ALLENTOWN, Pa.---The Pennsylvania Public Utility Commission Friday (5/21) approved procedures proposed by PP&L, Inc. for the issuance of bonds to securitize the company's competition-related transition costs.

PP&L, Inc., the major subsidiary of PP&L Resources, Inc. (NYSE: PPL), said it plans to issue $2.7 billion in transition bonds early in the third quarter.

"This order from the PUC marks an important step in our plans to issue transition bonds," said John Biggar, PP&L Resources' senior vice president and chief financial officer. "Issuance of these bonds will create savings that improve earnings for our shareowners and result in lower rates for PP&L, Inc.'s customers."

PP&L, Inc. will use the bond proceeds to reduce its outstanding debt and equity. The company plans to securitize $2.7 billion out of the $2.97 billion in transition costs that it was authorized to collect as the result of the PUC's approval of its restructuring plan. Transition costs result from the move from a regulated electricity marketplace to a competitive one.

While actual customer savings will vary and won't be known definitively until the bonds are issued, the company estimates that the reduction in customer rates will average about 1 percent over the 10 years that the bonds are outstanding.

Biggar confirmed that Morgan Stanley Dean Witter & Co. will take the lead in the bond offering. Timing of the actual bond offering is subject to registration of the bonds with the Securities and Exchange Commission and receipt of a tax determination from the Internal Revenue Service.