Fitch Affirms PPL & PPL Energy Supply Ratings; Outlook to Stable.

NEW YORK -- Fitch Ratings has affirmed the outstanding ratings of PPL Corp. (PPL), its wholly owned financing subsidiary PPL Capital Funding, Inc. and PPL Energy Supply, LLC as shown below. In addition, Fitch has assigned an 'F2' rating to the reestablished commercial paper program of PPL Energy Supply, LLC. The Rating Outlook for each of these entities has been revised to Stable from Negative by Fitch.

The consolidated ratings of PPL reflect the cash flow and earnings of its core subsidiaries, PPL Electric Utilities Corp. and PPL Energy Supply, while the ratings of PPL Capital Funding are based on an unconditional guarantee from PPL. Consolidated operations benefit from the predictable revenue stream from a full requirements contract between PPL Energy Supply and PPL Electric Utilities that extends through 2009, reasonable leverage (excluding non-recourse and securitization debt), and moderate capital requirements. Importantly, about 95% of gross margins in 2004 and an average of greater than 75% over the following four years are derived from committed energy sales. The high percentage of committed energy sales over the next five years, the completion of the company's construction program, achieved and proposed asset sales, and the retirement of $657 million of lease debt earlier this year account for the Outlook revision to Stable from Negative.

The ratings of PPL Energy Supply reflect the significant revenue derived from long- and intermediate-term power supply contacts, the low production costs and competitive advantage of its largely coal and nuclear based generation fleet, a moderate level of recourse debt, and healthy financial measures. In calculating the leverage of PPL Energy Supply and PPL, Fitch excludes the non-recourse debt of WPD, an electric distribution company in the UK, and other international subsidiaries in Latin America. The ratings also incorporate management's plan to refinance all or some of the approximately $900 million of affiliate PPL Capital Funding debt maturities over the next four years at PPL Energy Supply (in addition to $300 million pre-financed in 2004). Even with the additional debt, financial measures continue to support the existing rating. The incremental debt is partly offset by the retirement of approximately $660 million of synthetic lease debt earlier this year in large part with proceeds from the remarketing of PPL Capital Funding's $575 million of mandatorily convertible preferred securities.

During the course of 2004, several developments have positively affected the ratings of PPL and PPL Energy Supply. In June 2004, PPL Generation agreed to sell the 450 MW Sundance power plant to Arizona Public Service for $190 million ($422 per kw). The sale is subject to regulatory approval and is expected to close in the first quarter of 2005. If completed, the sale will reduce merchant exposure and provide funds for additional debt reduction. The plant, which was completed in July 2002, is a simple cycle gas-fired combustion turbine that operates primarily in peak periods.

Also in June, PPL Energy Supply terminated a $660 million synthetic lease. The transaction included the purchase of the Sundance and University Park generation assets from a consolidated Trust, with the proceeds used to pay off the Trust's related financing. In May 2004, PPL Generation placed the 600 MW Lower Mt. Bethel gas-fired plant in eastern Pennsylvania in commercial operation, essentially completing its discretionary construction program. In March 2004, PPL Global completed the sale of its minority interest in shares of CGE, an electric distribution company in Chile, for $123 million. In April, PPL Energy Supply completed a turbine replacement at the Susquehanna nuclear plant that increased nuclear capacity by 45 MW.

The following ratings have been affirmed by Fitch:

PPL Corp.

Indicative senior unsecured debt 'BBB';

PPL Capital Funding, Inc.

Senior unsecured debt 'BBB';

PPL Energy Supply, LLC

Senior unsecured debt 'BBB+'.