PP&L, Inc., and UGI Utilities, Inc., have signed an agreement that ends ongoing litigation and redefines the companies' 64-year relationship for the new realities of the competitive wholesale and retail electricity market.

"We have established terms for a new relationship between the two electric companies, and between UGI Utilities and the Pennsylvania-New Jersey-Maryland Interconnection," explained Frank A. Long, PP&L, Inc., executive vice president and chief operating officer.

Since 1935, the two companies have had an interconnection agreement, Long said. As part of that agreement and a separate power supply agreement, PP&L, Inc., provided much of the electricity used by UGI electric customers.

Recent changes in the wholesale and retail electricity market resulted in litigation between the two companies over issues in the interconnection and power supply agreements.

"This new agreement with PP&L, Inc., enables UGI to enter the competitive market in a stronger position," said Robert J. Chaney, executive vice president of UGI Utilities, Inc. "It benefits UGI and its electric service customers. It also forges a new working relationship with PP&L, Inc."

In addition, UGI Utilities has agreed to buy wholesale electricity from PP&L, Inc., for a period of about two years at prices and terms that reflect today's competitive market for electricity supply.

UGI Utilities provides electric service to over 60,000 customers in Luzerne and Wyoming counties in northeastern Pennsylvania. UGI Utilities, Inc., is a subsidiary of UGI Corporation (NYSE: UGI), a holding company with propane marketing, natural gas and electric utilities, and energy marketing subsidiaries. UGI Corporation is based in Valley Forge, Pa.