proceedings.................................................6
SECTION 3.07 Approvals......................................................6
SECTION 3.08 The Intangible Transition Property.............................6
SECTION 3.09 Solvency.......................................................7

ARTICLE IV
Covenants of the Seller

SECTION 4.01 Seller's Existence.............................................7
SECTION 4.02 No Liens or Conveyances........................................7
SECTION 4.03 Delivery of Collections........................................8
SECTION 4.04 Notice of Liens................................................8
SECTION 4.05 Compliance with Law............................................8
SECTION 4.06 Covenants Related to Intangible Transition Property............8
SECTION 4.07 Protection of Title............................................9
SECTION 4.08 Taxes..........................................................9
SECTION 4.09 Reliance by Seller, etc.......................................10

ARTICLE V
Miscellaneous Provisions

SECTION 5.01 Amendment.....................................................10
SECTION 5.02 Notices.......................................................10
SECTION 5.03 Assignment....................................................11
SECTION 5.04 Limitations on Rights of Others...............................11
SECTION 5.05 Severability..................................................11
SECTION 5.06 Separate Counterparts.........................................11
SECTION 5.07 Headings......................................................11
SECTION 5.08 Governing Law.................................................11
SECTION 5.09 Assignment to Trustee.........................................11
SECTION 5.10 Nonpetition Covenants.........................................11

INTANGIBLE TRANSITION PROPERTY SALE AGREEMENT dated as of July
__, 1999, between PP&L TRANSITION BOND COMPANY LLC, a Delaware limited
liability company (the "Issuer"), and CEP SECURITIES CO. LLC, a Delaware
limited liability company, as seller (the "Seller").

WHEREAS the Issuer desires to purchase from time to time
Intangible Transition Property created pursuant to the Competition Act and
the Qualified Rate Order;

WHEREAS the Seller is willing to sell Intangible Transition
Property to the Issuer;

WHEREAS the Issuer, in order to finance the purchase of the
Transferred Intangible Transition Property, will from time to time issue
Transition Bonds under the Indenture; and

WHEREAS the Issuer, to secure its obligations under the
Transition Bonds and the Indenture, will pledge its right, title and
interest in the Transferred Intangible Transition Property to the Trustee
for the benefit of the Transition Bondholders.

NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained and intending to be legally bound hereby, the
parties hereto agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.01 DEFINITIONS. Capitalized terms used herein and not
otherwise defined herein have the meanings assigned to them in Appendix A
of this Sale Agreement.

SECTION 1.02 OTHER DEFINITIONAL PROVISIONS.

(a) Agreement means this Intangible Transition Property Sale
Agreement, as the same may be amended, supplemented or otherwise
modified from time to time.

(b) Non-capitalized terms used herein which are defined in the
Competition Act shall, as the context requires, have the meanings
assigned to such terms in the Competition Act, but without giving
effect to amendments to the Competition Act after the date hereof
which have a material adverse effect on the Issuer or the Transition
Bondholders.

(c) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined therein.

(d) The words "hereof", "herein", "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement; Section,
Schedule and Exhibit references contained in this Agreement are
references to Sections, Schedules and Exhibits in or to this
Agreement unless otherwise specified; and the term "including" shall
mean "including without limitation".

(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms.

ARTICLE II

CONVEYANCE OF INTANGIBLE TRANSITION PROPERTY

SECTION 2.01 CONVEYANCE OF INITIAL INTANGIBLE TRANSITION
PROPERTY.

(a) In consideration of the Issuer's payment to or upon the order of
the Seller of $_____________ (the "Initial Purchase Price") by wire
transfer of funds immediately available on the date hereof to
Seller's account no. _______________at _____________, routing transit
# __________, subject to the conditions specified in Section 2.02,
the Seller does hereby irrevocably sell, transfer, assign, set over
and otherwise convey to the Issuer, without recourse (subject to the
obligations herein), all right, title and interest of the Seller in,
to and under (i) the Initial Intangible Transition Property (such
sale, transfer, assignment, setting over and conveyance of the
Initial Intangible Transition Property to include, to the fullest
extent permitted by the Competition Act, the assignment of all
revenues, collections, claims, rights, payments, money or proceeds of
or arising from the Intangible Transition Charges related to the
Initial Intangible Transition Property, as the same may be adjusted
from time to time) and (ii) all rights of the Seller under the
Contribution Agreement and the Assignment. Such sale, transfer,
assignment, setting over and conveyance of the Initial Intangible
Transition Property is hereby expressly stated to be a sale and,
pursuant to Section 2812(e) of the Competition Act, shall be treated
as an absolute transfer of all of the Seller's right, title and
interest (as in a true sale), and not as a pledge or other financing,
of the Initial Intangible Transition Property. The preceding sentence
is the statement referred to in Section 2812(e) of the Competition
Act. The Seller agrees and confirms that after giving effect to the
sale contemplated by clause (a), it has no rights in the Initial
Intangible Transition Property to which a security interest of
creditors of the Seller could attach because it has sold all of its
rights in the Initial Intangible Transition Property to the Issuer
pursuant to Section 2812(e) of the Competition Act.

(b) Subject to the conditions specified in Section 2.02, the Issuer
does hereby purchase the Initial Intangible Transition Property from
the Seller for the consideration set forth in paragraph (a) above.

(c) The Seller and the Issuer each acknowledge and agree that the
purchase price for the Initial Intangible Transition Property sold
pursuant to this Agreement is equal to its fair market value at the
time of sale.

(d) The Seller and the Issuer further agree that from time to time,
the Seller may offer to sell, and the Issuer may purchase, Subsequent
Intangible Transition Property as of Subsequent Transfer Dates,
subject to the conditions specified in Section 2.02, in exchange for
consideration to be agreed upon (the "Subsequent Purchase Price").
The Seller and the Issuer hereby agree that each such sale, transfer,
assignment, setting over and conveyance of any Subsequent Intangible
Transition Property shall be expressly stated to be a sale and,
pursuant to Section 2812(e) of the Competition Act, shall be treated
as an absolute transfer of all of the Seller's right, title and
interest (as in a true sale), and not as a pledge or other financing,
of the Subsequent Intangible Transition Property. The preceding
sentence shall constitute the statement referred to in Section
2812(e) of the Competition Act with respect to any Subsequent
Intangible Transition Property. The Seller agrees and confirms that
after giving effect to any such sale contemplated by this clause (d),
it shall have no rights in the Subsequent Intangible Transition
Property to which a security interest of creditors of the Seller
could attach because it will have sold all of its rights in the
Subsequent Intangible Transition Property to the Issuer pursuant to
Section 2812(e) of the Competition Act.

SECTION 2.02 CONDITIONS TO CONVEYANCE OF INTANGIBLE TRANSITION
PROPERTY. The sale by the Seller to the Issuer, and the purchase by the
Issuer from the Seller, of Intangible Transition Property upon the Initial
Transfer Date or any Subsequent Transfer Date shall be subject to and
conditioned upon the satisfaction or waiver of each of the following
conditions:

(i) on or prior to the Transfer Date, the Seller shall deliver to the
Issuer a duly executed Bill of Sale identifying the Intangible
Transition Property to be conveyed as of that date, substantially in
the form of Exhibit A hereto;

(ii) as of the Transfer Date, no breach by the Seller of its
representations, warranties or covenants in this Agreement shall
exist and no Servicer Default shall have occurred and be continuing;

(iii) as of the Transfer Date, the representations and warranties of
PP&L under the Contribution Agreement shall be true and correct and
no default shall exist thereunder, and PP&L shall have delivered to
the Issuer and the Trustee an Officer's Certificate to such effect
and confirming that the Issuer may exercise all of the rights of the
Seller under the Contribution Agreement;

(iv) as of the Transfer Date:

(A) the Issuer shall have sufficient funds available to pay the
purchase price for the Transferred Intangible Transition
Property to be conveyed on such date, and

(B) all conditions to the issuance of one or more Series of
Transition Bonds intended to provide such funds set forth in
the Indenture shall have been satisfied or waived;

(v) on or prior to Transfer Date, the Seller shall have taken all
action required to transfer to the Issuer ownership of the
Transferred Intangible Transition Property to be conveyed on such
date, free and clear of all Liens other than Liens created by the
Issuer pursuant to the Indenture, including, without limitation,
filing a notice of such transfer with the PUC pursuant to the
Competition Act; and the Issuer shall have taken any action required
for the Issuer to grant the Trustee a first priority perfected
security interest in the Collateral and maintain such security
interest as of such date;

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

(vii) the Seller shall have delivered to the Rating Agencies and to
the Issuer:

(A) an Opinion of Counsel with respect to the transfer of the
Transferred Intangible Transition Property then being conveyed
to the Issuer substantially in the form of Exhibit B hereto and

(B) an Opinion of Counsel to the Seller, substantially in the
form of Exhibit C hereto;

(viii) the Seller shall have delivered to the Trustee and the Issuer
an Officers' Certificate confirming the satisfaction of each
condition precedent specified in this Section 2.02;

(ix) with respect to any Subsequent Sale, the Seller shall have
taken any action necessary in order for the Rating Agency Condition
to have been satisfied; and

(x) the Seller shall have received the Initial Purchase Price or the
Subsequent Purchase Price, as applicable, in funds immediately
available on the applicable Transfer Date.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF SELLER

As of the Transfer Date, the Seller makes the following
representations and warranties on which the Issuer has relied and will rely
in acquiring Transferred Intangible Transition Property. The
representations and warranties shall survive the sale of Transferred
Intangible Transition Property to the Issuer and the pledge thereof to the
Trustee pursuant to the Indenture.

SECTION 3.01 ORGANIZATION AND GOOD STANDING. The Seller 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 or conducted and had
at all relevant times, and has, the requisite power, authority and legal
right to own the Intangible Transition Property.

SECTION 3.02 DUE QUALIFICATION. The Seller is duly qualified to
do business as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals, in all jurisdictions in which the
ownership or lease of property or the conduct of its business requires such
qualifications, licenses or approvals (except where the failure to so
qualify would not be reasonably likely to have a material adverse effect on
the Seller's business, operations, assets, revenues, properties or
prospects).

SECTION 3.03 POWER AND AUTHORITY. The Seller has the power and
authority to execute and deliver this Agreement and to carry out its terms;
the Seller has full power and authority to own the Intangible Transition
Property and sell and assign the Intangible Transition Property to the
Issuer, and the Seller has duly authorized such sale and assignment to the
Issuer; and the execution, delivery and performance of this Agreement has
been duly authorized by the Seller.

SECTION 3.04 BINDING OBLIGATION. This Agreement constitutes a
legal, valid and binding obligation of the Seller enforceable against the
Seller in accordance with its terms subject to bankruptcy, receivership,
insolvency, reorganization, moratorium or other laws affecting creditors'
rights generally from time to time in effect and to general principles of
equity (regardless of whether considered in a proceeding in equity or at
law).

SECTION 3.05 NO VIOLATION. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms hereof do
not conflict with, result in any breach of any of the terms and provisions
of, or constitute (with or without notice or lapse of time) a default
under, the limited liability company agreement or the certificate of
formation of the Seller, or any indenture, agreement or other instrument to
which the Seller is a party or by which it is bound; or result in the
creation or imposition of any Lien upon any of its properties pursuant to
the terms of any such indenture, agreement or other instrument; nor violate
any law or any order, rule or regulation applicable to the Seller of any
court or of any federal or state regulatory body, administrative agency or
other governmental instrumentality having jurisdiction over the Seller or
its properties.

SECTION 3.06 NO PROCEEDINGS. To the Seller's best knowledge,
there are no proceedings or investigations pending or threatened, before
any court, federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Seller or its
properties:

(i) asserting the invalidity of the Basic Documents or the Transition
Bonds;

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

(iii) which might materially and adversely affect the treatment of
the Transition Bonds as debt for federal or state income tax
purposes; or

(iv) seeking any determination or ruling that could reasonably be
expected to materially and adversely affect the performance by the
Seller of its obligations under, or the validity or enforceability
of, the Basic Documents or the Transition Bonds.

SECTION 3.07 APPROVALS. Except for UCC continuation filings, 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 by the Seller of this Agreement, the performance by the Seller
of the transactions contemplated hereby or the fulfillment by the Seller of
the terms hereof, except those that have been obtained or made.

SECTION 3.08 THE INTANGIBLE TRANSITION PROPERTY.

(a) Information. All information provided by the Seller to the Issuer
with respect to the Transferred Intangible Transition Property is
correct in all material respects.

(b) Effect of Transfer. The transfers and assignments herein
contemplated constitute a sale of the Intangible Transition Property,
from the Seller to the Issuer 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 the Seller under any bankruptcy
law.

(c) Transfer Filings. The Seller is the sole owner of the Intangible
Transition Property being sold to the Issuer on the Transfer Date;
the Transferred Intangible Transition Property has been validly
transferred and sold to the Issuer free and clear of all Liens other
than Liens created by the Issuer pursuant to the Indenture. All
filings, including filings with the PUC under the Competition Act,
necessary in any jurisdiction to give the Issuer a valid ownership
interest in the Transferred Intangible Transition Property, free and
clear of all Liens of the Seller or anyone claiming through the
Seller, have been made, other than any such filings (except
for filings with the PUC under the Competition Act) the absence of
which would not have an adverse impact on

(i) the ability of the Servicer to collect Intangible
Transition Charges with respect to the Transferred Intangible
Transition Property, or

(ii) the rights of the Issuer or the Trustee with respect to
the Transferred Intangible Transition Property.

SECTION 3.09 SOLVENCY. After giving effect to the sale of any
Transferred Intangible Transition Property hereunder, the Seller:

(i) is solvent and expects to remain solvent,

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

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

(iv) believes that it will be able to pay its debts as they come due
and that such belief is reasonable and

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

ARTICLE IV

COVENANTS OF THE SELLER

SECTION 4.01 SELLER'S EXISTENCE. So long as any of the
Transition Bonds are outstanding, the Seller shall keep in full force and
effect its existence as a limited liability company and remain in good
standing, under the laws of the jurisdiction of its organization, and shall
obtain and preserve its qualification to do business in each jurisdiction
in which such qualification is or will be necessary to protect the validity
and enforceability of this Agreement and each other instrument or agreement
to which the Seller is a party necessary to the proper administration of
this Agreement and the transactions contemplated hereby.

SECTION 4.02 NO LIENS OR CONVEYANCES. Except for the
conveyances hereunder, the Seller 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. The Seller shall
not at any time assert any Lien against or with respect to any Transferred
Intangible Transition Property, and shall defend the right, title and
interest of the Issuer and the Trustee, as assignee of the Issuer, in, to
and under the Intangible Transition Property, whether now existing or
hereafter created, against all claims of third parties claiming through or
under the Seller.

SECTION 4.03 DELIVERY OF COLLECTIONS. If the Seller receives
collections in respect of the Intangible Transition Charges or the proceeds
thereof, the Seller shall pay the Servicer all payments received by the
Seller in respect thereof as soon as practicable after receipt thereof by
the Seller, but in no event later than two Business Days after such
receipt.

SECTION 4.04 NOTICE OF LIENS. The Seller shall notify the Trustee
promptly after becoming aware of any Lien on any Intangible Transition
Property other than the conveyances hereunder or under the Indenture.

SECTION 4.05 COMPLIANCE WITH LAW. The Seller shall comply with its
organizational or governing documents and all laws, treaties, rules,
regulations and determinations of any governmental instrumentality
applicable to the Seller, except to the extent that failure to so comply
would not adversely affect the Issuer's or the Trustee's interests in the
Intangible Transition Property or under any of the Basic Documents or the
Seller's performance of its obligations hereunder.

SECTION 4.06 COVENANTS RELATED TO INTANGIBLE TRANSITION PROPERTY.

(a) So long as any of the Transition Bonds are outstanding, the
Seller shall:

(i) clearly disclose in its financial statements that it is not
the owner of the Transferred Intangible Transition Property and
that the assets of the Issuer are not available to pay
creditors of the Seller or any of its Affiliates and

(ii) clearly disclose the effects of all transactions between
the Seller and the Issuer in accordance with generally accepted
accounting principles.

(b) The Seller agrees that upon the sale by the Seller of the
Transferred Intangible Transition Property to the Issuer pursuant to
this Agreement:

(i) to the fullest extent permitted by law, including
applicable PUC Regulations, the Issuer shall have all of the
rights originally held by the Seller or PP&L with respect to
the Transferred Intangible Transition Property, including the
right to collect any amounts payable by any Customer or Third
Party in respect of such Transferred Intangible Transition
Property, notwithstanding any objection or direction to the
contrary by the Seller or PP&L and

(ii) any payment by any Customer or Third Party to the Issuer
shall discharge such Customer's or such Third Party's
obligations in respect of such Transferred Intangible
Transition Property to the extent of such payment,
notwithstanding any objection or direction to the contrary by
the Seller.

(i) the Seller shall not make any statement or reference in
respect of the Transferred Intangible Transition Property that
is inconsistent with the ownership thereof by the Issuer and

(ii) the Seller shall not take any action in respect of the
Transferred Intangible Transition Property except as
contemplated by the Basic Documents.

SECTION 4.07 PROTECTION OF TITLE. The Seller shall execute and file
such filings, and cause to be executed and filed such filings, all in such
manner and in such places as may be required by law fully to preserve,
maintain, and protect the interests of the Issuer in the Transferred
Intangible Transition Property, including all filings required under the
Competition Act relating to the transfer of the ownership of the
Transferred Intangible Transition Property by the Seller to the Issuer. The
Seller shall deliver (or cause to be delivered) to the Issuer file-stamped
copies of, or filing receipts for, any document filed as provided above, as
soon as available following such filing. The Seller shall take, or shall
cooperate with PP&L in taking, 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 the Issuer and the Transition Bondholders from
claims, state actions or other actions or proceedings of third
parties which, if successfully pursued, would result in a
breach of any representation set forth in Article III; or

(b) to block or overturn any attempts to cause a repeal of,
modification of or supplement to the Competition Act, the PUC
Order or the rights of Transition Bondholders by legislative
enactment or constitutional amendment that would be adverse to
the Issuer, the Trustee or the Transition Bondholders.

The costs of any such actions or proceedings shall be payable by the
Seller. The Seller designates the Issuer as its agent and attorney-in-fact
to execute any filings with the PUC, financing statements, continuation
statements or other instruments required by the Issuer pursuant to this
Section, it being understood that the Issuer shall have no obligation to
execute any such instruments.

SECTION 4.08 TAXES. So long as any of the Transition Bonds are
outstanding, the Seller shall pay all material 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
the Seller or one of its subsidiaries is contesting the same in good faith
by appropriate proceedings promptly instituted and diligently conducted and
if the Seller or such subsidiary has established appropriate reserves as
shall be required in conformity with generally accepted accounting
principles.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF ISSUER

As of the Transfer Date, the Issuer makes the following
representations and warranties on which the Seller has relied and will rely
in acquiring Transferred Intangible Transition Property. The
representations and warranties shall survive the purchase of Transferred
Intangible Transition Property by the Issuer and the pledge thereof to the
Trustee pursuant to the Indenture.

SECTION 5.01 ORGANIZATION AND GOOD STANDING. 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 or conducted.

SECTION 5.02 DUE QUALIFICATION. The Issuer is duly qualified to
do business as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals, in all jurisdictions in which the
ownership or lease of property or the conduct of its business requires such
qualifications, licenses or approvals (except where the failure to so
qualify would not be reasonably likely to have a material adverse effect on
the Issuer's business, operations, assets, revenues, properties or
prospects).

SECTION 5.03 POWER AND AUTHORITY. The Issuer has the power and
authority to execute and deliver this Agreement and to carry out its terms;
the Issuer has full power and authority to purchase the Intangible
Transition Property and the Issuer has duly authorized such purchase; and
the execution, delivery and performance of this Agreement has been duly
authorized by the Issuer.

SECTION 5.04 BINDING OBLIGATION. This Agreement constitutes a
legal, valid and binding obligation of the Issuer enforceable against the
Issuer in accordance with its terms subject to bankruptcy, receivership,
insolvency, reorganization, moratorium or other laws affecting creditors'
rights generally from time to time in effect and to general principles of
equity (regardless of whether considered in a proceeding in equity or at
law).

ARTICLE VI

MISCELLANEOUS PROVISIONS

SECTION 6.01 AMENDMENT. (a) This Agreement may be amended by
the Seller and the Issuer, with the consent of the Trustee. Promptly after
the execution of any such amendment or consent, the Issuer shall furnish
written notification of the substance of such amendment or consent to each
of the Rating Agencies.

(b) Prior to the execution of any amendment to this Agreement, the
Issuer and the Trustee shall be entitled to receive and rely upon an
Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement. The Issuer and the Trustee may,
but shall not be obligated to, enter into any such amendment which affects
their own rights, duties or immunities under this Agreement or otherwise.

SECTION 6.02 NOTICES. All demands, notices and communications
upon or to the Seller, the Issuer, the Trustee or the Rating Agencies under
this Agreement shall be in writing, delivered personally, via facsimile,
reputable overnight courier or by certified mail, return-receipt requested,
and shall be deemed to have been duly given upon receipt

(a) in the case of the Seller, to CEP Securities Co. LLC, 3773 Howard
Hughes Parkway, Suite 300 North, Las Vegas, NV 89109, Attention:
Managers,

(b) in the case of the Issuer, to PP&L Transition Bond Company LLC,
Two North Ninth Street, Allentown, PA 18101, Attention: Managers,

(c) in the case of Moody's, to Moody's Investors Service, Inc., ABS
Monitoring Department, 99 Church Street, New York, New York 10007,

(d) in the case of Standard & Poor's, to Standard & Poor's
Corporation, 55 Water Street, New York, New York 10041, Attention:
Asset Backed Surveillance Department, and

(e) in the case of Fitch, to Fitch IBCA, Inc., 1 State Street Plaza,
New York, New York, Attention: Asset Backed Securities,

or, as to each of the foregoing, at such other address as shall be
designated by written notice to the other parties.

SECTION 6.03 ASSIGNMENT BY SELLER. Notwithstanding anything to
the contrary contained herein, this Agreement may not be assigned by the
Seller.

SECTION 6.04 ASSIGNMENT TO TRUSTEE. The Seller hereby
acknowledges and consents to any pledge, assignment and grant of a security
interest by the Issuer to the Trustee pursuant to the Indenture for the
benefit of the Transition Bondholders of all right, title and interest of
the Issuer in, to and under the Transferred Intangible Transition Property
and the proceeds thereof and the assignment of any or all of the Issuer's
rights hereunder to the Trustee.

SECTION 6.05 LIMITATIONS ON RIGHTS OF OTHERS. The provisions of
this Agreement are solely for the benefit of the Seller, the Issuer and the
Trustee, on behalf of itself and the Transition Bondholders, and nothing in
this Agreement, whether express or implied, shall be construed to give to
any other Person any legal or equitable right, remedy or claim in the
Collateral or under or in respect of this Agreement or any covenants,
conditions or provisions contained herein.

SECTION 6.06 SEVERABILITY. Any provision of this Agreement that
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.

SECTION 6.07 SEPARATE COUNTERPARTS. This Agreement may be
executed by the parties hereto in separate counterparts, each of which when
so executed and delivered shall be an original, but all such counterparts
shall together constitute but one and the same instrument.

SECTION 6.08 HEADINGS. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define
or limit any of the terms or provisions hereof.

SECTION 6.09 GOVERNING LAW. This Agreement shall be construed
in accordance with the laws of the Commonwealth of Pennsylvania, without
reference to its conflict of law provisions, and the obligations, rights
and remedies of the parties hereunder shall be determined in accordance
with such laws.

SECTION 6.10 NONPETITION COVENANTS. (a) Notwithstanding any
prior termination of this Agreement or the Indenture, the Seller shall not,
prior to the date which is one year and one day after the termination of
the Indenture, petition or otherwise invoke or cause the Issuer to invoke
the process of any court or government authority for the purpose of
commencing or sustaining a case against the Issuer under any federal or
state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar
official of the Issuer or any substantial part of the property of the
Issuer, or ordering the winding up or liquidation of the affairs of the
Issuer.

(b) Notwithstanding any prior termination of this Agreement or
the Indenture, the Issuer shall not, prior to the date which is one year
and one day after the termination of the Indenture, petition or otherwise
invoke or cause the Seller to invoke the process of any court or government
authority for the purpose of commencing or sustaining a case against the
Seller under any federal or state bankruptcy, insolvency or similar law or
appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Seller or any substantial
part of the property of the Seller, or ordering the winding up or
liquidation of the affairs of the Seller.

IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers as of the day
and year first above written.

PP&L BOND TRANSITION
COMPANY LLC,
as Issuer,

By:__________________________________

Name:
Title: Manager

CEP SECURITIES CO. LLC,
as Seller,

By:__________________________________

Name:
Title: Manager

APPENDIX A - DEFINITIONS

The definitions contained in this Appendix A are applicable to the singular
as well as the plural forms of such terms.

Assignment means the Assignment executed and delivered by PP&L in
favor of CEP Securities Co. LLC pursuant to, and in the form set
forth in Exhibit A of, the Contribution Agreement.

Basic Documents means the Issuer LLC Agreement, the Issuer
Certificate of Formation, the Contribution Agreement, the Assignment,
the Sale Agreement, the Servicing Agreement, the Administration
Agreement, the Indenture and any Bills of Sale.

Bill of Sale means any bill of sale issued by CEP Securities to the
Issuer pursuant to the Sale Agreement evidencing the sale of
Intangible Transition Property by CEP Securities to the Issuer.

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, New York are required or authorized by
law or executive order to remain closed.

CEP Securities means CEP Securities Co. LLC, a Delaware limited
liability company, or its successor.

Collateral has the meaning specified in the Granting Clause of the
Indenture.

Competition Act means the Pennsylvania Electricity Generation
Customer Choice and Competition Act, Chapter 28 of Title 66 of the
Pennsylvania Consolidated Statutes, 66 Pa. C.S., Sections 2801, et
seq.

Contribution Agreement means the Contribution Agreement, dated as of
May 13, 1999, among PP&L, Group, Reserves and CEP Securities, as
amended by the Amendment thereto dated July __, 1999, as the same may
be further amended and supplemented from time to time.

Customers means each person that

(a) 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 retail customer of electric service of PP&L located within
PP&L's service territory after January 1, 1997,

(b) is still located within PP&L's service territory, and

Default means any occurrence that is, or with notice or the lapse of
time or both would become, an Event of Default.

Event of Default has the meaning specified in Section 5.01 of the
Indenture.

Fitch means Fitch IBCA, Inc., or its successor.

Group means CEP Group, Inc., a Pennsylvania corporation, or its
successor.

Holder or Transition Bondholder means the Person in whose name a
Transition Bond of any Series or Class is registered on the
Transition Bond Register.

Indenture means the Indenture dated as of July __, 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 hereto, and
shall include the forms and terms of the Transition Bonds established
thereunder.

Initial Intangible Transition Property means the Intangible
Transaction Property sold by the Seller to the Issuer as of the
Initial Transfer Date pursuant to the Sale Agreement.

Initial Transfer Date means the Series Issuance Date for the first
Series of Transition Bonds.

Intangible Transition Charges means the intangible transition charges
authorized by the PUC to be imposed on all Customers by PP&L or its
successor to recover Qualified Transition Expenses pursuant to the
Competition Act and the Qualified Rate Order.

Intangible Transition Property means the irrevocable right of PP&L or
its successor or assignee to collect Intangible Transition Charges
from Customers to recover through the issuance of Transition Bonds
the Qualified Transition Expenses described in the Qualified Rate
Order, including all right, title and interest of PP&L or its
successor or assignee in such order and in all revenues, collections,
claims, payments, money or proceeds of or arising from Intangible
Transition Charges pursuant to such order, and all proceeds of any of
the foregoing.

Issuer Certificate of Formation means the Certificate of Formation of
the Issuer which was filed with the Delaware Secretary of State's
Office on March 25, 1999.

Issuer LLC Agreement means the Amended and Restated Limited Liability
Company Agreement between the Issuer and PP&L, as sole Member, dated
as of July __, 1999.

Lien means a security interest, lien, charge, pledge, equity or
encumbrance of any kind.

Manager means any manager of the Issuer.

Member means PP&L, as the sole member of the Issuer.

Moody's means Moody's Investors Service Inc., or its successor.

Officers' Certificate means a certificate signed, in the case of PP&L,
by

(a) the chairman of the board, the president, the vice chairman of
the board, the executive vice president or any vice president; and

(b) a treasurer, assistant treasurer, secretary or assistant
secretary

and, in the case of CEP Securities, by two of the Managers of CEP
Securities.

Opinion of Counsel means one or more written opinions of counsel who
may be an employee of or counsel to CEP Securities or PP&L, which
counsel shall be reasonably acceptable to the Trustee, the Issuer or
the Rating Agencies, as applicable, and which shall be in form
reasonably satisfactory to the Trustee, if applicable.

PP&L means PP&L, Inc., a Pennsylvania corporation, or its successor.

Proceeding means any suit in equity, action at law or other judicial
or administrative proceeding.

PUC means the Pennsylvania Public Utility Commission or any
successor.

PUC Regulations means any regulations, orders or directives
promulgated, issued or adopted by the PUC.

Qualified Rate Order means the Final Order issued by the PUC on
August 27, 1998 pursuant to the Competition Act, as such order has
been supplemented by the Supplemental Order issued by the PUC on May
21, 1999, and as such order may hereafter be further supplemented by
an order of the PUC issued pursuant to paragraph 19 of the August 27,
1998 order.

Qualified Transition Expenses has the meaning assigned to that term
in the Competition Act and the Qualified Rate Order.

Reserves means CEP Reserves, Inc., a Delaware corporation, or its
successor.

Sale Agreement means this Intangible Transition Property Sale
Agreement, as the same may be amended and supplemented from time to
time.

Seller means CEP Securities Co. LLC, a Delaware limited liability
company, or its successor, in its capacity as seller of the
Intangible Transition Property to the Issuer pursuant to the Sale
Agreement.

Series means any series of Transition Bonds issued and authenticated
by the Issuer pursuant to the Indenture, as specified in the Series
Supplement therefor.

Series Supplement means an indenture supplemental to the Indenture
that authorizes a particular Series of Transition Bonds.

Servicer means PP&L, as the servicer of the Intangible Transition
Property, and each successor to PP&L (in the same capacity) pursuant
to Section 5.03 or 6.04 of the Servicing Agreement.

Servicer Default means an event specified in Section 6.01 of the
Servicing Agreement.

Servicing Agreement means the Servicing Agreement dated as of July
__, 1999, between the Issuer and the Servicer, as the same may be
amended and supplemented from time to time.

Standard & Poor's, or S&P, means Standard & Poor's Rating Group, a
division of The McGraw-Hill Companies, or its successor.

State means any one of the 50 states of the United States of America
or the District of Columbia.

Subsequent Intangible Transition Property means Intangible Transition
Property sold by the Seller to the Issuer as of a Subsequent Transfer
Date pursuant to the Sale Agreement.

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 pursuant to the Sale Agreement.

Supplemental Order means the Order of the PUC dated May 21, 1999,
supplementing the Qualified Rate Order.

Third Party means any third party, including any electric generation
supplier, providing billing or metering services, licensed by the PUC
pursuant to relevant provisions of the Competition Act and any PUC
order.

Transfer Date means the Initial Transfer Date or any Subsequent
Transfer Date, as applicable.

Transferred Intangible Transition Property means Intangible
Transition Property which has been sold, assigned and transferred to
the Issuer pursuant to the Sale Agreement.

Transition Bond means any of the transition bonds (as defined in the
Competition Act) issued by the Issuer pursuant to the Indenture.

Transition Bond Register means a register, kept by the Transition
Bond Registrar on behalf of the Issuer in which, subject to such
reasonable regulations as it may prescribe, the Transition Bond
Registrar shall provide for the registration of Transition Bonds and
the registration of transfers of Transition Bonds.

Transition Bond Registrar means the Trustee, in its capacity as
keeper of the Transition Bond Register, or any successor to the
Trustee in such capacity.

Trustee means The Bank of New York, a New York banking corporation,
or its successor or any successor Trustee under the Indenture.

UCC means, unless the context otherwise requires, the Uniform
Commercial Code, as in effect in the relevant jurisdiction, as
amended from time to time

EXHIBIT 10.2

INTANGIBLE TRANSITION PROPERTY CONTRIBUTION AGREEMENT

among

PP&L, INC.

CEP GROUP, INC.,

CEP RESERVES, INC.

and

CEP SECURITIES CO. LLC

Dated May 13, 1999

TABLE OF CONTENTS

Page
----

ARTICLE I

Definitions

SECTION 1.01. Definitions..................................................1

SECTION 1.02. Other Definitional Provisions................................2

ARTICLE II

Undertakings to Make Capital Contributions;
Assignment of Intangible Transition Property

SECTION 2.01. Undertakings to Make Capital Contributions...................2

SECTION 2.02. Assignment of Intangible Transition Property and Inurement
of Contract Rights...........................................2

ARTICLE III

Representations and Warranties of PP&L

SECTION 3.01. Organization and Good Standing...............................4

SECTION 3.02. Due Qualification............................................4

SECTION 3.03. Power and Authority..........................................4

SECTION 3.04. Binding Obligation...........................................5

SECTION 3.05. No Violation.................................................5

SECTION 3.06. No Proceedings...............................................5

SECTION 3.07. Approvals....................................................5

SECTION 3.08. The Intangible Transition Property...........................6

ARTICLE IV

Covenants of PP&L

SECTION 4.01. Corporate Existence.........................................10

SECTION 4.02. No Liens or Conveyances.....................................10

SECTION 4.03. Delivery of Collections.....................................10

SECTION 4.04. Notice of Liens.............................................10

SECTION 4.05. Compliance with Law.........................................11

SECTION 4.06. Covenants Related to Intangible Transition Property.........11

SECTION 4.07. Notice of Indemnification Events............................12

SECTION 4.08. Protection of Title.........................................12

SECTION 4.09. Taxes.......................................................12

ARTICLE V

Additional Undertakings of PP&L

SECTION 5.01. Liability of PP&L; Indemnities..............................13

SECTION 5.02. Merger or Consolidation of, or Assumption of the Obligations
of, PP&L....................................................14

SECTION 5.03. Limitation on Liability of PP&L and Others..................15

ARTICLE VI

Miscellaneous Provisions

SECTION 6.01. Amendment...................................................16

SECTION 6.02. Notices.....................................................16

SECTION 6.03. Assignment..................................................17

SECTION 6.04. Limitations on Rights of Others.............................17

SECTION 6.05. Severability................................................17

SECTION 6.06. Separate Counterparts.......................................17

SECTION 6.07. Headings....................................................17

SECTION 6.08. Governing Law...............................................17

SECTION 6.09. Nonpetition Covenant........................................17

SECTION 6.10. Perfection..................................................18

APPENDIX A - DEFINITIONS..................................................A-1

EXHIBIT A - Form of Assignment............................................A-8

INTANGIBLE TRANSITION PROPERTY CONTRIBUTION AGREEMENT dated May
13, 1999, among PP&L, INC., a Pennsylvania corporation ("PP&L"), CEP Group,
Inc. a Pennsylvania corporation ("Group"), CEP Reserves, Inc., a Delaware
corporation ("Reserves"), and CEP Securities Co. LLC, a Delaware limited
liability company ("CEP Securities").

WHEREAS, PP&L owns all of the issued and outstanding capital
stock of Group, Group owns all of the issued and outstanding capital stock
of Reserves, and Reserves is the sole member and owns the entire limited
liability company interest of CEP Securities;

WHEREAS, PP&L is the sole owner of the Intangible Transition
Property created under the Competition Act and the Qualified Rate Order;

WHEREAS, the parties hereto desire to arrange for an assignment
of the Intangible Transition Property to CEP Securities in accordance with
the Competition Act;

WHEREAS, CEP Securities desires to sell or otherwise convey, in
whole or from time to time in part, Intangible Transition Property pursuant
to the Competition Act to PP&L Transition Bond Company LLC, a Delaware
limited liability company wholly owned by Group (the "Issuer"), and in
connection with such sale or other conveyance to assign its rights under
this Agreement to the Issuer;

WHEREAS, such sale, conveyance and assignment will enable the
Issuer to issue Transition Bonds as contemplated by the Competition Act and
to secure the Issuer's obligations under the Transition Bonds and the
Indenture by pledging its right, title and interest in the Transferred
Intangible Transition Property, and by assigning the rights assigned to it
under this Agreement, to the Trustee for the benefit of the Transition
Bondholders; and

WHEREAS, PP&L has determined that the transactions contemplated
by this Agreement and the other Basic Documents conform to the requirements
of the Competition Act and are in the best interest of PP&L and represent a
prudent and advisable course of action that does not impair the rights and
interests of its creditors.

NOW, THEREFORE, in consideration of the premises and intending
to be legally bound hereby, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.01. DEFINITIONS. Capitalized terms used herein and
not otherwise defined herein have the meanings assigned to them in Appendix
A of this Agreement.

SECTION 1.02. OTHER DEFINITIONAL PROVISIONS.

(a) Agreement as used herein means this Intangible Transition
Property Contribution Agreement, as the same may be amended,
supplemented or otherwise modified from time
to time.

(c) All terms defined in Appendix A shall have the defined meaning
when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.

ARTICLE II

UNDERTAKINGS TO MAKE CAPITAL CONTRIBUTIONS;
ASSIGNMENT OF INTANGIBLE TRANSITION PROPERTY

SECTION 2.01. UNDERTAKINGS TO MAKE CAPITAL CONTRIBUTIONS. In
consideration of the resulting increase in value of the capital stock of
Group owned by PP&L, PP&L hereby agrees to contribute to Group all of
PP&L's right, title and interest in the Intangible Transition Property,
together with each representation, warranty, covenant and obligation of
PP&L contained in Articles III, IV and V, including the indemnification
obligations of PP&L contained in Section 5.01 (collectively, the "Contract
Rights" and collectively with the Intangible Transition Property, the
"Contributed Property"). In consideration of the resulting increase in the
value of the capital stock of Reserves owned by Group, Group hereby agrees
to contribute the Contributed Property to Reserves. In consideration of the
resulting increase in the value of the limited liability company interest
of CEP Securities owned by Reserves, Reserves hereby agrees to contribute
the Contributed Property to CEP Securities.

SECTION 2.02. ASSIGNMENT OF INTANGIBLE TRANSITION PROPERTY AND
INUREMENT OF CONTRACT RIGHTS.

(a) In light of the successive undertakings in Section 2.01 of
PP&L to contribute the Contributed Property to Group, of Group to
contribute the Contributed Property to Reserves and of Reserves to
contribute the Contributed Property to CEP Securities, each of the
parties hereto hereby agrees that, in lieu of the successive
transfers contemplated by Section 2.01, each of the respective
obligations of PP&L, Group and Reserves in Section 2.01 shall be
deemed to be satisfied by

(i) the execution and delivery by PP&L of an Assignment in
favor of CEP Securities in the form of Exhibit A hereto (the
"Assignment") pursuant to which PP&L shall irrevocably assign,
transfer, set over and otherwise convey directly to CEP
Securities, without recourse (subject to the obligations of
PP&L in this Agreement), all right, title and interest of PP&L
in and to the Intangible Transition Property (such assignment,
transfer, setting over and conveyance of the Intangible
Transition Property to include, 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 Qualified Rate
Order), and

(ii) the agreement of PP&L that the Contract Rights shall inure
to the benefit of CEP Securities.

Such assignment, transfer, setting over and conveyance of the
Intangible Transition Property is hereby expressly stated to be an
absolute transfer and, pursuant to Section 2812(e) of the Competition
Act, shall be treated as an absolute transfer of all of PP&L's right,
title and interest, as in a true sale, and not as a pledge or other
financing, of the Intangible Transition Property. The preceding
sentence is the statement referred to in Section 2812(e) of the
Competition Act. PP&L, Group and Reserves each agree and confirm
that, after giving effect to the assignment, transfer, setting over
and conveyance contemplated hereby and by the Assignment, it has no
rights in the Intangible Transition Property because all rights in
the Intangible Transition Property have been absolutely transferred
directly to CEP Securities in accordance with Section 2812(e) of the
Competition Act.

(b) PP&L agrees to execute and deliver to CEP Securities the
Assignment concurrently with the execution and delivery of this
Agreement, and further agrees that the Contract Rights shall inure to
the benefit of CEP Securities.

(c) CEP Securities does hereby accept the assignment of the
Intangible Transition Property from PP&L and agrees that the Contract
Rights shall inure to its benefit.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF PP&L

In satisfaction of its undertakings in Section 2.01, PP&L makes
the following representations and warranties and acknowledges and agrees
that Group, Reserves and CEP Securities have relied and will rely on such
representations and warranties. PP&L further agrees that such
representations and warranties shall inure to the benefit of CEP
Securities, that CEP Securities shall have the right to enforce such
representations and warranties directly against PP&L, 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 and that the Issuer shall have the right to
further assign such rights to the Trustee for the benefit of the Transition
Bondholders. Such representations and warranties shall survive the
assignment of the Intangible Transition Property to CEP Securities pursuant
to the Assignment, 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 such
representations and warranties will be true and correct on and as of each
Transfer Date as if made by it on such Transfer Date.

SECTION 3.01. ORGANIZATION AND GOOD STANDING. Each of PP&L,
Group and Reserves is a corporation duly organized and in good standing
under the laws of the Commonwealth of Pennsylvania (in the case of PP&L and
Group) or the State of Delaware (in the case of Reserves), with corporate
power and authority to own its properties and conduct its business as
currently owned and conducted. 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.

SECTION 3.02. DUE QUALIFICATION. Each of PP&L, Group, Reserves,
CEP Securities 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.

SECTION 3.03. POWER AND AUTHORITY. Each of PP&L, Group,
Reserves and CEP Securities has the power and authority to execute and
deliver, and to perform its obligations under, this Agreement and the
execution, delivery and performance of this Agreement has been duly
authorized by it. PP&L has the power and authority to own the Intangible
Transition Property and 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. 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 such sale, assignment,
transfer and conveyance to the Issuer pursuant to the Sale Agreement].

SECTION 3.04. BINDING OBLIGATION. This Agreement constitutes a
legal, valid and binding obligation of PP&L, Group, Reserves and CEP
Securities 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 (regardless of whether considered in a proceeding in equity or at
law).

SECTION 3.05. NO VIOLATION. The execution and delivery by PP&L,
Group, Reserves and CEP Securities of this Agreement, the performance by
each of them of the transactions contemplated hereby or the fulfillment by
each of them of the terms hereof do not conflict with, result in any breach
of any of the terms and provisions of, or constitute (with or without
notice or lapse of time) a default under, the articles of incorporation or
by-laws of PP&L, Group or Reserves, or the certificate of formation or
limited liability company agreement of CEP Securities, or any indenture,
agreement or other instrument to which any of such entities is a party or
by which it is bound; or result in the creation or imposition of any Lien
upon any of its properties pursuant to the terms of any such indenture,
agreement or other instrument; or violate any law or any order, rule or
regulation applicable to any of such entities of any court or of any
federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over any of such entities
or its properties.

SECTION 3.06. NO PROCEEDINGS. 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:

(i) asserting the invalidity of the Basic Documents or the
Transition Bonds;

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

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

SECTION 3.07. APPROVALS. 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
by PP&L, Group, Reserves or CEP Securities of this Agreement, the
performance by it of the transactions contemplated hereby or the
fulfillment by it of the terms hereof, except those that have been obtained
or made, including the approval of the PUC of the transactions contemplated
hereby pursuant to the Competition Act and the filing by the Issuer of a
registration statement on Form S-3 with the Securities and Exchange
Commission.

SECTION 3.08. THE INTANGIBLE TRANSITION PROPERTY.

(a) Information. 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.

(b) Effect of Transfer. The transfers and assignments herein
contemplated constitute an absolute transfer of the Intangible
Transition Property from PP&L to CEP Securities as provided in
Section 2812(e) of the Competition Act. 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.

(c) Transfer Filings. PP&L is the sole owner of the Intangible
Transition Property being assigned to CEP Securities pursuant to the
Assignment; upon the execution and delivery of the Assignment, the
Intangible Transition Property will have been validly assigned,
transferred and conveyed to CEP Securities free and clear of all
Liens. 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 such
filings (except for filings with the PUC under the Competition Act)
the absence of which would not have an adverse impact on

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

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

(d) Irrevocable; Process Valid; No Litigation; Etc.

(i) The Qualified Rate Order as issued on August 27, 1998 has
been issued by the PUC in accordance with the Competition Act,
such order and the process by which it was issued comply with
all applicable laws, rules and regulations. Any supplemental
order of the PUC adopted pursuant to paragraph 19 of the August
27, 1998 order will have been issued by the PUC in accordance
with the Competition Act, and such order and the process by
which it is issued will comply with all applicable laws, rules
and regulations. The Qualified Rate Order is and as of the date
of issuance of any Transition Bonds will be in full force and
effect

(ii) As of the date of issuance of any Series of Transition
Bonds, such Transition Bonds will be entitled to the
protections provided by the Competition Act and in accordance
with the Competition Act the provisions of the Qualified Rate
Order relating to Intangible Transition Property and Intangible
Transition Charges are not revocable by the PUC.

(iii)

(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
Qualified Rate 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.

(iv) There is no order by any court providing for the
revocation, alteration, limitation or other impairment of the
Competition Act, the Qualified Rate 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 Qualified Rate Order.

(v) 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.

(vi) 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 Qualified Rate Order or the Competition Act.

(vii) No failure on the date hereof 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.

(e) Assumptions. The assumptions used in calculating Intangible
Transition Charges are reasonable and made in good faith.

(f) Creation of Intangible Transition Property.

(i) The Intangible Transition Property constitutes a current
property right,

(ii) the Intangible Transition Property includes, without
limitation,

(A) the irrevocable right of PP&L to receive through
Intangible Transition Charges an amount sufficient to
recover all of the Qualified Transition Expenses
described in the Qualified Rate 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,

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

(iii) paragraphs five through twenty-one of the Qualified Rate
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.

(g) Solvency. After giving effect to the assignment, transfer and
conveyance of the Intangible Transition Property to CEP Securities
pursuant to the Assignment, PP&L:

(i) will be solvent and expects to remain solvent,

(ii) will be adequately capitalized to conduct its business and
affairs considering its size and the nature of its business and
intended purposes,

(iii) will not be engaged in nor does it expect to engage in a
business for which its remaining property represents an
unreasonably small capital,

(iv) believes that it will be able to pay its debts as they
come due and that such belief is reasonable, and

(v) 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.

ARTICLE IV

COVENANTS OF PP&L

In satisfaction of its undertakings in Section 2.01, PP&L makes
the following covenants and agrees that such covenants shall inure to the
benefit of CEP Securities, that CEP Securities shall have the right to
enforce such covenants directly against PP&L, that CEP Securities shall
have the right to assign its rights with respect to such covenants,
including such right of enforcement, to the Issuer and that the Issuer
shall have the right to further assign such rights to the Trustee for the
benefit of the Transition Bondholders.

SECTION 4.01. CORPORATE EXISTENCE. Subject to Section 5.02, 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 this Agreement and each other instrument or agreement to which PP&L is a
party necessary to the proper administration of this Agreement and the
transactions contemplated hereby.

SECTION 4.02. NO LIENS OR CONVEYANCES. Except for the
conveyances hereunder, 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. PP&L shall not at any time
assert any Lien against or with respect to any Serviced 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.

SECTION 4.03. DELIVERY OF COLLECTIONS. 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 of 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.

SECTION 4.04. NOTICE OF LIENS. 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 hereunder or
under the Sale Agreement or the Indenture.

SECTION 4.05. COMPLIANCE WITH LAW. 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.

SECTION 4.06. COVENANTS RELATED TO INTANGIBLE TRANSITION PROPERTY.

(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:

(i) clearly disclose in its financial statements that it is not
the owner of the Serviced 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

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

(c) 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:

(i) 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 Section 2807 of 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

(ii) 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.

(d) So long as any of the Transition Bonds are outstanding,

(i) 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

(ii) PP&L shall not take any action in respect of the Serviced
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.

(e) In connection with the issuance of any Transition Bonds, PP&L
agrees to execute and deliver, or cause to be delivered, such
amendments to this 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 such Transition
Bonds from each rating agency rating such bonds and to effect the
sale of such Transition Bonds to the underwriters of such bonds.

SECTION 4.07. NOTICE OF INDEMNIFICATION EVENTS. PP&L shall deliver to
CEP Securities, the Issuer and the Trustee, promptly after having obtained
knowledge thereof, written notice in an Officer's Certificate 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 Section 5.01.

SECTION 4.08. PROTECTION OF TITLE. PP&L shall execute and file or
cause to be executed and filed such filings, including filings with the PUC
pursuant to the Competition Act, in such manner and in such 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. 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. 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:

(i) 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 Article III or

(ii) to block or overturn any attempts to cause a repeal of,
modification of or supplement to the Competition Act or the Qualified
Rate 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.

SECTION 4.09. TAXES. So long as any of the Transition Bonds are
outstanding, PP&L, Group and Reserves shall, and shall cause each of its
respective subsidiaries (other than CEP Securities and the Issuer) 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, Group or Reserves or one of their respective subsidiaries is
contesting the same in good faith by appropriate proceedings promptly
instituted and diligently conducted and if PP&L, Group or Reserves or such
subsidiary has established appropriate reserves as shall be required in
conformity with generally accepted accounting principles.

ARTICLE V

ADDITIONAL UNDERTAKINGS OF PP&L

In satisfaction of its undertakings in Section 2.01, PP&L
hereby undertakes the obligations contained in this Article V and agrees
that such obligations shall inure to the benefit of CEP Securities, that
CEP Securities shall have the right to enforce such obligations directly
against PP&L, that CEP Securities shall have the right to assign its rights
with respect to such obligations, including such right of enforcement, to
the Issuer and that the Issuer shall have the right to further assign such
rights to the Trustee for the benefit of the Transition Bondholders.

SECTION 5.01. LIABILITY OF PP&L; INDEMNITIES.

(a) PP&L shall be liable in accordance herewith only to the
extent of the obligations specifically undertaken by PP&L under this
Agreement.

(b) PP&L shall indemnify CEP Securities, the Issuer and the
Trustee, for itself and on behalf of the Transition Bondholders, and
each of their respective officers, directors, managers, employees and
agents for, and defend and hold harmless each such Person from and
against, 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 such 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.

(c) PP&L shall indemnify CEP Securities, the Issuer and the
Trustee, for itself and on behalf of the Transition Bondholders, and
each of their respective officers, directors, managers, employees and
agents for, and defend and hold harmless each such Person from and
against, 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 such Person (collectively,
"Losses"), as a result of PP&L's breach of any of its
representations, warranties or covenants contained in Articles III,
IV or V.

(d) PP&L shall pay any and all taxes levied or assessed upon
all or any part of the Issuer's property or assets based on existing
law as of any Transfer Date.

(e) Indemnification under this Section 5.01 shall survive the
resignation or removal of the Trustee and the termination of this
Agreement and shall include reasonable fees and expenses of
investigation and litigation (including reasonable attorneys' fees
and expenses).

SECTION 5.02. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, PP&L. Any Person:

(a) into which PP&L may be merged or consolidated and which succeeds
to all or substantially all of the electric distribution business of
PP&L,

(b) which results from the division of PP&L into two or more Persons
and which succeeds to all or substantially all of the electric
distribution business of PP&L,

(c) which may result from any merger or consolidation to which PP&L
shall be a party and which succeeds to all or substantially all of
the electric distribution business of PP&L,

(d) which may succeed to the properties and assets of PP&L
substantially as a whole and which succeeds to all or substantially
all of the electric distribution business of PP&L, or

(e) which may otherwise succeed to all or substantially all of the
electric distribution business of PP&L,

which Person in any of the foregoing cases executes an agreement of
assumption to perform every obligation of PP&L under this Agreement, shall
be the successor to PP&L hereunder without the execution or filing of any
document or any further act by any of the parties to this Agreement;
provided, however, that

(i) immediately after giving effect to such transaction, no
representation or warranty made pursuant to Article III shall have
been breached and no Servicer Default, and no event that, after
notice or lapse of time, or both, would become a Servicer Default,
shall have occurred and be continuing,

(ii) PP&L shall have delivered to CEP Securities, the Issuer and the
Trustee an Officers' Certificate and an Opinion of Counsel each
stating that such consolidation, merger or succession and such
agreement of assumption comply with this Section and that all
conditions precedent, if any, provided for in this Agreement relating
to such transaction have been complied with,

(iii) PP&L shall have delivered to CEP Securities, the Issuer and the
Trustee an Opinion of Counsel either

(A) stating that, in the opinion of such counsel, all filings
to be made by PP&L, including filings with the PUC pursuant to
the Competition Act, have been executed and filed that are
necessary fully to preserve and protect the respective
interests of CEP Securities and the Issuer in the Intangible
Transition Property and reciting the details of such filings,
or

(B) stating that, in the opinion of such counsel, no such
action is necessary to preserve and protect such interests,

(iv) the Rating Agencies shall have received prior written notice of
such transaction; and

(v) PP&L shall have delivered to CEP Securities, the Issuer and the
Trustee an opinion of independent tax counsel (as selected by, and in
form and substance reasonably satisfactory to, PP&L, and which may be
based on a ruling from the Internal Revenue Service) to the effect
that, for federal income tax purposes, such consolidation or merger
will not result in a material adverse federal income tax consequence
to PP&L, CEP Securities, the Issuer, the Trustee or the then existing
Transition Bondholders.

PP&L shall not consummate any transaction referred to in clauses (a), (b),
(c), (d) or (e) above except upon execution of the above described
agreement of assumption and compliance with clauses (i), (ii), (iii), (iv)
and (v) above. When any Person acquires the properties and assets of PP&L
substantially as a whole and becomes the successor to PP&L in accordance
with the terms of this Section 5.02, then upon the satisfaction of all of
the other conditions of this Section 5.02, PP&L shall automatically and
without further notice be released from its obligations hereunder.

SECTION 5.03. LIMITATION ON LIABILITY OF PP&L AND OTHERS. PP&L
and any director or officer or employee or agent of PP&L may rely in good
faith on the advice of counsel or on any document of any kind, prima facie
properly executed and submitted by any Person, respecting any matters
arising hereunder. Subject to Section 4.08, PP&L shall 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.

ARTICLE VI

MISCELLANEOUS PROVISIONS

SECTION 6.01. AMENDMENT. This Agreement may be amended by PP&L,
Group, Reserves and CEP Securities, provided that so long as any Transition
Bonds are outstanding, any such amendment shall require the consent of the
Issuer and the Trustee. Promptly after the execution of any such amendment
or consent, PP&L shall furnish written notification of the substance of
such amendment or consent to each of the Rating Agencies. Prior to the
execution of any amendment to this Agreement, CEP Securities, the Issuer
and the Trustee shall be entitled to receive and rely upon an Opinion of
Counsel stating that the execution of such amendment is authorized or
permitted by this Agreement. CEP Securities, the Issuer and the Trustee
may, but shall not be obligated to, enter into any such amendment which
affects their own rights, duties or immunities under this Agreement or
otherwise.

SECTION 6.02. NOTICES. All demands, notices and communications
upon or to PP&L, CEP Securities, the Issuer, the Trustee or the Rating
Agencies under this Agreement shall be in writing, delivered personally, by
facsimile, overnight courier or certified mail, return-receipt requested,
and shall be deemed to have been duly given upon receipt

(a) in the case of PP&L, to PP&L, Inc., Two North Ninth Street,
Allentown, PA 18101-1179, Attention: Senior Vice President, & Chief
Financial Officer,

(b) in the case of CEP Securities, to CEP Securities Co. LLC, Suite
300 North, 3773 Howard Hughes Parkway, Las Vegas, Nevada 89109,

(c) in the case of the Issuer, to PP&L Transition Bond Company LLC,
Two North Ninth Street, Allentown, PA 18101, Attention: Manager,

(d) in the case of the Trustee, at the Corporate Trust Office,

(e) in the case of Moody's, to Moody's Investors Service, Inc., ABS
Monitoring Department, 99 Church Street, New York, New York 10007,

(f) in the case of Standard & Poor's, to Standard & Poor's
Corporation, 26 Broadway, New York, New York 10004, Attention of
Asset Backed Surveillance Department, and

(g) in the case of Fitch, to Fitch IBCA, Inc., 1 State Street Plaza,
New York, New York 10004.

or, as to each of the foregoing, at such other address as shall be
designated by written notice to the other parties.

SECTION 6.03. ASSIGNMENT. Notwithstanding anything to the
contrary contained herein, except as provided in Section 5.02, this
Agreement may not be assigned by any party hereto, except that CEP
Securities may assign it rights under this Agreement to the Issuer, and the
Issuer may in turn assign the rights so acquired under this Agreement to
the Trustee as collateral security for one or more Series of Transition
Bonds.

SECTION 6.04. LIMITATIONS ON RIGHTS OF OTHERS. The provisions
of this Agreement are solely for the benefit of PP&L, Group, Reserves and
CEP Securities, and by assignment the Issuer and the Trustee, on behalf of
itself and the Transition Bondholders, and nothing in this Agreement,
whether express or implied, shall be construed to give to any other Person
any legal or equitable right, remedy or claim in the Collateral or under or
in respect of this Agreement or any covenants, conditions or provisions
contained herein.

SECTION 6.05. SEVERABILITY. Any provision of this Agreement
that is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.

SECTION 6.06. SEPARATE COUNTERPARTS. This Agreement may be
executed by the parties hereto in separate counterparts, each of which when
so executed and delivered shall be an original, but all such counterparts
shall together constitute but one and the same instrument.

SECTION 6.07. HEADINGS. The headings of the various Articles
and Sections herein are for convenience of reference only and shall not
define or limit any of the terms or provisions hereof.

SECTION 6.08. GOVERNING LAW. This Agreement shall be construed
in accordance with the laws of the Commonwealth of Pennsylvania, without
reference to its conflict of law provisions, and the obligations, rights
and remedies of the parties hereunder shall be determined in accordance
with such laws.

SECTION 6.09. NONPETITION COVENANT. Notwithstanding any prior
termination of this Agreement or the Indenture, but subject to the PUC's
rights to order the sequestration and payment of revenues arising with
respect to the Intangible Transition Property notwithstanding any
bankruptcy, reorganization or other insolvency proceedings with respect to
PP&L, CEP Securities or the Issuer pursuant to Section 2812(d)(3)(v) of the
Competition Act, (a) neither PP&L, Group nor Reserves shall, prior to the
date which is one year and one day after the termination of the Indenture,
petition or otherwise invoke or cause CEP Securities to invoke the process
of any court or government authority for the purpose of commencing or
sustaining a case against CEP Securities under any federal or state
bankruptcy, insolvency or similar law or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of CEP
Securities or any substantial part of its property, or ordering the winding
up or liquidation of the affairs of CEP Securities; and (b) neither PP&L,
Group, Reserves nor CEP Securities shall, prior to the date which is one
year and one day after the termination of the Indenture, petition or
otherwise invoke or cause the Issuer to invoke the process of any court or
government authority for the purpose of commencing or sustaining a case
against the Issuer under any federal or state bankruptcy, insolvency or
similar law or appointing a receiver, liquidator, assignee, trustee,
custodian, sequestrator or other similar official of the Issuer or any
substantial part of its property, or ordering the winding up or liquidation
of the affairs of the Issuer.

SECTION 6.10. PERFECTION. In accordance with Section 2812(e) of the
Competition Act, upon the execution and delivery of this Agreement and the
Assignment, the transfer and assignment of the Intangible Transition
Property to CEP Securities will be perfected as against all third persons,
including any judicial lien creditors.

IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers or manager as of
the day and year first above written.

PP&L, INC.

by ______________________
Name:
Title:

CEP GROUP, INC.

by_________________________
Name:
Title:

CEP RESERVES, INC.

by ______________________
Name:
Title:

CEP SECURITIES CO. LLC

by _____________________
Name:
Title: Manager

APPENDIX A

DEFINITIONS

The definitions contained in this Appendix A are applicable to the singular
as well as the plural forms of such terms.

Agreement means this Contribution Agreement among PP&L, Group,
Reserves and CEP Securities.

Assignment has the meaning set forth in Section 2.02(a)(1) of this
Agreement.

Basic Documents means the Issuer LLC Agreement, the Issuer LLC
Certificate of Formation, the Contribution Agreement, the Assignment,
the Sale Agreement, the Servicing Agreement, the Administration
Agreement, the Indenture and any Bills of Sale.

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.

CEP Securities means CEP Securities Co. LLC, a Delaware limited
liability company, or its successor.

Collateral means all of the Issuer's right, title and interest in and to

(a) the Intangible Transition Property sold, transferred and
assigned by CEP Securities to the Issuer from time to time
pursuant to the Sale Agreement and all proceeds thereof,

(b) the Sale Agreement except to the extent of any provisions
thereof providing for indemnification of the Issuer,

(d) the Servicing Agreement except to the extent of any provisions
thereof providing for indemnification of the Issuer,

(e) the Collection Account and all amounts on deposit from time to
time therein, including in each subaccount thereof,

(f) all other property of whatever kind owned from time to time by
the Issuer,

(g) all present and future claims, demands, causes and choses in
action in respect of any or all of the foregoing and

(h) all payments on or under and all proceeds of every kind and
nature whatsoever in respect of any or all of the foregoing,
including all proceeds of the conversion, voluntary or
involuntary, into cash or other liquid property, all cash
proceeds, accounts, accounts receivable, notes, drafts,
acceptances, chattel paper, checks, deposit accounts, insurance
proceeds, condemnation awards, rights to payment of any and every
kind, and other forms of obligations and receivables, instruments
and other property which at any time constitute all or part of or
are included in the proceeds of any of the foregoing.

Competition Act means the Pennsylvania Electricity Generation
Customer Choice and Competition Act, Chapter 28 of Title 66 of the
Pennsylvania Consolidated Statutes, 66 Pa. C.S., ss.2801, et seq.

Contract Rights has the meaning set forth in Section 2.01 of this
Agreement.

Contributed Property means the Intangible Transition Property plus
the Contract Rights.

Corporate Trust Office means the principal office of the Trustee at
which at any particular time its corporate trust business shall be
administered (the address of which the Trustee will notify the
parties to this Agreement), or the principal corporate trust office
of any successor Trustee (the address of which the successor Trustee
will notify the parties to this Agreement, the Transition Bondholders
and the Issuer).

Customer means each Person that

(a) 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,

(b)is still located within PP&L's service territory, and

Fitch means Fitch IBCA, Inc., or its successor.

Group means CEP Group, Inc., a Pennsylvania corporation, or its
successor.

Holder or Transition Bondholder means the Person in whose name a
Transition Bond of any Series or Class is registered on the
Transition Bond Register.

Indenture means the Indenture to be entered into between the Issuer
and the Trustee, as the same may be amended and supplemented from
time to time by one or more indentures supplemental hereto, and shall
include the forms and terms of the Transition Bonds established
thereunder.

Insolvency Event means, with respect to a specified Person,

(a) the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of such Person or any
substantial part of its property in an involuntary case under any
applicable federal or state bankruptcy, insolvency or other
similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar
official for such Person or for any substantial part of its
property, or ordering the winding-up or liquidation of such
Person's affairs, and such decree or order shall remain unstayed
and in effect for a period of 90 consecutive days or

(b) the commencement by such Person of a voluntary case under any
applicable federal or state bankruptcy, insolvency or other
similar law now or hereafter in effect, or the consent by such
Person to the entry of an order for relief in an involuntary case
under any such law, or the consent by such Person to the
appointment of or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official for
such Person or for any substantial part of its property, or the
making by such Person of any general assignment for the benefit of
creditors, or the failure by such Person generally to pay its
debts as such debts become due, or the taking of action by such
Person in furtherance of any of the foregoing.

Intangible Transition Charges means the amounts authorized by the PUC
to be imposed on all Customer bills through a non-bypassable
mechanism by PP&L or its successor or by any other entity which
provides electric service to Customers, to recover Qualified
Transition Expenses pursuant to the Qualified Rate Order.

Intangible Transition Property means the irrevocable right of PP&L or
its successor or assignee to collect Intangible Transition Charges
from Customers to recover through the issuance of Transition Bonds
the Qualified Transition Expenses described in the Qualified Rate
Order, including all right, title and interest of PP&L or its
successor or assignee in the Qualified Rate Order and in all
revenues, collections, claims, payments, money or proceeds of or
arising from Intangible Transition Charges pursuant to the Qualified
Rate Order, and all proceeds of any of the foregoing.

Issuer means PP&L Transition Bond Company LLC, a Delaware limited
liability company, or its successor or the party named as such in the
Indenture until a successor replaces it and, thereafter, means the
successor and, for purposes of any provision contained in the
Indenture and required by the Delaware Limited Liability Company Act,
each other obligor on the Transition Bonds.

Lien means a security interest, lien, charge, pledge, equity or
encumbrance of any kind.

Losses has the meaning set forth in Section 2.01(c) of this
Agreement.

Moody's means Moody's Investors Service Inc., or its successor.

Officers' Certificate means in the case of PP&L a certificate signed
by (a) 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 (b) a treasurer, assistant treasurer, secretary or assistant
secretary of PP&L; and in the case of CEP Securities a certificate
signed by the member or any manager of CEP Securities.

Opinion of Counsel means one or more written opinions of counsel who
may be an employee of or counsel to CEP Securities or PP&L, which
counsel shall be reasonably acceptable to the Trustee, the Issuer or
the Rating Agencies, as applicable, and which shall be in form
reasonably satisfactory to the Trustee, if applicable.

Overcollateralization Amount means, with respect to any Series of
Transition Bonds, the amount specified as such in the related Series
Supplement.

PP&L means PP&L, Inc., a Pennsylvania corporation, or its successor.

Proceeding means any suit in equity, action at law or other judicial
or administrative proceeding.

PUC means the Pennsylvania Public Utility Commission or any
successor.

Qualified Rate Order means the order of the PUC issued on August 27,
1998 adopted in accordance with the Competition Act, which, among
other things, created the Intangible Transition Property and
authorized the imposition and collection of the Intangible Transition
Charges, together with any supplemental order of the PUC issued
pursuant to paragraph 19 of the August 27, 1998 order.

Qualified Transition Expenses has the meaning assigned to that term
in the Qualified Rate Order.

Rating Agency means Fitch, Moody's or S&P or any other rating agency
rating the Transition Bonds of any Class or Series at the time of
issuance thereof at the request of the Issuer. If no such
organization or successor is any longer in existence, "Rating Agency"
shall be a nationally recognized statistical rating organization or
other comparable Person designated by the Issuer, notice of which
designation shall be given to the Trustee under the Indenture, any
member of the Issuer and the Servicer.

Reserves means CEP Reserves, Inc., a Delaware corporation, or its
successor.

Sale Agreement means the Intangible Transition Property Sale
Agreement to be entered into between CEP Securities and the Issuer,
relating to the sale of Intangible Transition Property to the Issuer.

Seller means CEP Securities, or its successor, in its capacity as
seller of the Intangible Transition Property to the Issuer pursuant
to the Sale Agreement.

Series means any series of Transition Bonds issued and authenticated
by the Issuer pursuant to the Indenture.

Serviced Intangible Transition Property means all Intangible
Transition Property sold, assigned, transferred or otherwise conveyed
to the Issuer by CEP Securities.

Servicer means PP&L, Inc., as the servicer of the Intangible
Transition Property, and each successor to PP&L, Inc. (in the same
capacity) pursuant to the Servicing Agreement.

Servicer Default means any one of the following events:

(a) any failure by the Servicer to remit to the Trustee on behalf
of the Issuer any required remittance that continues unremedied
for a period of three Business Days after written notice of such
failure is received by the Servicer from the Issuer or the
Trustee; or

(b) any failure by the Servicer or, so long as the Seller and the
Servicer are the same Person, the Seller, as applicable, duly to
observe or perform in any material respect any other covenant or
agreement of the Servicer or the Seller, as the case may be, set
forth in this Agreement or any other Basic Document to which it is
a party, which failure

(i) materially and adversely affects the Intangible Transition
Property and

(ii) continue unremedied for a period of 30 days after written
notice of such failure has been given to the Servicer or the
Seller, as the case may be, by the Issuer or by the Trustee or
after discovery of such failure by an officer of the Servicer
or the Seller, as the case may be; or

(c) 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 the Issuer or the Transition
Bondholders and which material adverse effect continues unremedied
for a period of 60 days after the date on which written notice
thereof shall have been given to the Servicer by the Issuer or the
Trustee, as the case may be; or

(d) an Insolvency Event occurs with respect to the Servicer.

Servicing Agreement means the Servicing Agreement to be entered into
between the Issuer and the Servicer, as the same may be amended and
supplemented from time to time.

Standard & Poor's means Standard & Poor's Rating Group, or its
successor.

State means any one of the 50 states of the United States of America
or the District of Columbia.

Third Party means any third party, including any electric generation
supplier, providing billing or metering services to Customers,
licensed by the PUC pursuant to the Competition Act and any PUC
order.

Transfer Date means any date on which Intangible Transition Property
is sold by CEP Securities to the Issuer.

Transferred Intangible Transition Property means Intangible
Transition Property that has been sold, assigned, transferred and
conveyed by CEP Securities to the Issuer pursuant to
the Sale Agreement.

Transition Bond means any of the transition bonds (as defined in the
Competition Act) issued by the Issuer pursuant to the Indenture.

Trustee means The Bank of New York, a New York banking corporation,
or its successor or any successor Trustee under the Indenture.

Exhibit A

ASSIGNMENT

PP&L, INC., a Pennsylvania corporation (the "Assignor"), for value
received, hereby irrevocably assigns, transfers, sets over, grants and
conveys, effective as of the date hereof, directly to CEP SECURITIES CO.
LLC, a Delaware limited liability company ("the Assignee"), without
recourse (subject to the obligations of PP&L in the Intangible Transition
Property Contribution Agreement dated May 13, 1999 (the "Contribution
Agreement"), among the Assignor, CEP Group, Inc, a Pennsylvania
corporation, CEP Reserves, Inc., a Delaware corporation, and the Assignee),
all right, title and interest of the Assignor in and to the Intangible
Transition Property, which assignment, transfer, setting over, granting and
conveyance of the Intangible Transition Property shall include, 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 Qualified Rate Order, to have and to hold the same unto the
Assignee and to the successors and assigns of the Assignee, forever.

Capitalized terms used herein and not defined shall have the meanings
set forth in the Contribution Agreement.

IN WITNESS WHEREOF, the Assignor has duly executed this Assignment this
13th day of May, 1999.

PP&L, INC.

By: ________________________
Name: ______________________
Title: _______________________

Accepted this 13th day of May, 1999.

CEP SECURITIES CO. LLC

By: ________________________
Name: ______________________
Title: _______________________

EXHIBIT 10.3

INTANGIBLE TRANSITION PROPERTY SERVICING AGREEMENT

between

PP&L Transition Bond Company LLC

Issuer

and

PP&L, INC.,

Servicer

Dated as of , 1999

TABLE OF CONTENTS

Page

ARTICLE I

DEFINITIONS

SECTION 1.01. Definitions....................................................

SECTION 1.02. Other Definitional Provisions..................................

ARTICLE II

APPOINTMENT AND AUTHORIZATION OF SERVICER

SECTION 2.01. Appointment of Servicer; Acceptance of Appointment.............

SECTION 2.02. Authorization..................................................

SECTION 2.03. Dominion and Control over Serviced Intangible Transition
Property.......................................................

ARTICLE III

BILLING SERVICES

SECTION 3.01. Duties of Servicer.............................................

SECTION 3.02. Collection and Allocation of Intangible Transition Charges.....

SECTION 3.03. Servicing and Maintenance Standards............................

SECTION 3.04. Servicer's Certificates........................................

SECTION 3.05. Annual Statement as to Compliance; Notice of Default...........

SECTION 3.06. Annual Independent Certified Public Accountants' Report........

SECTION 3.07. Intangible Transition Property Documentation..................

SECTION 3.08. Computer Records; Audits of Documentation......................

SECTION 3.09. Defending Intangible Transition Property Against Claims........

SECTION 3.10. Opinions of Counsel............................................

ARTICLE IV

SERVICES RELATED TO INTANGIBLE TRANSITION CHARGES ADJUSTMENTS

SECTION 4.01. Intangible Transition Charges Adjustments......................

ARTICLE V

THE SERVICER

SECTION 5.01. Representations and Warranties of Servicer.....................

SECTION 5.02. Indemnities of Servicer; Release of Claims.....................

SECTION 5.03. Merger or Consolidation of, or Assumption of the Obligations
of, Servicer...................................................

SECTION 5.04. Assignment of Servicer's Obligations...........................

SECTION 5.05. Limitation on Liability of Servicer and Others.................

SECTION 5.06. PP&L, Inc. Not To Resign as Servicer...........................

SECTION 5.07. Quarterly Servicing Fee........................................

SECTION 5.08. Servicer Expenses..............................................

SECTION 5.09. Appointments...................................................

SECTION 5.10. Remittances....................................................

SECTION 5.11. Protection of Title............................................

ARTICLE VI

SERVICER DEFAULT

SECTION 6.01. Servicer Default...............................................

SECTION 6.02. Notice of Servicer Default.....................................

SECTION 6.03. Waiver of Past Defaults........................................

SECTION 6.04. Appointment of Successor.......................................

SECTION 6.05. Cooperation with Successor.....................................

ARTICLE VII

MISCELLANEOUS PROVISIONS

SECTION 7.01. Amendment......................................................

SECTION 7.02. Notices........................................................

SECTION 7.03. Assignment.....................................................

SECTION 7.04. Limitations on Rights of Others................................

SECTION 7.05. Severability...................................................

SECTION 7.06. Separate Counterparts..........................................

SECTION 7.07. Headings.......................................................

SECTION 7.08. Governing Law..................................................

SECTION 7.09. Assignment to Bond Trustee.....................................

SECTION 7.10. Nonpetition Covenants..........................................

SECTION 7.11. Addition of Issuers............................................

SECTION 7.12. Termination....................................................

EXHIBIT A Servicing Procedures

ANNEX 1 ITC Adjustment Process and Reports - PP&L Transition Bond
Company LLC

SERVICING AGREEMENT dated as of , 1999 (this "Agreement") between
PP&L Transition Bond Company LLC, a Delaware limited liability company (the
"Issuer"), and PP&L, INC., a Pennsylvania corporation ("PP&L"), as the
servicer of the Intangible Transition Property (together with each
successor to PP&L (in the same capacity) pursuant to Section 5.03 or 6.02,
the "Servicer").

WHEREAS the Servicer is willing to service the Intangible
Transition Property purchased from the Seller by the Issuer; and

WHEREAS the Issuer, in connection with ownership of Serviced
Intangible Transition Property, desires to engage the Servicer to carry out
the functions described herein.

NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained and intending to be legally bound hereby, the
parties hereto agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.01. DEFINITIONS. Capitalized terms used but not
otherwise defined in this Agreement have the respective meanings set forth
in Appendix A hereto

SECTION 1.02. OTHER DEFINITIONAL PROVISIONS.

(a) The words "hereof", "herein", "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole
and not to any particular provision of this Agreement; Section, Annex,
Schedule and Exhibit references contained in this Agreement are references
to Sections, Annexes, Schedules and Exhibits in or to this Agreement unless
otherwise specified; and the term "including" shall mean "including without
limitation".

(b) The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms.

ARTICLE II

APPOINTMENT AND AUTHORIZATION OF SERVICER

SECTION 2.01. APPOINTMENT OF SERVICER; ACCEPTANCE OF APPOINTMENT.
Subject to Section 5.04 and Article VI, the Issuer hereby appoints the
Servicer, and the Servicer hereby accepts such appointment, to perform the
Servicer's obligations pursuant to this Agreement on behalf of and for the
benefit of the Issuer in accordance with the terms of this Agreement. This
appointment and the Servicer's acceptance thereof may not be revoked except
in accordance with the express terms of this Agreement.

SECTION 2.02. AUTHORIZATION. With respect to all or any portion of
the Serviced Intangible Transition Property, the Servicer shall be, and
hereby is, authorized and empowered by the Issuer to:

(a) execute and deliver, on behalf of itself or the Issuer, as the
case may be, any and all instruments, documents or notices, and

(b) on behalf of itself or the Issuer, as the case may be, make
any filing and participate in proceedings of any kind with any governmental
authorities, including with the PUC.

The Issuer shall furnish the Servicer with such documents as have
been prepared by the Servicer for execution by the Issuer, and with such
other documents as may be in the Issuer's possession, as necessary or
appropriate to enable the Servicer to carry out its servicing and
administrative duties hereunder. Upon the written request of the Servicer,
the Issuer shall furnish the Servicer with any powers of attorney or other
documents necessary or appropriate to enable the Servicer to carry out its
duties hereunder.

SECTION 2.03. DOMINION AND CONTROL OVER SERVICED INTANGIBLE
TRANSITION PROPERTY. Notwithstanding any other provision herein, the
Servicer and the Issuer agree that the Issuer shall have dominion and
control over the Serviced Intangible Transition Property, and the Servicer,
in accordance with the terms hereof, is acting solely as the servicing
agent of the Issuer with respect to the Serviced Intangible Transition
Property. The Servicer hereby agrees that it shall not take any action that
is not authorized by this Agreement, that is not consistent with its
customary procedures and practices, or that shall impair the rights of the
Issuer with respect to the Serviced Intangible Transition Property, in each
case unless such action is required by law or court or regulatory order.

ARTICLE III

BILLING SERVICES

SECTION 3.01. DUTIES OF SERVICER. The Servicer, as agent for the
Issuer (to the extent provided herein), shall have the following duties:

(a) Duties of Servicer Generally. The Servicer will manage,
service, administer and make collections in respect of the Serviced
Intangible Transition Property. The Servicer's duties will include:

(i) calculating and billing the Intangible Transition Charges and
collecting (from Customers and Third Parties, as applicable) and posting
all ITC Collections;

(ii) responding to inquiries by Customers, Third Parties, the PUC,
or any federal, local or other state governmental authority with respect to
the Serviced Intangible Transition Property and the Intangible Transition
Charges;

(iii) 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;

(iv) selling, as the agent for the Issuer, as its interest may
appear, defaulted or written off accounts in accordance with the Servicer's
usual and customary practices; and

(v) taking action in connection with Intangible Transition Charge
Adjustments as is set forth herein.

Anything to the contrary notwithstanding, the duties of the
Servicer set forth in this Agreement shall be qualified in their entirety
by the Pennsylvania Public Utility Code and any PUC Regulations, orders or
directions as in effect at the time such duties are to be performed.
Without limiting the generality of this Section 3.01(a), in furtherance of
the foregoing, the Servicer hereby agrees that it shall also have, and
shall comply with, the duties and responsibilities relating to data
acquisition, usage and bill calculation, billing, customer service
functions, collections, payment processing and remittance set forth in
Exhibit A hereto.

(b) Notification of Laws and Regulations. The Servicer shall
immediately notify the Issuer, the Trustee and the Rating Agencies in
writing of any laws or PUC Regulations, orders or directions hereafter
promulgated that have a material adverse effect on the Servicer's ability
to perform its duties under this Agreement.

(c) Other Information. Upon the reasonable request of the Issuer,
the Trustee or any Rating Agency, the Servicer shall provide to the Issuer,
the Trustee or the Rating Agency, as the case may be, any public financial
information in respect of the Servicer, or any material information
regarding the Intangible Transition Property to the extent it is reasonably
available to the Servicer, that may be reasonably necessary and permitted
by law for the Issuer, the Trustee or the Rating Agency to monitor the
performance by the Servicer hereunder. In addition, so long as any of the
Transition Bonds of any Series are outstanding, the Servicer shall provide
to the Issuer and to the Trustee, within a reasonable time after written
request therefor, any information available to the Servicer or reasonably
obtainable by it that is necessary to calculate the Intangible Transition
Charges applicable to each Customer Class.

SECTION 3.02. COLLECTION AND ALLOCATION OF INTANGIBLE TRANSITION
CHARGES.

(a) The Servicer shall use all reasonable efforts, consistent with
its customary servicing procedures, to collect all amounts owed in respect
of Intangible Transition Charges as and when the same shall become due and
shall follow such collection procedures as it follows with respect to
collection activities that the Servicer conducts for itself or others. The
Servicer shall not change the amount of or reschedule the due date of any
scheduled payment of Intangible Transition Charges, except as contemplated
in this Agreement or as required by law or court or PUC order or directive;
provided, however, that the Servicer may take any of the foregoing actions
to the extent that such action would be in accordance with customary
billing and collection practices of the Servicer with respect to billing
and collection activities that it conducts for itself.

(b) As specified in [cite PUC order], any amounts received by the
Servicer from a Customer that represent a partial payment toward an
outstanding balance will be applied in the following manner:

[(i) If the Customer has a Pre-Retail Access balance, 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 has a Post-Retail Access balance,] 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.

(ii) For a Customer with no Pre-Retail Access balance 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.

SECTION 3.03. PAYMENT OF ITC COLLECTIONS. The Servicer shall
periodically prepare a Collections Curve for each Billing Month. The
Servicer agrees to remit actual ITC Collections for any Billing Month to
the Trustee for deposit in the Collection Account not later than the
Remittance Date immediately following the Reconciliation Date for such
Billing Month. In addition, the Servicer shall 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 the Servicer has
satisfied the conditions of Section 5.10(b), the Servicer shall 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 applicable 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 of
Section 5.10(b), the Servicer shall remit to the Trustee for each of the
seven preceding Billing Months an amount equal to (x) the amount of ITC
Collections estimated to have been received during the preceding calendar
month, based on the applicable Collections Curve for each Customer Class
then in effect, for those Billing Months, divided by (y) the number of
Business Days in the current month.

On or before the Reconciliation Date for each Billing Month, the
Servicer shall determine whether there exists a Curve Payment Shortfall or
an Excess Curve Payment with respect to such Billing Month. In the event
that there is a Curve Payment Shortfall with respect to the applicable
Billing Month, the Servicer shall pay the Curve Payment Shortfall to the
Trustee for deposit into the Collection Account on that Reconciliation
Date. In the event that there is an Excess Curve Payment for the applicable
Billing Month, the Servicer may either (i) reduce the amount that the
Servicer is required to remit 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 (ii)
require the Trustee to pay to the Servicer from the Collection Account the
amount of the Excess Curve Payment which payment shall become the property
of the Servicer. Any Excess Curve Payment or Curve Payment Shortfall for a
Reconciliation Date shall not affect the underlying Collection Curve
Payments otherwise due on that date.

SECTION 3.04. SERVICING AND MAINTENANCE STANDARDS. The Servicer
shall, on behalf of the Issuer:

(a) manage, service, administer and make collections in respect of
the Serviced Intangible Transition Property with reasonable care and in
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) follow standards, policies and procedures in performing its
duties as Servicer that are customary in the electric distribution
industry;

(c) use all reasonable efforts, consistent with its customary
servicing procedures, to enforce and maintain the Issuer's and the
Trustee's rights in respect of the Intangible Transition Property; and

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

except where the failure to comply with any of the foregoing would not
materially and adversely affect the Issuer's or the Trustee's interest in
the Serviced Intangible Transition Property. The Servicer shall follow such
customary and usual practices and procedures as it shall deem necessary or
advisable in its servicing of all or any portion of the Serviced Intangible
Transition Property, which, in the Servicer's judgment, may include the
taking of legal action pursuant to Section 3.10 hereof or otherwise.

SECTION 3.05. SERVICER'S CERTIFICATES. The Servicer will provide
to the Issuer and to the Trustee the statements and certificates specified
in Annex 1.

SECTION 3.06. ANNUAL STATEMENT AS TO COMPLIANCE; NOTICE OF
DEFAULT.

(a) The Servicer shall deliver to the Issuer, to the Trustee and to
each Rating Agency, on or before March 31 of each year beginning March 31,
2000, an Officers' Certificate, stating that:

(i) a review of the activities of the Servicer during the preceding
calendar year (or relevant portion thereof) and of its performance
under this Agreement has been made under such officers' supervision
and

(ii) to the best of such officers' knowledge, based on such review,
the Servicer has fulfilled all its obligations under this Agreement
throughout such period or, if there has been a default in the
fulfillment of any such obligation, describing each such default.

(b) The Servicer shall deliver to the Issuer, to the Trustee and to
each Rating Agency, promptly after having obtained knowledge thereof, but
in no event later than five Business Days thereafter, written notice in an
Officers' Certificate of any event which with the giving of notice or lapse
of time, or both, would become a Servicer Default under Section 6.01 or a
default under any other Basic Document.

SECTION 3.07. ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS'
REPORT.

(a) The Servicer shall cause a firm of independent certified public
accountants (which may also provide other services to the Servicer or the
Seller) to prepare, and the Servicer shall deliver to the Issuer, to the
Trustee and to each Rating Agency, on or before March 31 of each year,
beginning March 31, 2000 to and including the March 31 succeeding the
retirement of all Transition Bonds, a report addressed to the Servicer (the
"Annual Accountant's Report"), which may be included as part of the
Servicer's customary auditing activities, to the effect that such
firm has performed certain procedures in connection with the Servicer's
compliance with its obligations under this Agreement during the preceding
calendar year (or, in the case of the first Annual Accountant's Report, the
period of time from the first Sale Date until December 31, 1999),
identifying the results of such procedures and including any exceptions
noted. In the event such accounting firm requires the Trustee or the Issuer
to agree or consent to the procedures performed by such firm, the Issuer
shall direct the Trustee in writing to so agree; it being understood and
agreed that the Trustee will deliver such letter of agreement or consent in
conclusive reliance upon the direction of the Issuer, and the Trustee will
not make any independent inquiry or investigation as to, and shall have no
obligation or liability in respect of, the sufficiency, validity or
correctness of such procedures.

(b) The Annual Accountant's Report shall also indicate that the
accounting firm providing such report is independent of the Servicer within
the meaning of the Code of Professional Ethics of the American Institute of
Certified Public Accountants.

SECTION 3.08. INTANGIBLE TRANSITION PROPERTY DOCUMENTATION. To
assure uniform quality in servicing the Serviced Intangible Transition
Property and to reduce administrative costs, the Servicer shall keep on
file, in accordance with its customary procedures, all Intangible
Transition Property Documentation.

SECTION 3.09. COMPUTER RECORDS; AUDITS OF DOCUMENTATION.

(a) Safekeeping. The Servicer shall maintain accurate and complete
accounts, records and computer systems pertaining to the Intangible
Transition Property and the Intangible Transition Property Documentation in
accordance with its standard accounting procedures and in sufficient detail
to permit reconciliation between payments or recoveries on (or with respect
to) Intangible Transition Charges and the ITC Collections from time to time
remitted to the Trustee pursuant to Section 5.10 and to enable the Issuer
to comply with this Agreement and the Indenture. The Servicer shall
conduct, or cause to be conducted, periodic audits of the Intangible
Transition Property Documentation held by it under this Agreement and of
the related accounts, records and computer systems, in such a manner as
shall enable the Issuer and the Trustee, as pledgee of the Issuer, to
verify the accuracy of the Servicer's record keeping. The Servicer shall
promptly report to the Issuer and to the Trustee any failure on the
Servicer's part to hold the Intangible Transition Property Documentation
and maintain its accounts, records and computer systems as herein provided
and promptly take appropriate action to remedy any such failure. Nothing
herein shall be deemed to require an initial review or any periodic review
by the Issuer or the Trustee of the Intangible Transition Property
Documentation.

(b) Maintenance of and Access to Records. The Servicer shall maintain
the Intangible Transition Property Documentation at 2 North Ninth Street,
Allentown, Pennsylvania or at such other office as shall be specified to
the Issuer and to the Trustee by written notice not later than 30 days
prior to any change in location. The Servicer shall permit the Issuer and
the Trustee or their respective duly authorized representatives, attorneys,
agents or auditors at any time during normal business hours to inspect,
audit and make copies of and abstracts from the Servicer's records
regarding the Intangible Transition Property and Intangible Transition
Charges and the Intangible Transition Property Documentation. The failure
of the Servicer to provide access to such information as a result of an
obligation or applicable law (including PUC Regulations) prohibiting
disclosure of information regarding customers shall not constitute a breach
of this Section 3.09(b).

SECTION 3.10. DEFENDING INTANGIBLE TRANSITION PROPERTY AGAINST
CLAIMS. The Servicer shall institute any action or proceeding necessary to
compel performance by the PUC or the Commonwealth of Pennsylvania of any of
their obligations or duties under the Competition Act or the Qualified Rate
Order with respect to the Intangible Transition Property. The costs of any
such action reasonably allocated by the Servicer to the Serviced Intangible
Transition Property shall be payable from ITC Collections as an Operating
Expense in accordance with the Indenture. The Servicer's obligations
pursuant to this Section 3.10 shall survive and continue notwithstanding
the fact that the payment of Operating Expenses pursuant to the Indenture
may be delayed (it being understood that the Servicer may be required to
advance its own funds to satisfy its obligations hereunder).

SECTION 3.11. OPINIONS OF COUNSEL. The Servicer shall deliver to
the Issuer and to the Trustee:

(a) promptly after the execution and delivery of this Agreement and
of each amendment hereto, promptly after the execution of the Sale
Agreement and of each amendment thereto and on each Sale Date, an Opinion
of Counsel either:

(i) to the effect that, in the opinion of such counsel, all filings,
including filings with the PUC pursuant to the Competition Act that
are necessary to fully preserve and protect the interests of the
Trustee in the Serviced Intangible Transition Property have been
executed and filed, and reciting the details of such filings or
referring to prior Opinions of Counsel in which such details are
given, or

(ii) to the effect that, in the opinion of such counsel, no such
action shall be necessary to preserve and protect such interest; and

(b) within 90 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three months
after the first Sale Date, an Opinion of Counsel, dated as of a date during
such 90-day period, either:

(i) to the effect that, in the opinion of such counsel, all filings
with the PUC pursuant to the Competition Act have been executed and
filed that are necessary to preserve fully and protect fully the
interest of the Trustee in the Serviced Intangible Transition
Property, and reciting the details of such filings or referring to
prior Opinions of Counsel in which such details are given, or

(ii) to the effect that, in the opinion of such counsel, no such
action shall be necessary to preserve and protect such interest.

Each Opinion of Counsel referred to in clause (a) or (b) above shall
specify any action necessary (as of the date of such opinion) to be taken
in the following year to preserve and protect such interest.

ARTICLE IV

SERVICES RELATED TO INTANGIBLE TRANSITION CHARGES ADJUSTMENTS

SECTION 4.01. INTANGIBLE TRANSITION CHARGES ADJUSTMENTS. The
Servicer shall perform the calculations and take the actions relating to
adjusting the Intangible Transition Charges, as set forth in Annex 1.

ARTICLE V

THE SERVICER

SECTION 5.01. REPRESENTATIONS AND WARRANTIES OF SERVICER. The
Servicer makes the following representations and warranties as of each Sale
Date, on which the Issuer has relied and will rely in acquiring Serviced
Intangible Transition Property. The representations and warranties shall
survive the sale of any of the Serviced Intangible Transition Property to
the Issuer and the pledge thereof to the Trustee pursuant to the Indenture.

(a) Organization and Good Standing. 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 to conduct its business as such properties are currently owned and such
business is presently conducted and to execute, deliver and carry out the
terms of this Servicing Agreement, and has the power, authority and legal
right to service the Serviced Intangible Transition Property.

(b) Due Qualification. The Servicer is duly qualified to do business
as a foreign corporation in good standing, and has obtained all necessary
licenses and approvals in, all jurisdictions in which the ownership or
lease of property or the conduct of its business (including the servicing
of the Serviced Intangible Transition Property as required by this
Agreement) requires such qualifications, licenses or approvals (except
where the failure to so qualify would not be reasonably likely to have a
material adverse effect on the Servicer's business, operations, assets,
revenues, properties or prospects or adversely affect the servicing of the
Serviced Intangible Transition Property).

(c) Power and Authority. The Servicer has the corporate power and
authority to execute and deliver this Agreement and to carry out its terms;
and the execution, delivery and performance of this Agreement have been
duly authorized by the Servicer by all necessary corporate action.

(d) Binding Obligation. This Agreement constitutes a legal, valid and
binding obligation of the Servicer enforceable against the Servicer in
accordance with its terms subject to bankruptcy, receivership, insolvency,
reorganization, moratorium or other laws affecting creditors' rights
generally from time to time in effect and to general principles of equity
(regardless of whether considered in a proceeding in equity or at law).

(e) No Violation. The consummation of the transactions contemplated
by this Agreement and the fulfillment of the terms hereof will not conflict
with, result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time) a default under, the
articles of incorporation or by-laws of the Servicer, or any indenture,
agreement or other instrument to which the Servicer is a party or by which
it is bound; or result in the creation or imposition of any Lien upon any
of its properties pursuant to the terms of any such indenture, agreement or
other instrument; or violate any law or any order, rule or regulation
applicable to the Servicer of any court or of any federal or state
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Servicer or its properties.

(f) Approvals. Except for filings with the PUC for adjusting
Intangible Transition Charges pursuant to Section 4.01 and Annex 1 and UCC
continuation filings, 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 by the Servicer of this
Agreement, the performance by the Servicer of the transactions contemplated
hereby or the fulfillment by the Servicer of the terms hereof, except those
that have been obtained or made.

(g) No Proceedings. There are no proceedings or investigations
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:

(i) 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,
this Agreement; or

(ii) relating to the Servicer and which might materially and
adversely affect the treatment of the Transition Bonds as debt for
federal or state income tax purposes.

(h) Reports and Certificates. 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 Intangible
Transition Charges Adjustments 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; provided, however,
that 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.

SECTION 5.02. INDEMNITIES OF SERVICER; RELEASE OF CLAIMS.

(a) The Servicer shall be liable in accordance herewith only to the
extent of the obligations specifically undertaken by the Servicer under
this Agreement.

(b) The Servicer shall indemnify the Issuer and the Trustee (for
itself and on behalf of the Transition Bondholders) and each of their
respective trustees, members, managers, officers, directors, employees and
agents for, and defend and hold harmless each such Person from and against,
any and all Losses that may be imposed upon, incurred by or asserted
against any such Person as a result of

(i) the Servicer's wilful misconduct, bad faith or gross negligence
in the performance of its duties or observance of its covenants under
this Agreement or the Servicer's reckless disregard of its
obligations and duties under this Agreement;

(ii) the Servicer's breach of any of its representations or
warranties in this Agreement; and

(iii) litigation and related expenses relating to its status and
obligations as Servicer.

(c) If any action, claim, demand or proceeding (including any
governmental investigation) shall be brought or asserted against a party
(the"indemnified party") entitled to any indemnification provided for under
this Section 5.02, such indemnified party shall promptly notify the
Servicer in writing; provided, however, that failure to give such
notification shall not affect the indemnification provided hereunder except
to the extent the Servicer shall have been actually prejudiced as a result
of such failure.

(d) The Servicer shall indemnify the Trustee and its respective
officers, directors and agents for, and defend and hold harmless each such
Person from and against, any and all Losses that may be imposed upon,
incurred by or asserted against any such Person as a result of the
acceptance or performance of the trusts and duties contained herein and in
the Indenture, except to the extent that any such Loss shall be due to the
wilful misconduct, bad faith or gross negligence of the Trustee. Such
amounts with respect to the Trustee shall be deposited and distributed in
accordance with the Indenture.

(e) The Servicer's indemnification obligations under Section 5.02(b)
and (d) for events occurring prior to the removal or resignation of the
Trustee or the termination of this Agreement shall survive the resignation
or removal of the Trustee or the termination of this Agreement and shall
include reasonable costs, fees and expenses of investigation and litigation
(including the Issuer's and the Trustee's reasonable attorneys' fees and
expenses).

(f) Except to the extent expressly provided for in this Agreement,
the Sale Agreement or the Formation Documents (including the Servicer's
claims with respect to the Quarterly Servicing Fees and the Seller's claim
for payment of the purchase price of Intangible Transition Property), the
Servicer hereby releases and discharges the Issuer (including its Member,
managers, officers, employees and agents, if any), and the Trustee
(including its respective officers, directors and agents) (collectively,
the "Released Parties") from any and all actions, claims and demands
whatsoever, which the Servicer, in its capacity as Servicer or Seller,
shall or may have against any such Person relating to the Serviced
Intangible Transition Property or the Servicer's activities with respect
thereto other than any actions, claims and demands arising out of the
wilful misconduct, bad faith or gross negligence of the Released Parties.

SECTION 5.03. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, SERVICER. Any Person:

(a) into which the Servicer may be merged or consolidated and which
succeeds to all or substantially all of the electric distribution
business of the Servicer,

(b) which results from the division of the Servicer into two or more
Persons and which succeeds to all or substantially all of the
electric distribution business of the Servicer,

(c) which may result from any merger or consolidation to which the
Servicer shall be a party and which succeeds to all or substantially
all of the electric distribution business of the Servicer,

(d) which may succeed to the properties and assets of the Servicer
substantially as a whole and which succeeds to all or substantially
all of the electric distribution business of the Servicer or

(e) which may otherwise succeed to all or substantially all of the
electric distribution business of the Servicer,

which Person in any of the foregoing cases executes an agreement of
assumption to perform every obligation of the Servicer under this
Agreement,

shall be the successor to the Servicer under this Agreement without the
execution or filing of any document or any further act by any of the
parties to this Agreement; provided, however, that:

(i) immediately after giving effect to such transaction, no
representation or warranty made pursuant to Section 5.01 shall have
been breached and no Servicer Default, and no event that, after
notice or lapse of time, or both, would become a Servicer Default,
shall have occurred and be continuing,

(ii) the Servicer shall have delivered to the Issuer and the Trustee
an Officers' Certificate and an Opinion of Counsel each stating that
such consolidation, merger or succession and such agreement of
assumption comply with this Section 5.03 and that all conditions
precedent, if any, provided for in this Agreement relating to such
transaction have been complied with,

(iii) the Servicer shall have delivered to the Issuer and to the
Trustee an Opinion of Counsel either

(A) stating that, in the opinion of such counsel, all filings
to be made by the Servicer, including filings with the PUC
pursuant to the Competition Act, that are necessary fully to
preserve and protect the interests of the Issuer in the
Serviced Intangible Transition Property have been executed and
filed and reciting the details of such filings or

(B) stating that, in the opinion of such counsel, no such
action is necessary to preserve and protect such interests.

(iv) the Rating Agencies shall have received prior written notice of
such transaction; and

(v) the Servicer shall have delivered to the Issuer and the Trustee
an opinion of independent tax counsel (as selected by, and in form
and substance reasonably satisfactory to, the Servicer, and which may
be based on a ruling from the Internal Revenue Service) to the effect
that, for federal income tax purposes, such consolidation or merger
will not result in a material adverse federal income tax consequence
to the Servicer, the Issuer, the Trustee or the then existing
Transition Bondholders.

The Servicer shall not consummate any transaction referred to in clauses
(a), (b), (c), (d) or (e) above except upon execution of the above
described agreement of assumption and compliance with clauses (i), (ii),
(iii), (iv) and (v) above. When any Person acquires the properties and
assets of the Servicer substantially as a whole and becomes the successor
to the Servicer in accordance with the terms of this Section 5.03, then
upon the satisfaction of all of the other conditions of this Section 5.03,
the Servicer shall automatically and without further notice be released
from its obligations hereunder.

SECTION 5.04. ASSIGNMENT OF SERVICER'S OBLIGATIONS. Pursuant to
paragraph 17 of the Qualified Rate Order in which the PUC authorizes PP&L
to contract with an alternative party to perform PP&L's obligations
contemplated in the Qualified Rate Order, the Servicer may assign its
obligations hereunder to any electric distribution company (as such term is
defined in the Competition Act) which succeeds to [all or substantially
all] of PP&L's electric distribution business [upon the satisfaction of the
requirements specified in Section 5.03].

SECTION 5.05. LIMITATION ON LIABILITY OF SERVICER AND OTHERS. The
Servicer shall not be liable to the Issuer or the Trustee, except as
provided under this Agreement, for any action taken or for refraining from
the taking of any action pursuant to this Agreement or for errors in
judgment; provided, however, that this provision shall not protect the
Servicer against any liability that would otherwise be imposed by reason of
wilful misconduct, bad faith or gross negligence in the performance of its
duties or by reason of reckless disregard of obligations and duties under
this Agreement. The Servicer and any director or officer or employee or
agent of the Servicer may rely in good faith on the advice of counsel
reasonably acceptable to the Trustee or on any document of any kind, prima
facie properly executed and submitted by any Person, respecting any matters
arising under this Agreement.

Except as provided in this Agreement, the Servicer shall not be
under any obligation to appear in, prosecute or defend any legal action
that is not incidental to its duties to service the Serviced Intangible
Transition Property in accordance with this Agreement or related to its
obligation to pay indemnification, and that in its reasonable opinion may
cause it to incur any expense or liability.

SECTION 5.06. PP&L NOT TO RESIGN AS SERVICER. Subject to the
provisions of Sections 5.03 and 5.04, PP&L shall not resign from the
obligations and duties imposed on it as Servicer under this Agreement
except upon a determination that the performance of its duties under this
Agreement shall no longer be permissible under applicable law. Notice of
any such determination permitting the resignation of PP&L shall be
communicated to the Issuer, to the Trustee and to each Rating Agency at the
earliest practicable time (and, if such communication is not in writing,
shall be confirmed in writing at the earliest practicable time), and any
such determination shall be evidenced by an Opinion of Counsel to such
effect delivered to the Issuer and the Trustee concurrently with or
promptly after such notice. No such resignation shall become effective
until a successor Servicer shall have assumed the servicing obligations and
duties hereunder of the Servicer in accordance with Section 6.02.

SECTION 5.07. QUARTERLY SERVICING FEE. The Issuer agrees to pay
the Servicer on [the Business Day preceding] each Payment Date, solely to
the extent amounts are available therefor in accordance with the Indenture,
the Quarterly Servicing Fee with respect to all Series of Transition Bonds.
For so long as PP&L is the Servicer, the Quarterly Servicing Fee shall be
$312,500. The Servicer shall be entitled to retain as additional
compensation net investment income on ITC Collections related to Serviced
Intangible Transition Property received by the Servicer during any
Collection Period and the late fees, if any, paid by Customers to the
Servicer. The foregoing fees constitute a fair and reasonable price for the
obligations to be performed by the Servicer.

SECTION 5.08. SERVICER EXPENSES. Except as otherwise expressly
provided herein, the Servicer shall be required to pay all expenses
incurred by it in connection with its activities hereunder, including fees
and disbursements of independent accountants and counsel, taxes imposed on
the Servicer and expenses incurred in connection with reports to Transition
Bondholders.

SECTION 5.09. APPOINTMENTS. The Servicer may at any time appoint a
subservicer to perform all or any portion of its obligations as Servicer
hereunder; provided, however, that the Rating Agency Condition shall have
been satisfied in connection therewith; provided further that the Servicer
shall remain obligated and be liable to the Issuer for the servicing and
administering of the Serviced Intangible Transition Property in accordance
with the provisions hereof without diminution of such obligation and
liability by virtue of the appointment of such subservicer and to the same
extent and under the same terms and conditions as if the Servicer alone
were servicing and administering the Serviced Intangible Transition
Property. The fees and expenses of the subservicer shall be as agreed
between the Servicer and its subservicer from time to time, and none of the
Issuer, the Trustee or the Transition Bondholders shall have any
responsibility therefor.

SECTION 5.10. REMITTANCES.

(a) The Servicer shall remit all ITC Collections (from whatever
source) in accordance with Section 3.03, and all proceeds of other
Collateral of the Issuer, if any, received by the Servicer, to the Trustee
for deposit pursuant to the Indenture, not later than each Daily Remittance
Date.

(b) Notwithstanding the foregoing clause (a):

(i) as long as PP&L or any successor to PP&L's electric
distribution business remains the Servicer,

(ii) no Servicer Default has occurred and is continuing, and

(iii)

(A) PP&L or such successor maintains a short-term rating of
"A-1" or better by Standard & Poor's, "P-1" or better by
Moody's and "F-1" or better by Fitch (and for five Business
Days following a reduction in either such rating), or

(B) the Rating Agency Condition shall have been satisfied (and
any conditions or limitations imposed by the Rating Agencies
in connection therewith are complied with),

the Servicer need not make the daily remittances required by clause
(a), but in lieu thereof, shall remit all ITC Collections (from
whatever source) in accordance with Section 3.03, and all proceeds of
other Collateral of the Issuer, if any, received by the Servicer
during any Collection Period, to the Trustee for deposit pursuant to
the Indenture, not later than the corresponding Monthly Remittance
Date.

SECTION 5.11. PROTECTION OF TITLE. The Servicer shall execute and
file such filings, including filings with the PUC pursuant to the
Competition Act, and cause to be executed and filed such filings, all in
such manner and in such places as may be required by law fully to preserve,
maintain, and protect the interests of the Issuer in the Serviced
Intangible Transition Property, including all filings required under the
Competition Act relating to the transfer of the ownership or security
interest in the Serviced Intangible Transition Property by the Seller to
the Issuer or any security interest granted by the Issuer in the Serviced
Intangible Transition Property. The Servicer shall deliver (or cause to be
delivered) to the Issuer file-stamped copies of, or filing receipts for,
any document filed as provided above, as soon as available following such
filing.

ARTICLE VI

SERVICER DEFAULT

SECTION 6.01. SERVICER DEFAULT. If any one of the following events
(a "Servicer Default") occurs and is continuing:

(a) any failure by the Servicer to remit 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; or

(b) any failure by the Servicer duly to observe or perform in any
material respect any other covenant or agreement of the Servicer set forth
in this Agreement or any other Basic Document to which it is a party in
such capacity, which failure

(i) materially and adversely affects the Intangible Transition
Property, and

(ii) continues unremedied for a period of 60 days after written
notice of such failure has been given to the Servicer by the
Issuer or by the Trustee or after discovery of such failure by an
officer of the Servicer; or

(c) any representation or warranty made by the Servicer in this
Agreement proves to have been incorrect when made, which has a material
adverse effect on the Issuer or the Transition Bondholders and which
material adverse effect continues unremedied for a period of 60 days after
the date on which written notice thereof shall have been given to the
Servicer by the Issuer or the Trustee or after discovery of such failure by
an officer of the Servicer, as the case may be; or

(d) an Insolvency Event occurs with respect to the Servicer;

then, and in each and every case, so long as the Servicer Default shall not
have been remedied, the Trustee, with the consent of the Holders of a
majority of the outstanding principal amount of the Transition Bonds of all
Series, by notice then given in writing to the Servicer (a "Termination
Notice") may terminate all the rights and obligations (other than the
indemnification obligations set forth in Section 5.02 hereof and the
obligation under Section 6.02 to continue performing its functions as
Servicer until a successor Servicer is appointed) of the Servicer under
this Agreement. In addition, upon a Servicer Default described in Section
6.01(a), the Issuer and the Trustee shall be entitled to apply to the PUC
for sequestration and payment to the Trustee of revenues arising with
respect to the Serviced Intangible Transition Property.

On or after the receipt by the Servicer of a Termination Notice,
all authority and power of the Servicer under this Agreement, whether with
respect to the Serviced Intangible Transition Property, the related
Intangible Transition Charges or otherwise, shall, upon appointment of a
successor Servicer pursuant to Section 6.02, without further action, pass
to and be vested in such successor Servicer and, without limitation, the
Trustee is hereby authorized and empowered to execute and deliver, on
behalf of the predecessor Servicer, as attorney-in-fact or otherwise, any
and all documents and other instruments, and to do or accomplish all other
acts or things necessary or appropriate to effect the purposes of such
Termination Notice, whether to complete the transfer of the Intangible
Transition Property Documentation and related documents, or otherwise. The
predecessor Servicer shall cooperate with the successor Servicer, the
Trustee and the Issuer in effecting the termination of the responsibilities
and rights of the predecessor Servicer under this Agreement, including the
transfer to the successor Servicer for administration by it of all cash
amounts that shall at the time be held by the predecessor Servicer for
remittance, or shall thereafter be received by it with respect to the
Serviced Intangible Transition Property or the related Intangible
Transition Charges. As soon as practicable after receipt by the Servicer of
such Termination Notice, the Servicer shall deliver the Intangible
Transition Property Documentation to the successor Servicer. All reasonable
costs and expenses (including attorneys fees and expenses) incurred in
connection with transferring the Intangible Transition Property
Documentation to the successor Servicer and amending this Agreement to
reflect such succession as Servicer pursuant to this Section shall be paid
by the predecessor Servicer upon presentation of reasonable documentation
of such costs and expenses. Termination of PP&L as Servicer shall not
terminate PP&L's rights or obligations under the Contribution Agreement.

SECTION 6.02. NOTICE OF SERVICER DEFAULT. The Servicer shall
deliver to the Issuer, to the Trustee and to each Rating Agency promptly
after having obtained knowledge thereof, but in no event later than five
Business Days thereafter, written notice in an Officer's Certificate of any
event or circumstance which, with the giving of notice or the passage of
time, would become a Servicer Default under Section 6.01.

SECTION 6.03. WAIVER OF PAST DEFAULTS. The Trustee, with the
consent of Holders of the majority of the outstanding principal amount of
the Transition Bonds of all Series, may waive in writing any default by the
Servicer in the performance of its obligations hereunder and its
consequences, except a default in making any required remittances to the
Trustee of ITC Collections from Serviced Intangible Transition Property in
accordance with Section 5.10 of this Agreement. Upon any such waiver of a
past default, such default shall cease to exist, and any Servicer Default
arising therefrom shall be deemed to have been remedied for every purpose
of this Agreement. No such waiver shall extend to any subsequent or other
default or impair any right consequent thereto.

SECTION 6.04. APPOINTMENT OF SUCCESSOR.

(a) Upon the Servicer's receipt of a Termination Notice pursuant
to Section 6.01 or the Servicer's resignation in accordance with the terms
of this Agreement, the predecessor Servicer shall continue to perform its
functions as Servicer under this Agreement and shall be entitled to receive
the requisite portion of the Quarterly Servicing Fees, until a successor
Servicer shall have assumed in writing the obligations of the Servicer
hereunder as described below. In the event of the Servicer's removal or
resignation hereunder, the Trustee shall appoint a successor Servicer, with
the consent of the Holders of a majority of the outstanding principal
amount of the Transition Bonds of all Series, and the successor Servicer
shall accept its appointment by a written assumption in form acceptable to
the Issuer and the Trustee. If, within 30 days after the delivery of the
Termination Notice, a new Servicer shall not have been appointed and
accepted such appointment, the Trustee may petition the PUC or a court of
competent jurisdiction to appoint a successor Servicer under this
Agreement. A Person shall qualify as a successor Servicer only if:

(i) such Person is permitted under PUC Regulations to perform the
duties of the Servicer pursuant to the Competition Act, the
Qualified Rate Order and this Agreement,

(ii) the Rating Agency Condition shall have been satisfied, and

(iii) such Person enters into a servicing agreement with the
Issuer having substantially the same provisions as this
Agreement.

(b) Upon appointment, the successor Servicer shall be the
successor in all respects to the predecessor Servicer under this Agreement
and shall be subject to all the responsibilities, duties and liabilities
arising thereafter relating thereto placed on the predecessor Servicer and
shall be entitled to the Quarterly Servicing Fees and all the rights
granted to the predecessor Servicer by the terms and provisions of this
Agreement.

SECTION 6.05. COOPERATION WITH SUCCESSOR. The Servicer covenants
and agrees with the Issuer that it will, on an ongoing basis, 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 hereunder.

ARTICLE VII

MISCELLANEOUS PROVISIONS

SECTION 7.01. AMENDMENT. This Agreement may be amended by the
Servicer and the Issuer, with the consent of the Trustee. Promptly after
the execution of any such amendment or consent, the Issuer shall furnish
written notification of the substance of such amendment or consent to each
of the Rating Agencies.

Prior to the execution of any amendment to this Agreement, the
Issuer and the Trustee shall be entitled to receive and rely upon an
Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement and the Opinion of Counsel
referred to in Section 3.11. The Issuer and the Trustee may, but shall not
be obligated to, enter into any such amendment which affects their own
rights, duties or immunities under this Agreement or otherwise.

SECTION 7.02. NOTICES. All demands, notices and communications
upon or to the Servicer, the Issuer, the Trustee or the Rating Agencies
under this Agreement shall be in writing, delivered personally, via
facsimile, reputable overnight courier or by first class mail, postage
prepaid, and shall be deemed to have been duly given upon receipt

(a) in the case of the Servicer, to PP&L, 2 North Ninth Street,
Allentown, PA 18101, Attention of Treasurer;

(b) in the case of the Issuer, to PP&L Transition Bond Company
LLC, 2 North Ninth Street, Allentown, PA 18101, Attention of Managers;

(d) in the case of Moody's, to Moody's Investors Service, Inc.,
ABS Monitoring Department, 99 Church Street, New York, New York 10007;

(e) in the case of Standard & Poor's, to Standard & Poor's
Corporation, 55 Water Street, New York, New York 10041; and

(f) in the case of Fitch, to Fitch IBCA, Inc., 1 State Street
Plaza, New York, New York 10004;

or, as to each of the foregoing, at such other address as shall be
designated by written notice to the other parties.

SECTION 7.03. ASSIGNMENT. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 5.03 and 5.04 and as
provided in the provisions of this Agreement concerning the resignation of
the Servicer, this Agreement may not be assigned by the Servicer.

SECTION 7.04. LIMITATIONS ON RIGHTS OF OTHERS. The provisions of
this Agreement are solely for the benefit of the Servicer, the Issuer and
the Trustee, on behalf of itself and the Transition Bondholders, and
nothing in this Agreement, whether express or implied, shall be construed
to give to any other Person any legal or equitable right, remedy or claim
in any Collateral or under or in respect of this Agreement or any
covenants, conditions or provisions contained herein.

SECTION 7.05. SEVERABILITY. Any provision of this Agreement that
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.

SECTION 7.06. SEPARATE COUNTERPARTS. This Agreement may be
executed by the parties hereto in separate counterparts, each of which when
so executed and delivered shall be an original, but all such counterparts
shall together constitute but one and the same instrument.

SECTION 7.07. HEADINGS. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define
or limit any of the terms or provisions hereof.

SECTION 7.08. GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the Commonwealth of Pennsylvania, without
reference to its conflict of law provisions, and the obligations, rights
and remedies of the parties hereunder shall be determined in accordance
with such laws.

SECTION 7.09. ASSIGNMENT TO THE TRUSTEE. The Servicer hereby
acknowledges and consents to any pledge, assignment and grant of a security
interest by the Issuer to the Trustee pursuant to the Indenture for the
benefit of any Transition Bondholders of all right, title and interest of
the Issuer in, to and under the Serviced Intangible Transition Property
owned by the Issuer and the proceeds thereof and the assignment of any or
all of the Issuer's rights hereunder to the Trustee. In no event shall the
Trustee have any liability for the representations, warranties, covenants,
agreements or other obligations of the Issuer, hereunder or in any of the
certificates, notices or agreements delivered pursuant hereto, as to all of
which recourse shall be had solely to the assets of the Issuer.

SECTION 7.10. NONPETITION COVENANTS. Notwithstanding any prior
termination of this Agreement or the Indenture, but subject to the PUC's
rights to order the sequestration and payment of revenues arising with
respect to the Serviced Intangible Transition Property notwithstanding any
bankruptcy, reorganization or other insolvency proceedings with respect to
the debtor, pledgor or transferor of the Serviced Intangible Transition
Property pursuant to Section 2812(d)(3)(v) of the Competition Act, the
Servicer shall not, prior to the date which is one year and one day after
the termination of the Indenture, petition or otherwise invoke or cause the
Issuer to invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Issuer under any
federal or state bankruptcy, insolvency or similar law or appointing a
receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Issuer or any substantial part of the property of
the Issuer, or ordering the winding up or liquidation of the affairs of the
Issuer.

SECTION 7.11. TERMINATION. This Agreement shall terminate when all
Transition Bonds have been retired, redeemed or defeased in full.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective officers as of the day and year
first above written.

PP&L TRANSITION BOND
COMPANY LLC

By: ________________________________
Title: Manager

PP&L, INC., as Servicer

By: ________________________________
Title:

Acknowledged and Accepted:

THE BANK OF NEW YORK, not in its
individual capacity but solely as
Trustee on behalf of the Holders
of the Transition Bonds

By: ________________________________
Title:

ANNEX 1

SERVICING AGREEMENT

The Servicer agrees to comply with the following with respect to PP&L
Transition Bond Company LLC (the "Issuer"):

SECTION 1. DEFINITIONS.

(a) Capitalized terms used herein and not otherwise defined shall
have the meanings set forth in Appendix A to the Servicing Agreement
dated as of July , 1999, between the Issuer and PP&L, Inc., as
Servicer.

(b) Whenever used in this Annex 1, the following words and phrases
shall have the following meanings:

Adjustment Request means an application filed by the Servicer with
the PUC for revised Intangible Transition Charges pursuant to Section
5(b) of this Annex.

SECTION 2. CALCULATION DATE STATEMENTS. For each Calculation
Date, the Servicer will provide to the Issuer and the Trustee a statement
indicating

(a) the Transition Bond Balance and the Projected Transition Bond
Balance for each Series as of the immediately preceding Payment Date,

(b) the amount on deposit in the Overcollateralization Subaccount and
the Scheduled Overcollateralization Level as of the immediately
preceding Payment Date,

(c) the amount on deposit in the Capital Subaccount and the required
Capital Subaccount balance as of the immediately preceding Payment
Date;

(d) the amount on deposit in the Reserve Subaccount as of the
immediately preceding Payment Date;

(e) the Projected Transition Bond Balance and the Servicer's
projection of the Transition Bond Balance for the Payment Date
immediately preceding the next succeeding Adjustment Date;

(f) the Scheduled Overcollateralization Level and the Servicer's
projection of the amount on deposit in the Overcollateralization
Subaccount for the Payment Date immediately preceding the next
succeeding Adjustment Date;

(g) the required Capital Subaccount balance and the Servicer's
projection of the amount on deposit in the Capital Subaccount for the
Payment Date immediately preceding the next succeeding Adjustment
Date; and

(h) the Servicer's projection of the amount on deposit in the Reserve
Subaccount for the Payment Date immediately preceding the next
succeeding Adjustment
Date;

SECTION 3. REMITTANCE DATE STATEMENTS. [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 such Remittance
Date pursuant to the Indenture.

SECTION 4. PAYMENT DATE STATEMENTS. On or before each Payment
Date, the Servicer will prepare and furnish to the Issuer and to the
Trustee a statement setting forth the transfers and payments to be made in
respect of such Payment Date pursuant to [Section 8.02(d)] of the Indenture
and the amounts thereof and the amounts to be paid to Holders of Transition
Bonds of each Series pursuant to Section [8.02(e)] of the Indenture.

SECTION 5. INTANGIBLE TRANSITION CHARGES ADJUSTMENTS.

(a) Prior to each Calculation Date, the Servicer shall calculate

(i) the Transition Bond Balance as of each Calculation Date (a
written copy of which shall be delivered by the Servicer to the
Trustee within five days following such Calculation Date) and

(ii) the revised Intangible Transition Charges with respect to
the Serviced Intangible Transition Property for the then-current
calendar year and each subsequent Calendar year, such that the
Servicer projects that ITC Collections therefrom allocable to the
Issuer will be sufficient so that:

(A) the Transition Bond Balance on the Payment Date
immediately preceding the next Adjustment Date will equal the
Projected Transition Bond Balance as of such date or, if
earlier with respect to any Series or Class of Transition
Bonds, by the Expected Final Payment Date therefor, taking
into account any amounts on deposit in the Reserve Subaccount,

(B) the amount on deposit in the Overcollateralization
Subaccount on the Payment Date immediately preceding the next
Adjustment Date, or if earlier with respect to any Series or
Class of Transition Bonds, by the Expected Final Payment Date
therefor, will equal the Calculated Overcollateralization
Level for such date, taking into account amounts on deposit in
the Reserve Subaccount,

(C) the amount on deposit in the Capital Subaccount on the
Payment Date immediately preceding the next Adjustment Date,
or if earlier with respect to any Series or Class of
Transition Bonds, by the Expected Final Payment Date therefor,
will equal its required level for such date, taking into
account any amounts on deposit in the Reserve Subaccount, and

(D) thereafter the ITC Collections will provide for
amortization of the remaining outstanding principal amount of
each Series in accordance with the Expected Amortization
Schedule therefor, payment of interest on each Series when due
and deposits to the Overcollateralization Subaccount such that
the balance therein will equal the Calculated
Overcollateralization Level on each Payment Date.

(b) On each Calculation Date, the Servicer shall take the following
actions:

(i) For each Calculation Date, except for those Calculation Dates
commencing twelve months prior to the last scheduled date for the
payment of principal on each Series of Transition Bonds, the
Servicer shall make annual reconciliation filings with the PUC on
October 1 of each year. These filings shall include:

(A) actual over-collections of Intangible Transition Charges
or under-collections of Intangible Transition Charges
(collectively, "Over/Under Collections") for the eight months
from the beginning of the current calendar year until August
31,

(B) an estimate of Over/Under Collections for the four months
ending on the immediately following December 31 and

On December 15, the Servicer shall file actual Over/Under
Collection data as of November 30, replacing the estimates
submitted on October 1; the December 15 filing shall include a
tariff supplement and supporting data setting forth new
Intangible Transition Charges to become effective on the next
January 1.

(ii) Commencing twelve months prior to the last scheduled date
for the payment of principal on each Series of Transition Bonds,
the Servicer shall 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 Intangible Transition
Charges until the next interim reconciliation adjustment becomes
effective; these interim adjustments, which may be monthly or
quarterly as determined by the Servicer after consultation with
the Rating Agencies, will become effective on the first day of
the next calendar month, with not less than fifteen days notice.
Such interim reconciliation filings will be based upon, inter
alia, the cumulative differences between:

(A) the amount needed in order to provide for amortization of
the remaining outstanding principal amount of each Series in
accordance with the Expected Amortization Schedule therefor,
payment of interest on each Series when due, deposits to the
Overcollateralization Subaccount such that the balance therein
will equal the Calculated Overcollateralization Level on each
Payment Date and replenishment of any withdrawals from the
Capital Account, and

(B) actual remittances of Intangible Transition Charges to the
Trustee.

(i) take all reasonable actions and make all reasonable efforts
in order to effectuate all adjustments approved by the PUC to the
Intangible Transition Charges, and

(ii) promptly send to the Trustee copies of all material notices
and documents relating to such adjustments.

APPENDIX A

MASTER DEFINITIONS

[To be used in connection with the Servicing Agreement,
the Administration Agreement and the Indenture]

The definitions contained in this Appendix A are applicable to the singular
as well as the plural forms of such terms.

Act has the meaning specified in Section 11.03 of the Indenture.

Adjustment Date means (i) January 1 of each year through January 1,
2008 and (ii) the first day of each month or calendar quarter
thereafter in respect of which the Servicer requests the PUC to
approve an Intangible Transition Charge Adjustment.

Administration Agreement means the Administration Agreement dated as
of July __, 1999, between PP&L, as Administrator, and the Issuer.

Administrator means PP&L as administrator under the Administration
Agreement.

Annual Accountant's Report has the meaning assigned to that term in
Section 3.07 of the Servicing Agreement.

Assignment means the Assignment executed and delivered by PP&L in
favor of CEP Securities Co. LLC pursuant to, and in the form set
forth in Exhibit A of, the Contribution Agreement.

Authorized Denominations means, with respect to any Series or Class
of Transition Bonds, $1,000 and integral multiples thereof, or such
other denominations as may be specified in the Series Supplement
therefor.

[Authorized Officer means, with respect to the Issuer, any Manager or
the Member of the Issuer and, with respect to the Member of the
Issuer, any officer who is authorized to act for the Member in
matters relating to the Issuer and who is identified on the list of
Authorized Officers delivered by the Member to the Trustee as of the
date hereof (as such list may be modified or supplemented from time
to time thereafter).]

Basic Documents means the Issuer LLC Agreement, the Issuer
Certificate of Formation, the Contribution Agreement, the Assignment,
the Sale Agreement, the Servicing Agreement, the Administration
Agreement, the Indenture and any Bills of Sale.

Billing Month means a particular calendar month during which Intangible
Transition Charges are billed to Customers.

Bill of Sale means any bill of sale issued by CEP Securities to the
Issuer pursuant to the Sale Agreement evidencing the sale of
Intangible Transition Property by CEP Securities to the Issuer.

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, New York are required or authorized by
law or executive order to remain closed.

Calculation Date means, with respect to any Adjustment Date, (i)
________ of each year through [2008] and (ii) thereafter, the
fifteenth day of the month preceding such Adjustment Date.

Capital Subaccount has the meaning specified in Section 8.02(a) of
the Indenture.

CEP Securities means CEP Securities Co. LLC, a Delaware limited
liability company, or its successor.

Class means, with respect to any Series, any one of the classes of
Transition Bonds of that Series, as specified in the Series
Supplement for that Series.

Class Final Maturity Date in relation to the Notes issued means the
Final Maturity Date of a Class, as specified in the Series Supplement
for the related Series.

Clearing Agency means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.

Code means the Internal Revenue Code of 1986, as amended from time to
time, and Treasury Regulations promulgated thereunder.

Collateral has the meaning specified in the Granting Clause of the
Indenture.

Collection Account has the meaning specified in Section 8.02(a) of
the Indenture.

Collection Period means the period from and including the first day
of a calendar month to but excluding the first day of the next
calendar month.

Commission means the U.S. Securities and Exchange Commission, and any
successor thereof.

Competition Act means the Pennsylvania Electricity Generation
Customer Choice and Competition Act, Chapter 28 of Title 66 of the
Pennsylvania Consolidated Statutes, 66 Pa. C.S., Sections 2801, et
seq.

Competitive Transition Charges means the competitive transition
charges that PP&L may impose on Customers pursuant to the Competition
Act and the Qualified Rate Order.

Contract Rights has the meaning specified in Section 2.01 of the
Contribution Agreement.

Contributed Property has the meaning specified in Section 2.01 of the
Contribution Agreement.

Contribution Agreement means the Contribution Agreement, dated as of
May 13, 1999, among PP&L, Group, Reserves and CEP Securities, as
amended by the Amendment thereto dated July __, 1999, as the same may
be further amended and supplemented from time to time.

Corporate Trust Office means the principal office of the Trustee at
which at any particular time its corporate trust business shall be
administered, which office at date of the execution of this Indenture
is located at , New York, NY , Attention: _______ or at such other
address as the Trustee may designate from time to time by notice to
the Transition Bondholders and the Issuer, or the principal corporate
trust office of any successor Trustee (the address of which the
successor Trustee will notify the Transition Bondholders and the
Issuer).

Covenant Defeasance Option has the meaning specified in Section 4.01
of the Indenture.

Customer Class means each of the customer classes specified in the
Qualified Rate Order.

Customers means each person that

(a) 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 retail customer of electric service of PP&L located within
PP&L's service territory after January 1, 1997,

(b)is still located within PP&L's service territory, and

Daily Remittance Date means, if the Servicer has not satisfied the
conditions of Section 5.10(b) of the Servicing Agreement, each
Business Day of each calendar month.

Default means any occurrence that is, or with notice or the lapse of
time or both would become, an Event of Default.

Defeasance Subaccount has the meaning specified in Section 8.02(a) of
the Indenture.

Definitive Transition Bonds has the meaning specified in Section 2.11
of the Indenture.

DTC Agreement means the agreement between the Issuer, the Trustee and
The Depository Trust Company, as the initial Clearing Agency, dated
as of the Closing Date, relating to the Transition Bonds,
substantially in the form of Exhibit C of the Indenture, as the same
may be amended and supplemented from time to time.

Eligible Deposit Account means either:

(a) a segregated account with an Eligible Institution or

(b) a segregated trust account with the corporate trust
department of a depository institution organized under the laws
of the United States of America or any State (or any domestic
branch of a foreign bank), having corporate trust powers and
acting as trustee for funds deposited in such account, so long as
any of the securities of such depository institution shall have a
credit rating from each Rating Agency in one of its generic
rating categories which signifies investment grade.

Eligible Guarantor Institution means a firm or other entity
identified in Rule 17Ad-15 under the Exchange Act as "an eligible
guarantor institution," including (as such terms are defined
therein):

(a) a bank;

(b) a broker, dealer, municipal securities broker or dealer or
government securities broker or dealer;

(d) a national securities exchange, registered securities
association or clearing agency; or

(e) a savings association that is a participant in a securities
transfer association.

Eligible Institution means:

(a) the corporate trust department of the Trustee or

(b) 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

(i) has either

(A) a long-term unsecured debt rating of "AAA" by Standard &
Poor's and "Al" by Moody's or

(B) a certificate of deposit rating of "A-1+" by Standard &
Poor's and "P-1" by Moody's, or any other long-term,
short-term or certificate of deposit rating acceptable to
the Rating Agencies and

(ii) whose deposits are insured by the FDIC.

Eligible Investments mean book-entry securities, negotiable
instruments or securities represented by instruments in bearer or
registered form which evidence:

(a) direct obligations of, and obligations fully guaranteed as to
timely payment by, the United States of America;

(b) demand deposits, time deposits or certificates of deposit of
any depositors institution or trust company incorporated under the
laws of the United States of America or any State thereof (or any
domestic branch of a foreign bank) and subject to supervision and
examination by Federal or State banking or depository institution
authorities; provided, however, that at the time of the investment
or contractual commitment to invest therein, the commercial paper
or other short-term unsecured debt obligations (other than such
obligations the rating of which is based on the credit of a Person
other than such depository institution or trust company) thereof
shall have a credit rating from each of the Rating Agencies in the
highest investment category granted thereby;

(c) commercial paper or other short term obligations of any
corporation organized under the laws of the United States of
America (other than PP&L) whose ratings, at the time of the
investment or contractual commitment to invest therein, from each
of the Rating Agencies are in the highest investment category
granted thereby;

(d) investments in money market funds having a rating from each of
the Rating Agencies in the highest investment category granted
thereby (including funds for which the Trustee or any of its
Affiliates act as investment manager or advisor);

(e) bankers' acceptances issued by any depository institution or
trust company referred to in clause (b) above;

(f) repurchase obligations with respect to any security that is a
direct obligation of, or fully guaranteed by, the United States of
America or any agency or instrumentality thereof the obligations
of which are backed by the full faith and credit of the United
States of America, in either case entered into with a depository
institution or trust company (acting as principal) described in
clause (b) above;

(g) repurchase obligations with respect to any security or whole
loan entered into with

(i) a depository institution or trust company (acting as
principal) described in clause (b) above (except that the
rating referred to in the proviso in this clause (b) shall be
A-1 or higher in the case of Standard & Poor's) (any depository
institution or trust company being referred to in this
definition as a "financial institution"),

(ii) a broker/dealer (acting as principal) registered as a
broker or dealer under Section 15 of the Exchange Act (any
broker/dealer being referred to in this definition as a
"broker/dealer"), the unsecured short-term debt obligations of
which are rated P-1 by Moody's and at least A-1 by
Standard & Poor's at the time of entering into this repurchase
obligation, or

(iii) an unrated broker/dealer, acting as principal, that is a
wholly-owned subsidiary of a non-bank or bank holding company
the unsecured short-term debt obligations of which are rated
P-1 by Moody's and at least A-1 by Standard & Poor's at the
time of purchase; or

(h) any other investment permitted by each of the Rating Agencies;

provided, however, that:

(i) 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 such 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

(ii) 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 such 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).

Event of Default has the meaning specified in Section 5.01 of the
Indenture.

Excess Curve Payment means, with respect to each Billing Month and
the Reconciliation Date for such Billing Month, the excess of the
Collections Curve Payments previously made to the Trustee for that
Billing Month over actual ITC Collections the Servicer has received
for that Billing Month.

Exchange Act means the Securities Exchange Act of 1934, as amended.

Expected Final Payment Date means, with respect to each Series or, if
applicable, each Class of Transition Bonds, the date when all
interest and principal is scheduled to be paid for that Series or
Class in accordance with the Expected Amortization Schedule, as
specified in the Series Supplement therefor.

FDIC means the Federal Deposit Insurance Corporation or any
successor.

Financing Issuance means an issuance of a new Series of Transition
Bonds under the Indenture to provide funds to finance the purchase by
the Issuer of Intangible Transition Property.

Fitch means Fitch IBCA, Inc., or its successor.

Formation Documents means, collectively, the Issuer LLC Agreement,
the Issuer Certificate of Formation and any other document pursuant
to which the Issuer is formed or governed, as the same may be amended
and supplemented from time to time.

General Subaccount has the meaning specified in Section 8.02(a) of
the Indenture.

Grant means mortgage, pledge, bargain, sell, warrant, alienate,
remise, release, convey, assign, transfer, create, and grant a lien
upon and a security interest in and right of set-off against,
deposit, set over and confirm pursuant to this Indenture. A Grant of
the Collateral or of any other agreement or instrument shall include
all rights, powers and options (but none of the obligations) of the
Granting party thereunder, including the immediate and continuing
right to claim for, collect, receive and give receipt for principal,
interest and other payments in respect of the Collateral and all
other moneys payable thereunder, to give and receive notices and
other communications, to make waivers or other agreements, to
exercise all rights and options, to bring Proceedings in the name of
the Granting party or otherwise and generally to do and receive
anything that the Granting party is or may be entitled to do or
receive thereunder or with respect thereto.

Group means CEP Group, Inc., a Pennsylvania corporation, or its
successor.

Holder or Transition Bondholder means the Person in whose name a
Transition Bond of any Series or Class is registered on the
Transition Bond Register.

Indenture means the Indenture dated as of July __, 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 hereto, and
shall include the forms and terms of the Transition Bonds established
thereunder.

Independent means, when used with respect to any specified Person, that
the Person

(a) is in fact independent of the Issuer, any other obligor upon
the Transition Bonds, PP&L, Group, Reserves, CEP Securities and
any Affiliate of any of the foregoing Persons,

(c) is not connected with the Issuer, any such other obligor,
PP&L, Group, Reserves, CEP Securities or any Affiliate of any of
the foregoing Persons as an officer, employee, promoter,
underwriter, trustee, partner, director or person performing
similar functions.

Independent Certificate means a certificate or opinion to be
delivered to the Trustee under the circumstances described in, and
otherwise complying with, the applicable requirements of Section
11.01 of the Indenture, made by an Independent appraiser or other
expert appointed by an Issuer Order and approved by the Trustee in
the exercise of reasonable care, and such opinion or certificate
shall state that the signer has read the definition of "Independent"
in this Appendix A and that the signer is Independent within the
meaning thereof.

Initial Intangible Transition Property means the Intangible
Transaction Property sold by the Seller to the Issuer as of the
Initial Transfer Date pursuant to the Sale Agreement.

Initial Transfer Date means the Series Issuance Date for the first
Series of Transition Bonds.

Insolvency Event means, with respect to a specified Person,

(a) the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of such Person or any
substantial part of its property in an involuntary case under any
applicable federal or state bankruptcy, insolvency or other
similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar
official for such Person or for any substantial part of its
property, or ordering the winding-up or liquidation of such
Person's affairs, and such decree or order shall remain unstayed
and in effect for a period of 90 consecutive days or

(b) the commencement by such Person of a voluntary case under any
applicable federal or state bankruptcy, insolvency or other
similar law now or hereafter in effect, or the consent by such
Person to the entry of an order for relief in an involuntary case
under any such law, or the consent by such Person to the
appointment of or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official for
such Person or for any substantial part of its property, or the
making by such Person of any general assignment for the benefit of
creditors, or the failure by such Person generally to pay its
debts as such debts become due, or the taking of action by such
Person in furtherance of any of the foregoing.

Intangible Transition Charge Adjustment means each adjustment to
Intangible Transition Charges related to the Transferred Intangible
Transition Property made in accordance with Section 4.01 of the
Servicing Agreement and the Issuer Annex [or in connection with the
conveyance to the Issuer of Intangible Transition Property or the
redemption or refunding by the Issuer of Transition Bonds].

Intangible Transition Charge Adjustment Process means the process by
which Intangible Transition Charges are adjusted pursuant to the
Servicing Agreement and the Competition Act.

Intangible Transition Charges means the intangible transition charges
authorized by the PUC to be imposed on all Customers by PP&L or its
successor to recover Qualified Transition Expenses pursuant to the
Competition Act and the Qualified Rate Order.

Intangible Transition Property means the irrevocable right of PP&L or
its successor or assignee to collect Intangible Transition Charges
from Customers to recover through the issuance of Transition Bonds
the Qualified Transition Expenses described in the Qualified Rate
Order, including all right, title and interest of PP&L or its
successor or assignee in such order and in all revenues, collections,
claims, payments, money or proceeds of or arising from Intangible
Transition Charges pursuant to such order, and all proceeds of any of
the foregoing.

Intangible Transition Property Documentation means all documents
relating to the Intangible Transition Property, including copies of
the Qualified Rate Order and all documents filed with the PUC in
connection with any Intangible Transition Charges Adjustment, as
described in Section 3.08 of the Servicing Agreement.

Interest means, for any Payment Date for any Series or Class of
Transition Bonds, the sum, without duplication, of:

(a) an amount equal to the amount of interest accrued at the
applicable interest rates from the prior Payment Date with
respect to that Series or Class;

(b) any unpaid interest, to the extent permitted by law, plus
any interest accrued on this unpaid interest;

(d) with respect to a Series or Class 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.

Issuer Annex means, Annex 1 of the Servicing Agreement.

Issuer Certificate of Formation means the Certificate of Formation of
the Issuer which was filed with the Delaware Secretary of State's
Office on March 25, 1999.

Issuer LLC Agreement means the Amended and Restated Limited Liability
Company Agreement between the Issuer and PP&L, as sole Member, dated
as of July __, 1999.

Issuer Opinion of Counsel means one or more written opinions of
counsel who may, except as otherwise expressly provided in the
Indenture, be employees of or counsel to the Issuer and who shall be
reasonably satisfactory to the Trustee, and which opinion or
opinions shall be addressed to the Trustee, as Trustee, and shall
comply with any applicable requirements of Section 11.01 of the
Indenture, and shall be in a form reasonably satisfactory to the
Trustee.

Issuer Order and Issuer Request means a written order or request
signed in the name of the Issuer by any one of its Authorized
Officers and delivered to the Trustee.

ITC Collections means amounts collected in respect of Intangible
Transition Charges.

Legal Defeasance Option has the meaning specified in Section 4.01(b)
of the Indenture.

Lien means a security interest, lien, charge, pledge, equity or
encumbrance of any kind.

[Losses means collectively, any and all liabilities, obligations,
losses, damages, payments, costs or expenses of any kind whatsoever.]

Manager means any manager of the Issuer.

Member means PP&L, as the sole member of the Issuer.

Moody's means Moody's Investors Service Inc., or its successor.

Officers' Certificate means a certificate signed, in the case of PP&L,
by

(a) the chairman of the board, the president, the vice chairman of
the board, the executive vice president or any vice president; and

(b) a treasurer, assistant treasurer, secretary or assistant
secretary

and, in the case of CEP Securities, by two of the Managers of CEP
Securities.

Operating Expenses means, with respect to the Issuer, all fees,
costs, expenses and indemnity payments owed by the Issuer, including
all amounts owed by the Issuer to the Trustee, the Quarterly
Servicing Fee, the quarterly fee payable by the Issuer to the
Administrator under the Administration Agreement, the fees and
expenses payable by the Issuer to the independent managers of the
Issuer, legal fees and expenses of the Servicer pursuant to Section
3.09 of the Servicing Agreement, and legal and accounting fees, costs
and expenses of the Issuer.

Opinion of Counsel means one or more written opinions of counsel who
may be an employee of or counsel to CEP Securities or PP&L, which
counsel shall be reasonably acceptable to the Trustee, the Issuer or
the Rating Agencies, as applicable, and which shall be in form
reasonably satisfactory to the Trustee, if applicable.

Outstanding with respect to Transition Bonds means, as of the date of
determination, all Transition Bonds theretofore authenticated and
delivered under the Indenture except:

(a) Transition Bonds theretofore canceled by the Transition Bond
Registrar or delivered to the Transition Bond Registrar for
cancellation;

(c) Transition Bonds in exchange for or in lieu of other
Transition Bonds which have been authenticated and delivered
pursuant to the Indenture unless proof satisfactory to the Trustee
is presented that any such Transition Bonds are held by a bona
fide purchaser;

provided that in determining whether the Holders of the requisite
Outstanding Amount of the Transition Bonds or any Series or Class
thereof have given any request, demand, authorization, direction,
notice, consent or waiver hereunder or under any Basic Document,
Transition Bonds owned by the Issuer, any other obligor upon the
Transition Bonds, PP&L, Group, Reserves, CEP Securities or any
Affiliate of any of the foregoing Persons shall be disregarded and
deemed not to be Outstanding, except that, in determining whether the
Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Transition
Bonds that the Trustee knows to be so owned shall be so disregarded.
Transition Bonds so owned that have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with
respect to such Transition Bonds and that the pledgee is not the
Issuer, any other obligor upon the Transition Bonds, PP&L, Group,
Reserves, CEP Securities or any Affiliate of any of the foregoing
Persons.

Overcollateralization Amount means, with respect to any Series of
Transition Bonds, the amount specified as such in the Series
Supplement therefor.

Overcollateralization Subaccount has the meaning specified in Section
8.02(a) of the Indenture.

Paying Agent means the Trustee or any other Person that meets the
eligibility standards for the Trustee specified in Section 6.11 of
the Indenture and is authorized by the Issuer to make the payments of
principal of or premium, if any, or interest on the Transition Bonds
on behalf of the Issuer.

PP&L means PP&L, Inc., a Pennsylvania corporation, or its successor.

Predecessor Transition Bond means, with respect to any particular
Transition Bond, every previous Transition Bond evidencing all or a
portion of the same debt as that evidenced by such particular
Transition Bond; and, for the purpose of this definition, any
Transition Bond authenticated and delivered under Section 2.06 in
lieu of a mutilated, lost, destroyed or stolen Transition Bond shall
be deemed to evidence the same debt as the mutilated, lost, destroyed
or stolen Transition Bond.

Post-Retail Access means any period after the time that a Customer
was permitted to choose its electricity generation supplier.

Pre-Retail Access means any period prior to the time that a Customer
was permitted to choose its electricity generation supplier.

Principal means, with respect to any Payment Date and each Series or,
if applicable, each Class of Transition Bonds:

(a)the amount of principal scheduled to be paid on such Payment Date
in accordance with the Expected Amortization Schedule;

(b)the amount of principal due on the Final Maturity Date of any
Series or Class on such Payment Date;

(c)the amount of principal due as a result of the occurrence and
continuance of an Event of Default and acceleration of the
Transition Bonds;

(d)the amount of principal and premium, if any, due as a result of a
redemption of Transition Bonds on such Payment Date; and

(e)any overdue payments of principal.

Proceeding means any suit in equity, action at law or other judicial or
administrative proceeding.

Projected Transition Bond Balance means, as of any date, the sum of
the amounts provided for in the Expected Amortization Schedules for
each outstanding Series of Transition Bonds and such date.

PUC means the Pennsylvania Public Utility Commission or any
successor.

PUC Regulations means any regulations, orders or directives
promulgated, issued or adopted by the PUC.

Qualified Rate Order means the Final Order issued by the PUC on
August 27, 1998 pursuant to the Competition Act, as such order has
been supplemented by the Supplemental Order issued by the PUC on May
21, 1999, and as such order may hereafter be further supplemented by
an order of the PUC issued pursuant to paragraph 19 of the August 27,
1998 order.

Qualified Transition Expenses has the meaning assigned to that term in
the Competition Act and the Qualified Rate Order.

Quarterly Servicing Fee means the fee payable to the Servicer on [the
Business Day preceding] each Payment Date for services rendered, in
accordance with Section 5.07 of the Servicing Agreement.

Reconciliation Date means, with respect to any Billing Month, the
twentieth day (or if such twentieth day is not a Business Day, the
next Business day) in the eighth month after such Billing Month.

Record Date means, with respect to any Payment Date for a Series or
Class, the date set forth as such in the Series Supplement therefor.

Redemption Date means, with respect to each Series or, if applicable,
each Class of Transition Bonds, the date for the redemption of the
Transition Bonds of such Series or Class pursuant to Sections 10.01
or 10.02 of the Indenture or the Series Supplement for such Series or
Class, which in each case shall be a Payment Date.

Redemption Price has the meaning set forth in Section 10.01 of the
Indenture.

Refunding Issuance means issuance of a new Series of Transition Bonds
hereunder to pay the cost of refunding, through redemption or payment
on the Expected Final Payment Date for a Series or Class of
Transition Bonds, all or part of the Transition Bonds of such Series
or Class to the extent permitted by the terms thereof.

Registered Holder means, as of any date, the Person in whose name a
Transition Bond is registered on the Transition Bond Register on such
date.

Released Parties has the meaning specified in Section 5.02(f) of the
Servicing Agreement.

Remittance Date means a Daily Remittance Date or a Monthly Remittance
Date, as applicable.

Required Capital Amount means a capital contribution in an amount
equal to the amount specified in the related Series Supplement,
representing a capital contribution from PP&L.

Reserve Subaccount has the meaning specified in Section 8.02(a) of
the Indenture.

Reserves means CEP Reserves, Inc., a Delaware corporation, or its
successor.

Responsible Officer means, with respect to the Trustee, any officer
within the Corporate Trust Office of the Trustee, including any Vice
President, Assistant Vice President, Secretary, Assistant Secretary,
or any other officer of the Trustee customarily performing functions
similar to those performed by any of the above designated officers
and also, with respect to a particular matter, any other officer to
whom such matter is referred because of such officer's knowledge of
and familiarity with the particular subject.

Retiring Trustee means a Trustee that resigns or vacates the office
of Trustee for any reason.

Sale Agreement means the Intangible Transition Property Sale
Agreement dated July __, 1999, between the Seller and the Issuer.

Sale Date means each date on which the Seller sells, transfers,
assigns and conveys the Intangible Transition Property to the Issuer.

Scheduled Overcollateralization Level means, with respect to any
Payment Date, the amount set forth as such in [Schedule 1 of the
Indenture], as such Schedule has been adjusted in accordance with
Section 3.19 of the Indenture to reflect redemptions or defeasances
of Transition Bonds and issuances of additional Series of Transition
Bonds.