<PAGE>
United States
Securities and Exchange Commission
Washington, DC 20549
Form 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Registrant; State of Incorporation; IRS Employer
Number Address; and Telephone No. Identification No.
1-11459 PP&L Resources, Inc. 23-2758192
(Pennsylvania)
Two North Ninth Street
Allentown, PA 18101
(610) 774-5151
1-905 Pennsylvania Power & Light Company 23-0959590
(Pennsylvania)
Two North Ninth Street
Allentown, PA 18101
(610) 774-5151
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
PP&L Resources, Inc. Yes X No
PP&L Yes X No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
PP&L Resources, Inc. Common stock, $.01 par value,
161,474,843 shares outstanding at
July 31, 1996
Pennsylvania Power & Light Co. Common stock, no par value,
157,300,382, shares outstanding and
all held by PP&L Resources, Inc. at
July 31, 1996
<PAGE>
PP&L RESOURCES, INC.
AND
PENNSYLVANIA POWER & LIGHT COMPANY
FORM 10-Q
FOR THE QUARTER ENDED June 30, 1996
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
PP&L Resources, Inc.
Consolidated Statements of Income
Consolidated Balance Sheet
Consolidated Statement of Cash Flows
Pennsylvania Power & Light Company
Consolidated Statements of Income
Consolidated Balance Sheet
Consolidated Statement of Cash Flows
Notes to Financial Statements
PP&L Resources, Inc. and Pennsylvania
Power & Light Company
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
PP&L Resources, Inc. and Pennsylvania Power
& Light Company
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security
Holders
Item 6. Exhibits and Reports on Form 8-K
GLOSSARY OF TERMS AND ABBREVIATIONS
SIGNATURES
<PAGE>
<TABLE>
PP&L RESOURCES, INC. AND SUBSIDIARIES
Part 1. FINANCIAL INFORMATION
Item 1. Financial Statements
In the opinion of PP&L Resources, Inc. (PP&L Resources), the unaudited
financial statements, included herein, reflect all adjustments necessary to present
fairly the Consolidated Balance Sheet as of June 30, 1996, and the Consolidated
Statements of Income and Consolidated Statement of Cash Flows for the periods
ended June 30, 1996 and 1995. PP&L Resources is the parent holding company of
Pennsylvania Power & Light Company (PP&L), Power Markets Development Company
(PMDC) and Spectrum Energy Services Corporation (Spectrum). PP&L comprises substan-
tially all of PP&L Resources' assets, revenues and earnings. All nonutility operating
transactions are included in "Other Income and (Deductions) - Net" in PP&L Resources'
Consolidated Statements of Income.
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
(Millions of Dollars, except per share data)
<CAPTION>
Three Months
Ended June 30,
1996 1995
<S> <C> <C>
Operating Revenues ............................... $669 $609
Operating Expenses
Operation
Fuel......................................... 101 90
Power purchases.............................. 74 74
Other........................................ 127 120
Maintenance..................................... 55 50
Depreciation (including amortized depreciation). 90 87
Income taxes.................................... 53 36
Taxes, other than income........................ 49 48
549 505
Operating Income .................................. 120 104
Other Income and (Deductions) - Net................ 2 4
Income Before Interest Charges & Dividends on Preferred
Stock ........................................... 122 108
Interest Charges
Long-term debt.................................. 52 53
Short-term debt and other....................... 2 3
54 56
Preferred Stock Dividend Requirements.............. 7 7
Net Income......................................... $61 $45
Earnings Per Share of Common Stock (a) ............ $0.38 $0.28
Average Number of Shares Outstanding
(thousands)....................................... 160,610 157,161
Dividends Declared Per Share of Common
Stock............................................. $0.4175 $0.4175
<FN>
(a) Based on average number of shares outstanding.
See accompanying Notes to Financial Statements.
</TABLE>
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<TABLE>
PP&L RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
(Millions of Dollars, except per share data)
<CAPTION>
Six Months
Ended June 30,
1996 1995
<S> <C> <C>
Operating Revenues ............................... $1,458 $1,337
Operating Expenses
Operation
Fuel......................................... 225 208
Power purchases.............................. 165 148
Other........................................ 249 236
Maintenance..................................... 95 85
Depreciation (including amortized depreciation) 181 175
Income taxes.................................... 142 118
Taxes, other than income........................ 106 101
1,163 1,071
Operating Income .................................. 295 266
Other Income and (Deductions) - Net................ 4 7
Income Before Interest Charges & Dividends on Preferred
Stock ........................................... 299 273
Interest Charges
Long-term debt.................................. 104 108
Short-term debt and other....................... 3 5
107 113
Preferred Stock Dividend Requirements.............. 14 14
Net Income......................................... $178 $146
Earnings Per Share of Common Stock (a) ............ $1.11 $0.93
Average Number of Shares Outstanding
(thousands)....................................... 160,271 156,688
Dividends Declared Per Share of Common
Stock............................................. $0.835 $0.835
<FN>
(a) Based on average number of shares outstanding.
See accompanying Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
PP&L RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Millions of Dollars)
<CAPTION>
June 30, December 31,
1996 1995
(Unaudited)(Audited)
<S> <C> <C>
ASSETS
Property, Plant and Equipment
Electric utility plant in service -
at original cost............................ $9,703 $9,637
Accumulated depreciation ................... (3,240) (3,113)
Deferred depreciation ...................... 175 209
6,638 6,733
Construction work in progress - at cost....... 202 170
Nuclear fuel owned and leased - net
of amortization ............................ 135 134
Other leased property - net of amortization .. 82 85
Electric utility plant - net................ 7,057 7,122
Other property - (net of depreciation,
amortization and depletion 1996, $57; 57 57
1995, $56)...................................
7,114 7,179
Investments
Associated company - at equity ............... 17 17
Nuclear plant decommissioning trust fund ..... 114 110
Financial investments......................... 135 142
Other - at cost or less ...................... 30 20
296 289
Current Assets
Cash and cash equivalents .................... 201 20
Current financial investments ................ 120 96
Accounts receivable (less reserve: 1996, $37;
1995, $35).................................. 212 211
Unbilled revenues............................. 77 92
Fuel (coal, oil and gas) - at average cost.... 96 82
Materials and supplies - at average cost...... 106 108
Prepayments................................... 66 11
Deferred income taxes ........................ 45 42
Other......................................... 28 31
951 693
Deferred Debits
Taxes recoverable through future rates........ 983 1,003
Other ........................................ 301 328
1,284 1,331
$9,645 $9,492
See accompanying Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
PP&L RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Millions of Dollars)
<CAPTION>
June 30, December 31,
1996 1995
(Unaudited)(Audited)
LIABILITIES
<S> <C> <C>
Capitalization
Common equity
Common stock................................ $2 $2
Capital in excess of par value ............. 1,548 1,513
Earnings reinvested ........................ 1,127 1,083
Capital stock expense and other ............ (2) (1)
2,675 2,597
Preferred stock
With sinking fund requirements.............. 295 295
Without sinking fund requirements........... 171 171
Long-term debt................................ 2,831 2,829
5,972 5,892
Current Liabilities
Commercial paper ............................. 31 68
Bank loans ................................... 218 21
Long-term debt due within one year............ 30
Capital lease obligations due within one year. 79 81
Accounts payable.............................. 98 128
Taxes accrued................................. 50 47
Interest accrued.............................. 61 66
Dividends payable............................. 74 74
Other......................................... 98 86
709 601
Deferred Credits and Other Noncurrent Liabilities
Deferred investment tax credits .............. 214 219
Deferred income taxes ........................ 2,066 2,106
Capital lease obligations .................... 141 139
Other ........................................ 543 535
2,964 2,999
Commitments and Contingent Liabilities
(See Note 5)..................................
$9,645 $9,492
See accompanying Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
PP&L RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(Millions of Dollars)
<CAPTION>
Six Months
Ended June 30,
1996 1995
<S> <C> <C>
Cash Flows From Operating Activities
Net income............................................ $178 $146
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation....................................... 181 175
Amortization of property under capital leases...... 44 40
Deferred income taxes and investment tax credits... (29) (18)
Change in current assets and current liabilities
Unbilled and refundable electric revenues.... 26 28
Prepayments ................................. (55) (59)
Accounts payable............................. (30) (40)
Other........................................ (8) (12)
Other operating activities - net................... 47 7
Net cash provided by operating activities....... 354 267
Cash Flows From Investing Activities
Property, plant and equipment expenditures............ (155) (222)
Proceeds from sales of nuclear fuel to trust.......... 33 32
Purchases of available-for-sale securities............ (278) (148)
Sales and maturities of available-for-sale securities. 261 150
Other investing activities - net...................... (8) 3
Net cash used in investing activities........... (147) (185)
Cash Flows From Financing Activities
Issuance of long-term debt............................ 116
Issuance of common stock.............................. 35 39
Retirement of long-term debt.......................... (145) (85)
Payments on capital lease obligations................. (44) (40)
Common & preferred dividends paid..................... (147) (144)
Net increase in short-term debt....................... 160 154
Other financing activities - net...................... (1) (8)
Net cash used in financing activities........... (26) (84)
Net Increase(Decrease) In Cash and Cash Equivalents ... 181 (2)
Cash and Cash Equivalents at Beginning of Period ...... 20 10
Cash and Cash Equivalents at End of Period ............ $201 $8
Supplemental Disclosures of Cash Flow Information
Cash paid during the period for
Interest (net of amount capitalized)................. $107 $109
Income taxes......................................... $146 $128
See accompanying Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
PENNSYLVANIA POWER & LIGHT COMPANY AND SUBSIDIARIES
In the opinion of Pennsylvania Power & Light Company (PP&L), the unaudited
financial statements, included herein, reflect all adjustments necessary to
present fairly the Consolidated Balance Sheet as of June 30, 1996, and the
Consolidated Statements of Income and Consolidated Statement of Cash Flows
for the periods ended June 30, 1996 and 1995. All nonutility operating transactions
are included in "Other Income and (Deductions) - Net" in PP&L's Consolidated
Statements of Income.
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
(Millions of Dollars)
<CAPTION>
Three Months
Ended June 30,
1996 1995
<S> <C> <C>
Operating Revenues ............................... $669 $609
Operating Expenses
Operation
Fuel......................................... 101 90
Power purchases.............................. 74 74
Other........................................ 127 120
Maintenance..................................... 55 50
Depreciation (including amortized depreciation) 90 87
Income taxes.................................... 53 36
Taxes, other than income........................ 49 48
549 505
Operating Income .................................. 120 104
Other Income and (Deductions) - Net ............... 3 4
Income Before Interest Charges..................... 123 108
Interest Charges
Long-term debt.................................. 52 53
Short-term debt and other....................... 2 3
54 56
Net Income......................................... 69 52
Dividends on Preferred Stock....................... 7 7
Earnings Available to PP&L Resources, Inc. ....... $62 $45
See accompanying Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
PENNSYLVANIA POWER & LIGHT COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
(Millions of Dollars)
<CAPTION>
Six Months
Ended June 30,
1996 1995
<S> <C> <C>
Operating Revenues ............................... $1,458 $1,337
Operating Expenses
Operation
Fuel......................................... 225 208
Power purchases.............................. 165 148
Other........................................ 249 236
Maintenance..................................... 95 85
Depreciation (including amortized depreciation) 181 175
Income taxes.................................... 142 118
Taxes, other than income........................ 106 101
1,163 1,071
Operating Income .................................. 295 266
Other Income and (Deductions) - Net ............... 6 7
Income Before Interest Charges..................... 301 273
Interest Charges
Long-term debt.................................. 104 108
Short-term debt and other....................... 3 5
107 113
Net Income......................................... 194 160
Dividends on Preferred Stock....................... 14 14
Earnings Available to PP&L Resources, Inc. ........ $180 $146
See accompanying Notes to Financial Statements.
</TABLE>
<TABLE>
<PAGE>
PENNSYLVANIA POWER & LIGHT COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Millions of Dollars)
<CAPTION>
June 30, December 31,
1996 1995
(Unaudited)(Audited)
<S> <C> <C>
ASSETS
Property, Plant and Equipment
Electric utility plant in service................ $9,703 $9,637
Accumulated depreciation....................... (3,240) (3,113)
Deferred depreciation.......................... 175 209
6,638 6,733
Construction work in progress.................... 202 170
Nuclear fuel owned and leased - net
of amortization................................ 135 134
Other leased property - net of amortization ..... 82 85
Electric utility plant - net................... 7,057 7,122
Other property - net of depreciation,
amortization and depletion (1996, $57; 57 57
1995, $56) ....................................
7,114 7,179
Investments
Associated company - at equity................... 17 17
Nuclear plant decommissioning trust fund ........ 114 110
Financial investments............................ 128 132
Other - at cost or less.......................... 10 9
269 268
Current Assets
Cash and cash equivalents........................ 6 15
Current financial investments ................... 57 55
Accounts receivable (less reserve: 1996, $37;
1995, $35)..................................... 211 210
Unbilled revenues................................ 77 92
Fuel (coal, oil and gas) - at average cost....... 96 82
Materials and supplies - at average cost......... 106 108
Prepayments...................................... 66 11
Deferred income taxes............................ 45 42
Other............................................ 29 31
693 646
Deferred Debits
Taxes recoverable through future rates........... 983 1,003
Other............................................ 301 328
1,284 1,331
$9,360 $9,424
See accompanying Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
PENNSYLVANIA POWER & LIGHT COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Millions of Dollars)
<CAPTION>
June 30, December 31,
1996 1995
(Unaudited)(Audited)
<S> <C> <C>
LIABILITIES
Capitalization
Common equity
Common stock............................... $1,476 $1,476
Additional paid-in capital ................ 30 25
Earnings reinvested........................ 1,080 1,034
Capital stock expense and other ........... (8) (7)
2,578 2,528
Preferred stock
With sinking fund requirements............. 295 295
Without sinking fund requirements.......... 171 171
Long-term debt............................... 2,831 2,829
5,875 5,823
Current Liabilities
Commercial paper............................. 31 68
Bank loans................................... 28 21
Long-term debt due within one year........... 30
Capital lease obligations due within one year 79 81
Accounts payable............................. 98 128
Taxes accrued................................ 52 48
Interest accrued............................. 61 66
Dividends payable............................ 74 74
Other........................................ 98 86
521 602
Deferred Credits and Other Noncurrent Liabilities
Deferred investment tax credits.............. 214 219
Deferred income taxes........................ 2,066 2,106
Capital lease obligations.................... 141 139
Other........................................ 543 535
2,964 2,999
Commitments and Contingent Liabilities
(See Note 5).................................
$9,360 $9,424
See accompanying Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
PENNSYLVANIA POWER & LIGHT COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(Millions of Dollars)
<CAPTION>
Six Months
Ended June 30,
1996 1995
<S> <C> <C>
Cash Flows From Operating Activities
Net income................................................. $194 $160
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation............................................ 181 175
Amortization of property under capital leases........... 44 40
Deferred income taxes and investment tax credits........ (29) (18)
Change in current assets and current liabilities
Unbilled and refundable electric revenues......... 26 28
Prepayments ...................................... (55) (59)
Accounts payable.................................. (30) (40)
Other............................................. (8) (12)
Other operating activities - net........................ 34 (7)
Net cash provided by operating activities............ 357 267
Cash Flows From Investing Activities
Property, plant and equipment expenditures................. (155) (222)
Proceeds from sales of nuclear fuel to trust............... 33 32
Purchases of available-for-sale securities................. (71) (54)
Sales and maturities of available-for-sale securities...... 73 55
Other investing activities - net...................................... 4
Net cash used in investing activities................ (120) (185)
Cash Flows From Financing Activities
Issuance of long-term debt................................. 116
Issuance of common stock and capital contribution from pare 5 39
Retirement of long-term debt............................... (145) (85)
Payments on capital lease obligations...................... (44) (40)
Common & preferred dividends paid.......................... (147) (144)
Net increase(decrease) in short-term debt.................. (30) 154
Other financing activities - net........................... (1) (8)
Net cash used in financing activities................ (246) (84)
Net Decrease In Cash and Cash Equivalents .................. (9) (2)
Cash and Cash Equivalents at Beginning of Period ........... 15 9
Cash and Cash Equivalents at End of Period ................. $6 $7
Supplemental Disclosures of Cash Flow Information
Cash paid during the period for
Interest (net of amount capitalized)...................... $107 $109
Income taxes.............................................. $146 $128
See accompanying Notes to Financial Statements.
</TABLE>
<PAGE>
PP&L Resources, Inc. and Pennsylvania Power & Light Company
Notes to Financial Statements
Terms and abbreviations appearing in Notes to Financial Statements are
explained in the glossary on page 28.
1. Interim Financial Statements
Certain information in footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles has been condensed or omitted in this Form 10-Q
pursuant to the rules and regulations of the SEC. These financial
statements should be read in conjunction with the financial statements and
notes included in PP&L Resources' and PP&L's Annual Report to the SEC on
Form 10-K for the year ended December 31, 1995.
Certain amounts in the June 30, 1995 financial statements have been
reclassified to conform to the presentation in the June 30, 1996 financial
statements.
2. Rate Matters - PP&L
Appeal of Base Rate Case
Reference is made to PP&L Resources' and PP&L's Annual Report to the
SEC on Form 10-K for the year ended December 31, 1995 regarding the PUC
Decision. The OCA has appealed certain aspects of the PUC Decision to the
Commonwealth Court. PP&L cannot predict the final outcome of this matter.
Energy Cost Rate Issues
In March 1996, the PUC approved PP&L's 1996-97 ECR, effective April 1,
1996. That ECR, which is about $42 million lower than the previous ECR,
reflects lower projected energy costs largely due to lower coal prices,
only one nuclear refueling outage, the start of gas and oil dual fuel
capability at Martins Creek Units 3 and 4, and the end of a settlement
adjustment charge for replacement power costs associated with the 1993
Susquehanna Unit 1 refueling outage.
3. Sales to Other Major Electric Utilities - PP&L
In March 1996, the New Jersey Board of Public Utilities approved an
agreement between PP&L and JCP&L, under which PP&L will provide JCP&L with
150,000 kilowatts of capacity credits and energy from June 1997 through May
1998, 200,000 kilowatts from June 1998 through May 1999 and 300,000
kilowatts from June 1999 through May 2004. Prices under the new agreement
are based on a predetermined reservation rate that escalates over time,
plus an energy component based on PP&L's actual fuel-related costs. PP&L
expects to file the agreement for FERC review and acceptance in August
1996.
4. Credit Arrangements and Financing Activity - PP&L Resources/PP&L
During the second quarter of 1996, 726,994 shares of PP&L Resources'
common stock ($18 million) were issued through the DRIP. As of June 30,
1996, 160,829,734 shares of common stock were outstanding. In July 1996,
PP&L Resources issued an additional 645,109 shares of common stock ($15
million) through the DRIP.
During the second quarter, PP&L Resources established a revolving
credit facility in the amount of $300 million. At the option of PP&L
Resources, interest rates can be based on Eurodollar deposit rates or the
prime rate. Any loans made under this credit arrangement would mature, and
the facility will terminate, on May 29, 1997. PP&L Resources used
borrowings under this revolving credit facility for the funding of a PMDC
subsidiary's indirect acquisition of a 25 percent interest in SWEB. On
July 1, the PMDC subsidiary obtained an ownership interest in SWEB for $189
million through the purchase of a 25 percent interest in SIUKH, a holding
company for Southern Investments UK plc, which is the sole shareholder of
SWEB. Borrowings of $190 million were outstanding under this credit
facility at June 30, 1996. PP&L Resources expects to replace the revolving
credit borrowing by the end of May 1997 with about one-half common equity
and one-half long-term debt. See "Financing and Liquidity - PP&L
Resources" on page 22 and "Increasing Competition-Investment in Independent
Energy Projects" on page 24 for additional information on PP&L Resources'
financing and acquisition of SWEB.
PP&L has a $250 million revolving credit arrangement with a group of
banks. Any loans made under this credit arrangement would mature in
September 1999 and, at the option of PP&L, interest rates would be based
upon certificate of deposit rates, Eurodollar deposit rates or the prime
rate. PP&L has additional credit arrangements with another group of banks.
The banks have committed to lend PP&L up to $45 million under these credit
arrangements, which mature in November 1996 or May 1997, at interest rates
based upon Eurodollar deposit rates or the prime rate. These credit
arrangements produce a total of $295 million of lines of credit to provide
back-up for PP&L's commercial paper and short-term borrowings of certain
subsidiaries. No borrowings were outstanding at June 30, 1996 under these
credit arrangements.
PP&L retired $30 million principal amount of First Mortgage Bonds,
5-5/8% Series that matured on June 1, 1996. In March 1996, PP&L issued
$116 million principal amount of unsecured promissory notes which mature in
March 2001. At the option of PP&L, interest rates can be based on
Eurodollar deposit rates or the prime rate. The proceeds from the issuance
of these notes were used for the redemption in March 1996 of $115 million
principal amount of First Mortgage Bonds ($40 million principal amount of
the 8-1/8 Series due 1999 and $75 million principal amount of the 7-5/8%
Series due 2002) pursuant to the maintenance and replacement fund
provisions of PP&L's Mortgage.
5. Commitments and Contingent Liabilities - PP&L Resources/PP&L
There have been no material changes related to PP&L Resources' or
PP&L's commitments and contingent liabilities since the companies filed
their joint 1995 Form 10-K.
For discussion pertaining to PP&L Resources' and PP&L's financing
matters, see Management's Discussion and Analysis of Financial Condition
and Results of Operations under the caption "Financial Condition -
Financing Programs."
Nuclear Insurance
PP&L is a member of certain insurance programs which provide coverage
for property damage to members' nuclear generating stations. Facilities at
the Susquehanna station are insured against property damage losses up to
$2.75 billion under these programs. PP&L is also a member of an insurance
program which provides insurance coverage for the cost of replacement power
during prolonged outages of nuclear units caused by certain specified
conditions. Under the property and replacement power insurance programs,
PP&L could be assessed retrospective premiums in the event of the insurers'
adverse loss experience. The maximum amount PP&L could be assessed under
these programs at June 30, 1996 was about $38 million.
PP&L's public liability for claims resulting from a nuclear incident
at the Susquehanna station is limited to about $8.9 billion under
provisions of The Price Anderson Amendments Act of 1988. PP&L is protected
against this liability by a combination of commercial insurance and an
industry assessment program. In the event of a nuclear incident at any of
the reactors covered by The Price Anderson Amendments Act of 1988, PP&L
could be assessed up to $151 million per incident, payable at a rate of $20
million per year, plus an additional 5% surcharge, if applicable.
Environmental Matters
Air
The Clean Air Act deals, in part, with acid rain, attainment of
federal ambient ozone standards and toxic air emissions. PP&L has complied
with the Phase I acid rain provisions required to be implemented by 1995 by
installing continuous emission monitors on all units, burning with lower
sulfur coal and installing low nitrogen oxide burners on the applicable
units. To comply with the year 2000 acid rain provisions, PP&L plans to
purchase lower sulfur coal and use banked or purchased emission allowances
instead of installing FGD on its wholly-owned units.
PP&L has met the initial ambient ozone requirements identified in
Title I of the Clean Air Act by reducing nitrogen oxide emissions by 40%
with low nitrogen oxide burners. Further nitrogen oxide reductions to 55%
and 75% of pre-Clean Air Act levels are proposed under the Northeast Ozone
Transport Region's Memorandum of Understanding for 1999 and 2003,
respectively.
The Clean Air Act requires EPA to study the health effects of
hazardous air emission and fine particulates from power plants and other
sources. Adverse findings could cause the EPA to mandate further emission
reductions from PP&L's power plants.
Expenditures to meet the year 1999 requirements are included in the
table of projected construction expenditures in "Financial Condition -
Reduction in Capital Expenditure Requirements" on page 35 of the 1995 Form
10-K. PP&L currently estimates that additional capital expenditures and
operating costs for environmental compliance under the Clean Air Act will
be incurred beyond 2000 in amounts which are not now determinable but could
be material.
Water and Residual Waste
DEP regulations require PP&L to upgrade and repermit existing ash
basins at all of its coal-fired generating stations. Ash basins that
cannot be repermitted are required to close by July 1997. Any groundwater
contamination caused by the basins must also be addressed. Any new ash
disposal facility must meet the rigid siting and design standards set forth
in the regulations.
To address the DEP regulations, PP&L is moving forward with its plan
to install dry fly ash handling systems at its power stations.
Groundwater degradation related to fuel oil leakage from underground
facilities and seepage from coal refuse disposal areas and coal storage
piles has been identified at several PP&L generating stations. Remedial
work is substantially completed at two generating stations. At this time,
there is no indication that remedial work will be required at other PP&L
generating stations.
The current Montour station NPDES permit contains stringent limits for
certain toxic metals and increased monitoring requirements. Depending on
the results of toxic reduction studies in progress, additional water
treatment facilities may be needed at the Montour station. PP&L is
reviewing with the DEP the need for and design of waste water treatment
systems at the Sunbury, Brunner Island and Holtwood stations.
Capital expenditures through year 2000 to comply with the residual
waste regulations, correct groundwater degradation at fossil-fueled
generating stations and address waste water control at PP&L facilities, are
included in the table of construction expenditures in "Financial Condition
- - Reduction in Capital Expenditure Requirements" on page 35 of the 1995
Form 10-K. PP&L currently estimates that about $68 million of additional
capital expenditures could be required in year 2000 and beyond. Actions
taken to correct groundwater degradation, to comply with the DEP's
regulations and to address waste water control are also expected to result
in increased operating costs in amounts which are not now determinable but
could be material.
Superfund and Other Remediation
PP&L has signed a consent order with the DEP to address a number of
sites where PP&L may be liable for remediation of contamination. This may
include potential PCB contamination at certain of PP&L's substations and
pole sites; potential contamination at a number of coal gas manufacturing
facilities formerly owned and operated by PP&L; and oil or other
contamination which may exist at some of PP&L's former generating
facilities.
At June 30, 1996, PP&L had accrued $13 million, representing the
amount PP&L can reasonably estimate it will have to spend to remediate
sites involving the removal of hazardous or toxic substances including
those covered by the consent order mentioned above. Future cleanup or
remediation work at sites currently under review, or at sites not currently
identified, may result in material additional operating costs which PP&L
cannot estimate at this time. In addition, certain federal and state
statutes, including Superfund and the Pennsylvania Hazardous Sites Cleanup
Act, empower certain governmental agencies, such as the EPA and the DEP, to
seek compensation from the responsible parties for the lost value of
damaged natural resources. The EPA and the DEP may file such compensation
claims against the parties, including PP&L, held responsible for cleanup of
such sites. Such natural resource damage claims against PP&L could result
in material additional liabilities.
Other Environmental Matters
In addition to the issues discussed above, PP&L may be required to
modify, replace or cease operating certain of its facilities to comply with
other statutes, regulations and actions by regulatory bodies or courts
involving environmental matters, including the areas of water and air
quality, hazardous and solid waste handling and disposal, toxic substances
and electric and magnetic fields. In this regard, PP&L also may incur
material capital expenditures, operating expenses and other costs in
amounts which are not now determinable.
For additional information relating to Environmental Matters, see Note
15 in PP&L Resources' and PP&L's Annual Report to the SEC on Form 10-K for
the year ended December 31, 1995.
<PAGE>
PP&L Resources, Inc. and Pennsylvania Power & Light Company
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
The financial condition and results of operations of PP&L are
currently the principal factors affecting the financial condition and
results of operations of PP&L Resources. All nonutility operating
transactions are included in "Other Income and Deductions-Net" on the
Consolidated Statements of Income. This discussion should be read in
conjunction with the section entitled "Review of the Financial Condition
and Results of Operations of PP&L Resources, Inc. and Pennsylvania Power &
Light Company" in PP&L Resources' and PP&L's Annual Report to the SEC on
Form 10-K for the year ended December 31, 1995.
Terms and abbreviations appearing in Management's Discussion and
Analysis of Financial Condition and Results of Operations are explained in
the glossary on page 28.
Results of Operations
The following explains material changes in principal items on the
Consolidated Statements of Income comparing the three months and six months
ended June 30, 1996 to the comparable period ended June 30, 1995.
The Consolidated Statements of Income reflect the results of past
operations and are not intended as any representation of the results of
future operations. Future results of operations will necessarily be
affected by various and diverse factors and developments. Because results
for interim periods can be disproportionately influenced by various factors
and developments and by seasonal variations, the results of operations for
interim periods are not necessarily indicative of results or trends for the
year.
Earnings - PP&L Resources
Comparison of Earnings-June 30
Three Months Ended Six Months Ended
1996 1995 1996 1995
Earnings per share - excluding
weather variances and other
adjustments referred to below $.37 $.30 $1.06 $.96
Weather variances .02 (.01) .06 (.06)
Workforce reduction program (.01) (.01) (.01) (.01)
One-time adjustment - recovery
of replacement power costs .04
Earnings per share - reported $.38 $.28 $1.11 $.93
Earnings per share, excluding weather variances and certain other
adjustments referred to above, improved by $.07 for the three months ended
June 30, 1996 and by $.10 for the first six months of 1996, when compared
with the same periods in 1995. Earnings improvement for these periods was
primarily the net effect of the following:
June 30, 1996 vs. June 30, 1995
Three Months Six Months
Ended Ended
(Millions of Dollars)
(per share)
o Higher PUC and FERC base rate $.09 $.16
revenues, primarily due to the
impact of the PUC Decision and
increased system sales;
o Additional revenues recorded in .02 .02
connection with fuel costs and
state income taxes;
o Reduction in earnings due to the (.02) (.04)
phaseout of the JCP&L contract;
o Higher employee benefits costs (.01) (.05)
and depreciation expense primarily
the result of the PUC Decision.
These expenses were partially offset
by a reduction in wages.
Electric Energy Sales - PP&L
The increase in PP&L's electric energy sales was attributable to the
following:
June 30, 1996 vs. June 30, 1995
Three Months Six Months
Ended Ended
(Millions of Kwh)
Electric energy sales
Residential 162 622
Commercial 66 263
Industrial (21) (46)
Other (including UGI) 1 34
System sales 208 873
Sales to other utilities 1,452 2,180
PJM energy sales 19 (258)
Total 1,679 2,795
System, or service area, sales were 7.8 billion kwh for the three
months ended June 30, 1996. This was a 2.8% increase over the same months
of 1995. The increase was primarily due to more extreme weather during
1996 that caused greater heating and cooling use compared to milder than
normal weather for the comparable period in 1995. If normal weather had
been experienced in the second quarter of both 1995 and 1996, system sales
would show a 0.5% increase.
System sales were 17.4 billion kwh for the six months ended June 30,
1996, which was a 5.3% increase over the first six months of 1995. This
change was primarily due to a colder winter and a warmer June in 1996 as
compared to milder than normal weather in 1995. Under normal weather
conditions in both periods, the growth in system sales was 1.4%. Assuming
normal weather conditions for the rest of the year, system sales for 1996
are expected to total 33.4 billion kwh which would be 2.4% more than 1995.
Sales to other utilities for the three months ended June 30, 1996,
increased 96.5% as compared to the same period in 1995. The increase was
primarily the result of PP&L's one-year contract to supply energy to PSE&G
and increased sales to other utilities. For the six months ended June 30,
1996, the increase in sales to other utilities was 63.2%.
Sales to PJM for the six months ended June 30, 1996 decreased by 26.2%
over the comparable period in 1995. This is primarily the result of the
increased emphasis on bilateral direct sales to other utilities.
Operating Revenues - PP&L
The increase in total operating revenues was attributable to the
following:
June 30, 1996 vs. June 30, 1995
Three Months Six Months
Ended Ended
(Millions of Dollars)
Rate increase - PUC Decision $22 $ 48
Sales to other utilities & PJM 19 25
Weather 9 34
Other, net 10 14
$60 $121
Operating revenues increased by $60 million, or 9.9%, during the three
months ended June 30, 1996, from the same period in 1995. This was
primarily due to the PUC Decision, which increased PUC jurisdictional rates
by about 3.8%, and due to increased sales to other utilities. Sales to
other utilities included a new one-year contract to supply energy to PSE&G.
Revenues from these additional sales were partially offset by the loss in
revenue due to the phasing out of the capacity sales agreement with JCP&L.
For the first six months of 1996 revenues increased by $121 million,
or 9.1%, compared with same period in 1995. The PUC Decision and sales to
other utilities, as described above, accounted for about $73 million of the
increase. Weather conditions provided an additional $34 million in
revenue. The weather during the first quarter of 1995 was milder than
normal, whereas weather in the first quarter of 1996 was colder than
normal. Sales volume and sales mix also helped revenues for the first six
months of 1996 versus 1995.
Rate Matters - PP&L
Reference is made to PP&L Resources' and PP&L's Annual Report to the
SEC on Form 10-K for the year ended December 31, 1995 regarding the PUC
Decision. The OCA has appealed certain aspects of the PUC Decision to the
Commonwealth Court. PP&L cannot predict the final outcome of this matter.
In March 1996, the PUC approved PP&L's 1996-97 ECR, effective April 1,
1996. That ECR, which is about $42 million lower than the previous ECR,
reflects lower projected energy costs largely due to lower coal prices,
only one nuclear refueling outage, the start of gas and oil dual fuel
capability at Martins Creek Units 3 and 4, and the end of a settlement
adjustment charge for replacement power costs associated with the 1993
Susquehanna Unit 1 refueling outage.
Fuel Expense - PP&L
Fuel expense increased for the three and six months ended June 30,
1996 by 12% and 8%, respectively, over the comparable periods in 1995.
These increases were the net effect of:
June 30, 1996 vs. June 30, 1995
Three Months Six Months
Ended Ended
(Millions of Dollars)
Decrease due to change
in fuel prices $(2) $(9)
Increase due to change
in generation 13 26
$11 $17
Total generation increased 19% for the three months ended June 30,
1996, over the same period in 1995 due to increased energy sales for that
period. The increase was primarily due to a nuclear refueling outage in
the second quarter of 1995. There were also small increases in coal-fired
and oil/gas co-fired generation.
Total generation increased 10% for the six months ended June 30, 1996,
over the same period in 1995 due to increased energy sales for that period.
This was primarily due to an increase in nuclear and oil/gas generation.
There were also lower unit fuel prices for nuclear-fueled and oil/gas co-
fired generation.
Income Taxes - PP&L Resources/PP&L
For the three months ended June 30, 1996, income tax expense increased
$17 million, or 48.2%, over the comparable period in 1995. This is
primarily due to an increase in PP&L Resources' pre-tax book income of $34
million and the recording in 1995 of the effect of the decrease in the
state income tax rate. In June 1995, Pennsylvania reduced the corporate
net income tax rate from 10.99% to 9.99% retroactive to January 1, 1995.
The recording of the decrease in state income tax expense in June 1995
included an adjustment for the first quarter of 1995.
For the six months ended June 30, 1996, income tax expense increased
$24 million, or 20.1%, over the comparable period in 1995. This is
primarily due to an increase in PP&L Resources' pre-tax book income of $55
million.
Financial Condition
Financing Programs - PP&L Resources/PP&L
From January through July 1996, PP&L Resources obtained $50 million
from sales of common equity through the DRIP.
During the second quarter, PP&L Resources obtained a commitment from
certain banks to provide loans under an unsecured revolving credit facility
up to an aggregate $300 million. See "Investment in Independent Energy
Projects" on page 24 and Financial Note 4 for additional information on the
use of this revolving credit facility.
PP&L retired $30 million principal amount of First Mortgage Bonds,
5-5/8% Series that matured on June 1, 1996. In March 1996, PP&L issued
$116 million principal amount of unsecured promissory notes which mature in
March 2001. At the option of PP&L, interest rates can be based on
Eurodollar deposit rates or the prime rate. The proceeds from the issuance
of the notes were used for the redemption in March 1996 of $115 million
principal amount of First Mortgage Bonds ($40 million principal amount of
the 8-1/8 Series due 1999 and $75 million principal amount of the 7-5/8%
Series due 2002) pursuant to the maintenance and replacement fund
provisions of PP&L's Mortgage.
Financing and Liquidity - PP&L Resources
Cash and cash equivalents as of June 30, 1996, increased $193 million
as compared to the balance as of June 30, 1995. This increase was due to
PP&L Resources' $190 million of short-term debt borrowed under its $300
million revolving credit facility during the second quarter of 1996. At
June 30, 1996, the $190 million was held temporarily in an interest bearing
demand deposit account until the SWEB transaction was completed on July 1,
1996. See "Investment in Independent Energy Projects" on page 24 and
Financial Note 4 for additional information on the use of this revolving
credit facility.
Financial Indicators - PP&L Resources
The ratio of pre-tax income to interest charges was 3.8 and 3.2,
respectively, for the six months ended June 30, 1996 and 1995. The annual
per share dividend rate on common stock remained unchanged at $1.67 per
share. The ratio of the market price to book value of common stock was
142% at June 30, 1996 compared with 122% at June 30, 1995.
Commitments and Contingent Liabilities - PP&L
There have been no material changes related to PP&L Resources' or
PP&L's commitments and contingent liabilities since the companies filed
their joint 1995 Form 10-K.
Increasing Competition
Background
The electric utility industry has experienced and will continue to
experience a significant increase in the level of competition in the energy
supply market. PP&L has publicly expressed its support for full customer
choice of electricity suppliers for all customer classes. PP&L is actively
involved in efforts at both the state and federal levels to encourage a
smooth transition to full competition. PP&L believes that this transition
to full competition should provide for the recovery of a utility's stranded
investments, which are those costs incurred by a utility because of federal
or state regulatory requirements and, also, any portion of prudent
investments made in generating facilities which would not be recoverable in
a competitive market.
Pennsylvania Activities
In March 1996, legislation was introduced in both the Pennsylvania
House and Senate aimed at ensuring that all customers enjoy the benefits of
increased competition in the electricity generation market. In general,
the bills would open up the generation portion of the electric utility
business to full competition while maintaining FERC regulation of the
transmission portion of the business and PUC regulation of distribution.
In addition, in July 1996 the PUC issued to the Governor and General
Assembly the report of its investigation on competition in Pennsylvania's
electric utility industry. Major elements of the PUC report include: (i)
a five-year transition period (which could be shorter or longer depending
on the progress of the transition), during which time utilities would adopt
specific plans to achieve retail competition; (ii) a request that each
utility submit to the PUC by April 1997 a tentative restructuring proposal
describing these specific plans; (iii) a four-year phase-in period for
customer choice (2001 to 2004), after which time all customers would have
retail access; (iv) an opportunity for utilities to recover 100% of their
net, unmitigated stranded costs; (v) a recommendation that utilities file
voluntary pilot programs for retail access, pending legislative action to
require such programs; and (vi) a schedule of milestone PUC reviews on the
progress made toward full retail competition. PP&L is preparing to respond
to the various requirements of the PUC report.
Federal Activities
Legislation has been introduced in the U.S. Congress that would give
all retail customers the right to choose among competitive suppliers of
electricity as early as 2000.
In addition, in April 1996 the FERC adopted rules on competition in
the wholesale electricity market primarily dealing with open access to
transmission lines and recovery of stranded costs (FERC Orders 888 and
889). These rules, which were effective on July 9, 1996, require all
electric utilities to file open access transmission tariffs available to
all wholesale sellers and buyers of electricity. The tariffs must offer
point-to-point and network services, as well as ancillary services. A
utility must offer these services to all eligible wholesale customers on a
basis comparable to the services the utility provides to itself. A utility
must take service under its open access transmission tariff for its own
wholesale sales and purchases. The rules do not abrogate existing
transmission agreements.
The rules also provide that utilities are entitled to recover all
"legitimate, verifiable, prudently incurred stranded costs" as a result of
rendering transmission services pursuant to their tariffs. The FERC
proposes to provide recovery mechanisms for wholesale stranded costs,
including stranded costs resulting from municipalization. Wholesale
contracts signed after July 11, 1994 must contain explicit provisions
addressing recovery of stranded costs. For contracts signed before this
date, a utility may seek recovery if it can show that it had a reasonable
expectation of continuing to serve the customer after the contract term and
that it has made reasonable efforts to mitigate any stranded costs. PP&L's
contracts with 18 small utilities were signed before July 11, 1994. The
new rules give these parties the right to ask the FERC to modify their
contracts on a case-by-case basis. If they do, under the rules PP&L can
seek recovery of stranded costs.
The rules also require restructuring of transactions within power
pools and bilateral coordination agreements by December 31, 1996. In
addition, utilities must separate their transmission and power marketing
functions, and they must implement an electronic bulletin board for
transmission capacity information by November 6, 1996.
The states have responsibility for adopting policies concerning
recovery of stranded costs resulting from retail wheeling transactions.
The rules advise utilities to initially pursue recovery of such retail
stranded costs at the state level.
PP&L filed its initial open access transmission service tariff with
the FERC in March 1996. The tariff would apply to all new requests for
wholesale transmission service through or within PP&L's system. The tariff
would not supersede PP&L's existing transmission agreements. In July 1996,
PP&L filed the open access transmission tariff required by FERC Order 888.
Under the new FERC rules, that tariff became effective on July 9, 1996,
superseding the previously filed tariff.
On a related matter, on July 24, 1996, all of the PJM companies,
except PECO Energy Company, submitted a comprehensive filing for FERC
approval of changes to the PJM Power Pool to accommodate greater
competition and broader participation, with proposed implementation of the
new structure by the end of 1996. The filing would (i) establish pool-wide
transmission service tariffs to provide comparable, open-access service for
all wholesale transactions throughout PJM; (ii) establish a price-based
bidding system, with the resulting regional energy market open to all
wholesale buyers and sellers of power; (iii) create a not-for-profit
corporate entity in the form of an Independent System Operator (ISO)
responsible for impartial daily management and administration of the energy
market and the transmission system; and (iv) develop an enhanced pool-wide
planning function to be administered by the ISO.
The sponsoring PJM Companies propose to enter into three pool
participation agreements to define the relationships among the signatories
and the ISO: (i) a Reserve Sharing Agreement among all entities that serve
end-use customers within the new power pool; (ii) a Transmission Owners
Agreement among entities that own bulk power transmission facilities; and
(iii) a Market Operations Agreement to establish a spot energy market open
to all wholesale entities that wish to participate in the new pool. PECO
Energy Company is expected to file a separate proposal with the FERC.
Investment in Independent Energy Projects
PMDC continues to pursue opportunities to develop and acquire electric
generation, transmission and distribution facilities in the United States
and abroad.
On July 1, PMDC's British subsidiary indirectly acquired a 25 percent
interest in SWEB, a British regional electric utility company, for
approximately $189 million. SWEB, which is one of twelve regional
electricity companies in England and Wales licensed to distribute, supply
and, to a limited extent, generate electricity, will remain in control of
its day-to-day operations. PMDC obtained an ownership interest in SWEB
through the purchase of a 25 percent interest in SIUKH, a holding company
for Southern Investments UK plc, which is the sole shareholder of SWEB.
The remaining interest in SIUKH is owned by Southern Electric
International, Inc., a wholly owned subsidiary of The Southern Company of
Atlanta.
PMDC subsidiaries also have entered into a joint venture with
subsidiaries of an Austrian company, to develop and operate small
hydroelectric plants in Portugal and Spain. In June, PMDC subsidiaries
entered into purchase agreements pursuant to which PMDC expects to commit
up to $22 million in respect to ten small hydroelectric projects in Spain
and Portugal that are operating or are under development.
A PMDC subsidiary is a member of a consortium that will build and
operate a power plant and natural gas-related facilities in the Aguaytia
area of Peru. PMDC expects to invest up to $24 million in the project over
the next several years.
In addition, a PMDC subsidiary is a member of a consortium that is
exploring the possibility of developing a 500 megawatt power plant in
Krishnapatnam in Andra Pradesh, India.
<PAGE>
PP&L RESOURCES, INC. AND
PENNSYLVANIA POWER & LIGHT COMPANY AND SUBSIDIARIES
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Reference is made to Notes to Financial Statements for information
concerning rate matters.
In August 1995, SER, one of the non-utility generating companies from
which PP&L purchases power under PURPA, brought suit against PP&L in the
District Court of PA. SER alleged that, since July 1994, PP&L had
improperly curtailed power purchases from SER under the power purchase
agreement between the parties. SER claimed that such activity breached the
power purchase agreement and violated the federal antitrust laws, among
other counts. SER alleged that PP&L's actions resulted in loss of revenue
from power sales of $1.6 million and an unquantified increase in its costs
of operation. SER also requested compensatory and punitive damages, as
well as treble damages and attorneys' fees for the alleged antitrust
violations. In May 1996, the District Court granted PP&L's motion to
dismiss this lawsuit. SER has appealed the District Court's order to the
U.S. Court of Appeals for the Third Circuit.
In June 1996, SER filed a state court lawsuit against PP&L in the
Lehigh County Court of Common Pleas. In this lawsuit, SER restates its
state law claims concerning PP&L's procedures for curtailing power
deliveries from SER during periods of minimum generation emergencies
declared by PJM. PP&L has requested that the Court of Common Pleas stay
this SER action pending consideration of the power purchase issues by the
PUC. In addition, the lawsuit makes libel claims against PP&L. SER claims
damages in excess of $4 million and punitive damages of $25 million.
In November 1995, PP&L instituted a separate civil action in the Court
of Common Pleas seeking a judgment against SER in an amount to be
determined for violation of the pricing provisions of the power purchase
agreement. The principal issue is whether SER and an affiliate of SER
properly used the steam generated by the plant in accordance with the terms
of the contract and applicable FERC requirements. Under the contract, if
the steam was used properly, SER is entitled to a rate of 6.6 cents/KWH; if
not, it is entitled to a rate of only 5.0 cents/KWH. The total annual
difference in payment under the two rates is about $9 million. In an
interim ruling, the Court of Common Pleas concluded that PP&L could not
reduce the rate paid to SER under the power purchase agreement until PP&L
obtained either a determination on the issue by FERC or a further order of
the Court of Common Pleas.
Accordingly, in July 1996, PP&L instituted a proceeding requesting
FERC to revoke SER's status as a qualifying cogeneration facility under
PURPA. In this action, PP&L contends that SER, with the aid of a corporate
affiliate, has erroneously claimed the status of a "cogenerator" under
PURPA. As a result, PP&L believes that its 1.2 million ratepayers have
paid SER about $55 million (i.e., about $9 million annually over six years)
to which it is not entitled.
PP&L cannot predict the outcome of these proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
At PP&L Resources' Annual Meeting of Shareowners held on April 24,
1996, the shareowners:
(1) Elected all three nominees for the office of director. The vote
for all nominees was 112,709,699. The votes for individual nominees were
as follows:
Number of Votes
For Withhold Authority
William J. Flood 112,488,779 1,552,906
William F. Hecht 112,357,740 1,683,945
Frank A. Long 112,502,073 1,539,612
The vote to withhold authority for all nominees was 1,331,986;
(2) Ratified the appointment of Price Waterhouse LLP as independent
auditors for year ending December 31, 1996. The vote was 112,400,903 in
favor, and 618,033 against with 1,022,749 abstaining.
At PP&L's Annual Meeting of Shareowners held on April 24, 1996, the
shareowners:
(1) Elected all three nominees for the office of director. The vote
for all nominees was 160,888,588. The votes for individual nominees were
as follows:
Number of Votes
For Withhold Authority
William J. Flood 160,887,901 4,562
William F. Hecht 160,887,851 4,612
Frank A. Long 160,888,255 4,208
The vote to withhold authority for all nominees was 3,875.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 - Financial Data Schedule
(b) Reports on Form 8-K
Report dated July 1, 1996
Item 5. Other Events
Information regarding the investment by a PMDC subsidiary in stock of
a subsidiary of The Southern Company, thereby acquiring a 25 percent
interest in a British regional electric utility company.
<PAGE>
Glossary of Terms and Abbreviations
Clean Air Act (Federal Clean Air Act Amendments of 1990) - legislation
passed by Congress to address environmental issues including acid rain,
ozone and toxic air emissions.
DEP - Pennsylvania Department of Environmental Protection
DRIP (Dividend Reinvestment Plan) - program available to shareowners of
Resources' common stock and PP&L preferred stock to reinvest dividends in
Resources' common stock instead of receiving dividend checks.
ECR (Energy Cost Rate) - a tariff applied to PUC-jurisdictional customers
to recover fuel and other energy costs. Differences between actual and
estimated amounts are collected or refunded to customers.
EPA - Environmental Protection Agency
FGD - Flue gas desulfurization equipment installed at coal-fired power
plants to reduce sulfur dioxide emissions.
FERC (Federal Energy Regulatory Commission) - government agency that
regulates interstate transmission and sale of electricity and related
matters.
JCP&L - Jersey Central Power & Light Company
NPDES - National Pollutant Discharge Elimination System
OCA - Pennsylvania Office of Consumer Advocate
PCB (Polychlorinated Biphenyl) - additive to oil used in certain
electrical equipment up to the late 1970s. Now classified as a hazardous
chemical.
PECO - PECO Energy Company (the former Philadelphia Electric Company)
PJM (Pennsylvania - New Jersey - Maryland Interconnection Association) -
Mid-Atlantic power pool consisting of 11 operating electric utilities,
including PP&L.
PMDC (Power Markets Development Company) - Resources' unregulated
subsidiary formed to invest in and develop world-wide power markets.
PP&L - Pennsylvania Power & Light Company
PP&L Resources (PP&L Resources, Inc.) - parent holding company of PP&L,
PMDC and Spectrum.
PP&L's Mortgage - Pennsylvania Power & Light Company's Mortgage and Deed
of Trust dated October 1, 1945
PSE&G - Public Service Electric & Gas Company
PUC (Pennsylvania Public Utility Commission) - agency that regulates
certain ratemaking, accounting, and operations of Pennsylvania utilities.
PUC Decision - final order issued by the PUC on September 27, 1995
pertaining to PP&L's base rate case filed in December 1994.
PURPA (Public Utility Regulatory Policies Act of 1978) - legislation
passed by Congress to encourage energy conservation, efficient use of
resources, and equitable rates.
SEC - Securities and Exchange Commission
SER - Schuylkill Energy Resources, Inc.
SIUKH - Southern Investments UK Holdings Limited
Small utilities - utilities subject to FERC jurisdiction whose billings
include base rate charges and a supplemental charge or credit for fuel
costs over or under the levels included in base rates.
Superfund - Federal and state legislation that addresses remediation of
contaminated sites.
SWEB - South Western Electricity plc, a British regional electric utility
company.
UGI - UGI Corporation
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized. The signature for each
undersigned company shall be deemed to relate only to matters having
reference to such company or its subsidiary.
PP&L Resources, Inc.
(Registrant)
Pennsylvania Power & Light Company
(Registrant)
Date: August 13, 1996 /s/ R. E. Hill
R. E. Hill
Senior Vice President-Financial
(PP&L Resources, Inc. and
Pennsylvania Power & Light Company)
/s/ J. J. McCabe
J. J. McCabe
Vice President & Controller (PP&L
Resources, Inc. and Pennsylvania
Power & Light Company)
[ARTICLE] UT
[LEGEND]
This schedule contains summary financial information extracted from the
consolidated statement of income, consolidated balance sheet, consolidated
statement of cash flows for the form 10-Q dated March 31, 1996 and is qualified
in its entirety by reference to such financial statements.
[/LEGEND]
[CIK] 0000317187
[NAME] PENNSYLVANIA POWER & LIGHT COMPANY
[MULTIPLIER] 1,000,000
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] DEC-31-1995
[PERIOD-END] JUN-30-1996
[BOOK-VALUE] PER-BOOK
[TOTAL-NET-UTILITY-PLANT] 7,057
[OTHER-PROPERTY-AND-INVEST] 326
[TOTAL-CURRENT-ASSETS] 693
[TOTAL-DEFERRED-CHARGES] 1,284
[OTHER-ASSETS] 0
[TOTAL-ASSETS] 9,360
[COMMON] 1,476
[CAPITAL-SURPLUS-PAID-IN] 22
[RETAINED-EARNINGS] 1,080
[TOTAL-COMMON-STOCKHOLDERS-EQ] 2,578
[PREFERRED-MANDATORY] 295
[PREFERRED] 171
[LONG-TERM-DEBT-NET] 2,831
[SHORT-TERM-NOTES] 28
[LONG-TERM-NOTES-PAYABLE] 0
[COMMERCIAL-PAPER-OBLIGATIONS] 31
[LONG-TERM-DEBT-CURRENT-PORT] 0
[PREFERRED-STOCK-CURRENT] 0
[CAPITAL-LEASE-OBLIGATIONS] 141
[LEASES-CURRENT] 79
[OTHER-ITEMS-CAPITAL-AND-LIAB] 3,206
[TOT-CAPITALIZATION-AND-LIAB] 9,360
[GROSS-OPERATING-REVENUE] 1,458
[INCOME-TAX-EXPENSE] 142
[OTHER-OPERATING-EXPENSES] 1,021
[TOTAL-OPERATING-EXPENSES] 1,163
[OPERATING-INCOME-LOSS] 295
[OTHER-INCOME-NET] 6
[INCOME-BEFORE-INTEREST-EXPEN] 301
[TOTAL-INTEREST-EXPENSE] 107
[NET-INCOME] 194
[PREFERRED-STOCK-DIVIDENDS] 14
[EARNINGS-AVAILABLE-FOR-COMM] 180
[COMMON-STOCK-DIVIDENDS] 0
[TOTAL-INTEREST-ON-BONDS] 0
[CASH-FLOW-OPERATIONS] 357
[EPS-PRIMARY] 0
[EPS-DILUTED] 0
</TABLE>
