Core Viewpoint - PPL Corporation (PPL) has outperformed the Zacks Utility-Electric Power industry with a 10.9% increase in shares over the past year, compared to the industry's 6.5% growth, driven by strategic investments aimed at expanding clean energy generation capacity and achieving carbon neutrality by 2050 [1][8]. Group 1: Performance and Investment Strategy - PPL's focus on infrastructure construction for generation, transmission, and distribution has led to fewer outages for customers, with a planned regulated capital investment of $20 billion from 2025 to 2028 [4]. - The capital investments for 2025 and 2026 are projected to be $4.3 billion and $5.2 billion, respectively [4]. - The company is experiencing load growth due to increasing demand from data centers, with nearly 14.4 gigawatts (GW) of potential demand in advanced stages, leading to a potential transmission capital investment of $0.75-$1.25 billion [5]. Group 2: Environmental Goals and Financial Outlook - PPL aims to reduce carbon emissions by 70% by 2035 and 80% by 2040, relative to 2010 levels, with a goal of achieving carbon neutrality by 2050 [6]. - The Zacks Consensus Estimate for PPL's earnings per share (EPS) indicates an increase of 7.69% for 2025 and 8.42% for 2026 [11]. Group 3: Cost Management and Dividend Policy - PPL expects to reduce operating and maintenance (O&M) costs by at least $150 million by 2025 and $175 million by 2026, enhancing margins and supporting earnings growth [10]. - The company plans to increase its annual dividend by 6-8% through at least 2028, with a current quarterly dividend of 27.25 cents per share, resulting in an annualized dividend of $1.09 per share [15][16]. Group 4: Market Position and Valuation - PPL's trailing 12-month return on equity (ROE) is 8.81%, lower than the industry average of 10.14% [17]. - PPL is currently trading at a premium compared to its industry on a forward 12-month P/E basis [19].

Core Insights - PPL Corporation is focused on modernizing the grid to enhance electrification and provide customers with options to reduce energy consumption through energy efficiency programs [1] - The company's energy efficiency initiatives are aligned with its goal of achieving net-zero carbon emissions and operational excellence, benefiting from cost savings and improved grid reliability [1] Energy Efficiency Programs - PPL supports various programs aimed at reducing energy usage and costs, including direct bill assistance and weatherization [2] - In 2024, energy efficiency programs helped customers save over 434,100 megawatt-hours (MWh) of electricity and reduced peak demand by nearly 78 MW [2] - PPL's investment in Electric Energy Efficiency Programs for 2024 was approximately $199.8 million, reflecting a 7.4% increase from the previous year [3] Financial Performance - The Zacks Consensus Estimate indicates a year-over-year EPS growth of 7.69% for 2025 and 8.42% for 2026 [8] - PPL shares have increased by 5.7% over the past three months, while the industry has seen a decline of 1.3% during the same period [9][13] - PPL is trading at a forward 12-month price-to-earnings ratio of 19.02X, which is higher than the industry average of 14.75X [11] Customer Engagement and Satisfaction - By providing programs that save customers money and energy, PPL strengthens customer relationships and enhances satisfaction [5] Industry Context - Other utilities, such as Exelon Corporation and Entergy Corporation, are also implementing energy efficiency programs, contributing to overall industry efforts in managing energy use [6][7]

Industry Overview - Utility service providers are benefiting from increased electricity tariffs, accretive acquisitions, cost reductions, and energy-efficiency initiatives [1] - The power industry is also seeing improvements in electric infrastructure resilience against adverse weather and a transition to renewable energy sources [1] Capital Expenditures - Maintenance and improvement of utilities' infrastructure rely heavily on capital expenditures for updating and modernizing assets [2] - Utility providers are investing in output enhancement to meet the growing demand for data centers [2] Transition to Renewable Energy - U.S. electric utilities are evolving beyond revenue generation due to climate measures and federal incentives, positioning them for gradual growth in the clean energy sector [3] Investment Opportunities - Companies like PPL Corporation and FirstEnergy are becoming attractive investment options due to strategic investments in grid infrastructure upgrades [4] - PPL is focusing on infrastructure projects to reduce outages and enhance service resilience [5] - FirstEnergy has expanded its regulated activities and is benefiting from improved economic conditions and increased demand [7] Data Center Demand - In Pennsylvania, potential data center demand has increased to 14.4 GW, with a projected capital investment of $0.75-$1.25 billion [6] - FirstEnergy's long-term data center load demand has grown over 80% since February 2025, totaling 11.1 GW [8] Earnings Estimates - The Zacks Consensus Estimate for PPL's 2025 and 2026 earnings per share indicates increases of 7.69% and 8.33%, respectively [9] - FirstEnergy's projected earnings show a decrease of 3.8% for 2025 but an increase of 6.72% for 2026 [11] Return on Equity - PPL's current return on equity (ROE) is 8.81%, while FirstEnergy's is 11.31%, outperforming the industry average of 10.14% [13] Strategic Investment Plans - PPL plans $20 billion in regulated capital investments from 2025 to 2028 [14] - FirstEnergy has planned investments of $28 billion between 2025 and 2029 [15] Dividend Yield - PPL's dividend yield is 2.97%, compared to FirstEnergy's 4.09% [16] Debt Position - PPL has a debt-to-capital ratio of 55.47%, while FirstEnergy's is 64.56%, both compared to the industry's 59.75% [17] - Both companies maintain a times interest earned (TIE) ratio above 1, indicating financial flexibility [18] Investment Recommendation - PPL is currently favored over FirstEnergy due to better debt management and growth in earnings estimates, with both stocks holding a Zacks Rank 3 (Hold) [19]

Group 1 - PPL Corporation declared a quarterly common stock dividend of $0.2725 per share, payable on October 1, 2025, to shareholders of record as of September 10, 2025 [1] - PPL Corporation is a leading U.S. energy company providing electricity and natural gas to over 3.6 million customers [2] - The company focuses on building smarter, more resilient power grids and advancing sustainable energy solutions [2] Group 2 - PPL Corporation is headquartered in Allentown, Pennsylvania [2] - The company has high-performing, award-winning utilities that address energy challenges [2] - Additional news about PPL Corporation can be found on their media website [3]

Core Insights - PPL Corporation is strategically positioned to benefit from multi-fuel generation through investments in a diverse energy portfolio aimed at enhancing grid reliability, reducing carbon emissions, and lowering costs for customers [1][2] - The company has set ambitious carbon emission reduction targets, aiming for a 70% reduction by 2035, 80% by 2040, and achieving carbon neutrality by 2050 [2] - PPL is investing $20 billion in a regulated capital investment plan from 2025 to 2028, focusing on new technology, grid strengthening, and clean energy generation capacity expansion [1][7] Investment and Growth Strategy - PPL is exploring low-carbon technologies, including hydrogen projects and carbon capture studies, to support its multi-fuel innovation [3][7] - The company is evaluating a diverse mix of replacement generation sources, including natural gas, renewables, and biofuels, to ensure reliability and resilience in the energy landscape [2][3] Earnings Estimates - The Zacks Consensus Estimate indicates a year-over-year EPS growth of 7.69% for 2025 and 8.33% for 2026 [6][7] - Current estimates for 2025 EPS are $1.82, with a projected increase to $1.97 in 2026 [8] Market Position - PPL is trading at a premium with a forward 12-month price-to-earnings ratio of 18.95X, compared to the industry average of 14.97X [9] - Over the past three months, PPL's shares have increased by 3.5%, while the industry has seen a decline of 0.6% [11]

Core Insights - PPL Corporation is experiencing growth due to its focus on transmission and distribution, enhancing grid reliability and capacity to meet increased energy demand, particularly in Pennsylvania and Kentucky [1][5] Investment and Infrastructure - PPL is investing $20 billion from 2025 to 2028 to upgrade its transmission and distribution infrastructure, with $4.3 billion planned for 2025 and $5.2 billion for 2026 [3] - The company is implementing smart grid technologies, which include advanced metering and automated switching, leading to a more reliable energy grid and reduced power outages [3][4] Performance Metrics - Since 2012, PPL's infrastructure investments have resulted in a 93% decrease in outage frequency, 89% fewer lightning-related outages, and 64% fewer equipment failures [4] - The Zacks Consensus Estimate indicates a year-over-year EPS increase of 7.69% for 2025 and 8.33% for 2026 [8] Market Position - PPL's shares have increased by 9.1% over the past three months, outperforming the industry growth of 3.1% [9][13] - The company is trading at a forward price-to-earnings ratio of 19.32X, higher than the industry average of 15.04X [11]

Core Viewpoint - PPL Corporation's shares have shown resilience despite missing earnings estimates, driven by strategic investments and increasing demand from data centers [1][8][26]. Financial Performance - PPL reported Q2 earnings of 32 cents per share, missing the Zacks Consensus Estimate of 37 cents by 13.5% and down from 38 cents a year ago [1][4][8]. - Total revenues reached $2.03 billion, exceeding the Zacks Consensus Estimate of $1.98 billion by 2.15% and increasing 7.7% from the previous year's $1.88 billion [4][8]. - Interest expenses rose to $199 million, a 9.3% increase from $182 million in the same period of 2024 [9]. Operational Highlights - PPL's Kentucky Regulated segment reported adjusted EPS of 18 cents, remaining flat year over year due to lower sales volumes influenced by weather [6]. - The company sold 15,737 gigawatt hours of electricity, reflecting a 0.9% year-over-year decline [9]. - PPL is focused on reducing operating and maintenance expenses, achieving a 1.4% reduction in the reported quarter [5][17]. Strategic Initiatives - PPL plans to invest $20 billion from 2025 through 2028 to meet rising demand and improve grid reliability, with $4.3 billion and $5.2 billion allocated for 2025 and 2026 respectively [8][16]. - The company is experiencing growth in load driven by data centers, with potential demand increasing from 11 GW to 14.4 GW [14]. Shareholder Returns - PPL has a history of dividend payments, currently offering a quarterly dividend of 27.25 cents per share, with plans to increase it by 6-8% annually through at least 2028 [24][25]. - The expected dividend payout ratio is between 60-65%, supported by strong cash flow generation [25]. Market Position - PPL's trailing 12-month return on equity is 8.81%, below the industry average of 10.41% [20]. - The stock is currently trading at a premium compared to its industry on a forward 12-month P/E basis [21].

Core Insights - PPL reported revenue of $2.03 billion for the quarter ended June 2025, reflecting a year-over-year increase of 7.7% and a surprise of +2.15% over the Zacks Consensus Estimate of $1.98 billion [1] - The company's EPS was $0.32, down from $0.38 in the same quarter last year, resulting in an EPS surprise of -13.51% compared to the consensus estimate of $0.37 [1] Revenue Performance - Pennsylvania Regulated revenues were $693 million, slightly below the estimated $709.5 million, representing a year-over-year increase of +3% [4] - Rhode Island Regulated revenues reached $494 million, exceeding the estimated $431.56 million, with a significant year-over-year increase of +27% [4] - Kentucky Regulated revenues were reported at $837 million, close to the estimated $843.64 million, showing a year-over-year change of +2.2% [4] Stock Performance - PPL shares have returned +5.6% over the past month, outperforming the Zacks S&P 500 composite's +2.3% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

[GLOSSARY OF TERMS AND ABBREVIATIONS](index=6&type=section&id=GLOSSARY%20OF%20TERMS%20AND%20ABBREVIATIONS) This section provides definitions for key terms and abbreviations used throughout the report [FORWARD-LOOKING INFORMATION](index=14&type=section&id=FORWARD-LOOKING%20INFORMATION) This section outlines forward-looking statements and key factors that could cause actual results to differ materially - Statements in this Form 10-Q concerning expectations, beliefs, plans, objectives, goals, strategies, future events or performance, and underlying assumptions are "forward-looking statements" Actual results may differ materially due to various risks and uncertainties[78](index=78&type=chunk) - Key factors that could cause actual results to differ include: weather, strategic acquisitions/dispositions, catastrophic events (wildfires, floods), capital market conditions (interest rates, credit), volatility in financial markets/commodity prices/economic conditions (inflation), regulatory proceedings, cyber-based intrusion, development/adoption of artificial intelligence, tariffs, changes in electricity demand, alternative generation, risk management effectiveness, counterparty defaults, market value decline, pension/retiree medical liabilities, new accounting requirements, credit rating changes, impairment charges, GHG emission laws, fuel supply access, war/conflicts, political/regulatory/economic conditions, governmental permits, tax laws, legislation, investigations, employee retention, customer/stakeholder expectations, business restructuring, cost control, new projects, labor negotiations, and litigation[78](index=78&type=chunk)[82](index=82&type=chunk) [PART I. FINANCIAL INFORMATION](index=16&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part presents the unaudited condensed consolidated financial statements and management's discussion and analysis [Item 1. Financial Statements](index=16&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for PPL Corporation and its key subsidiaries (PPL Electric, LG&E, KU) for the quarter and six months ended June 30, 2025, and comparative periods [PPL Corporation and Subsidiaries](index=16&type=section&id=PPL%20Corporation%20and%20Subsidiaries) This subsection provides the condensed consolidated financial statements for PPL Corporation and its subsidiaries, including statements of income, comprehensive income, cash flows, balance sheets, and equity, for the three and six months ended June 30, 2025, and 2024, and balance sheet data as of December 31, 2024 PPL Corporation and Subsidiaries: Condensed Consolidated Statements of Income (Millions of Dollars, except share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Operating Revenues | $2,025 | $1,881 | $4,529 | $4,185 | | Total Operating Expenses | $1,619 | $1,491 | $3,445 | $3,250 | | Operating Income | $406 | $390 | $1,084 | $935 | | Other Income (Expense) - net | $23 | $32 | $51 | $54 | | Interest Expense | $199 | $182 | $389 | $361 | | Income Before Income Taxes | $230 | $240 | $746 | $628 | | Income Taxes | $47 | $50 | $149 | $131 | | Net Income | $183 | $190 | $597 | $497 | | Basic EPS | $0.25 | $0.26 | $0.81 | $0.67 | | Diluted EPS | $0.25 | $0.26 | $0.80 | $0.67 | PPL Corporation and Subsidiaries: Condensed Consolidated Statements of Cash Flows (Millions of Dollars) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $1,115 | $1,048 | | Net cash used in investing activities | $(1,713) | $(1,261) | | Net cash provided by financing activities | $577 | $155 | | Net Decrease in Cash, Cash Equivalents and Restricted Cash | $(21) | $(58) | | Cash, Cash Equivalents and Restricted Cash at End of Period | $318 | $324 | PPL Corporation and Subsidiaries: Condensed Consolidated Balance Sheets (Millions of Dollars) | Asset/Liability Category | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :------------ | :---------------- | | Total Current Assets | $2,923 | $2,880 | | Property, Plant and Equipment, net | $34,356 | $33,149 | | Total Other Noncurrent Assets | $5,084 | $5,040 | | **Total Assets** | **$42,363** | **$41,069** | | Total Current Liabilities | $4,978 | $3,333 | | Long-term Debt | $15,292 | $15,952 | | Total Deferred Credits and Other Noncurrent Liabilities | $7,807 | $7,707 | | Total Equity | $14,286 | $14,077 | | **Total Liabilities and Equity** | **$42,363** | **$41,069** | [PPL Electric Utilities Corporation and Subsidiaries](index=23&type=section&id=PPL%20Electric%20Utilities%20Corporation%20and%20Subsidiaries) This subsection presents the condensed consolidated financial statements for PPL Electric Utilities Corporation and its subsidiaries, including statements of income, cash flows, balance sheets, and equity, for the three and six months ended June 30, 2025, and 2024, and balance sheet data as of December 31, 2024 PPL Electric Utilities Corporation and Subsidiaries: Condensed Consolidated Statements of Income (Millions of Dollars) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Operating Revenues | $693 | $673 | $1,512 | $1,443 | | Total Operating Expenses | $460 | $437 | $994 | $967 | | Operating Income | $233 | $236 | $518 | $476 | | Other Income (Expense) - net | $11 | $11 | $22 | $20 | | Interest Income from Affiliate | $0 | $10 | $2 | $20 | | Interest Expense | $62 | $61 | $122 | $123 | | Income Before Income Taxes | $182 | $196 | $420 | $393 | | Income Taxes | $43 | $46 | $97 | $94 | | Net Income | $139 | $150 | $323 | $299 | PPL Electric Utilities Corporation and Subsidiaries: Condensed Consolidated Statements of Cash Flows (Millions of Dollars) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $382 | $353 | | Net cash used in investing activities | $(467) | $(1,020) | | Net cash provided by (used in) financing activities | $76 | $629 | | Net Decrease in Cash, Cash Equivalents and Restricted Cash | $(9) | $(38) | | Cash, Cash Equivalents and Restricted Cash at End of Period | $15 | $13 | PPL Electric Utilities Corporation and Subsidiaries: Condensed Consolidated Balance Sheets (Millions of Dollars) | Asset/Liability Category | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :------------ | :---------------- | | Total Current Assets | $947 | $1,117 | | Property, Plant and Equipment, net | $13,874 | $13,315 | | Total Other Noncurrent Assets | $1,071 | $1,043 | | **Total Assets** | **$15,892** | **$15,475** | | Total Current Liabilities | $1,184 | $806 | | Long-term Debt | $5,215 | $5,214 | | Total Deferred Credits and Other Noncurrent Liabilities | $2,747 | $2,725 | | Total Equity | $6,746 | $6,730 | | **Total Liabilities and Equity** | **$15,892** | **$15,475** | [Louisville Gas and Electric Company](index=30&type=section&id=Louisville%20Gas%20and%20Electric%20Company) This subsection provides the condensed financial statements for Louisville Gas and Electric Company (LG&E), including statements of income, cash flows, balance sheets, and equity, for the three and six months ended June 30, 2025, and 2024, and balance sheet data as of December 31, 2024 Louisville Gas and Electric Company: Condensed Statements of Income (Millions of Dollars) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total Operating Revenues | $378 | $366 | $883 | $842 | | Total Operating Expenses | $286 | $265 | $637 | $600 | | Operating Income | $92 | $101 | $246 | $242 | | Other Income (Expense) - net | $5 | $4 | $8 | $6 | | Interest Expense | $27 | $26 | $53 | $52 | | Income Before Income Taxes | $70 | $79 | $201 | $196 | | Income Taxes | $14 | $17 | $40 | $41 | | Net Income | $56 | $62 | $161 | $155 | Louisville Gas and Electric Company: Condensed Statements of Cash Flows (Millions of Dollars) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $279 | $273 | | Net cash used in investing activities | $(306) | $(207) | | Net cash provided by (used in) financing activities | $24 | $(82) | | Net Decrease in Cash, Cash Equivalents, and Restricted Cash | $(3) | $(16) | | Cash, Cash Equivalents, and Restricted Cash at End of Period | $21 | $28 | Louisville Gas and Electric Company: Condensed Balance Sheets (Millions of Dollars) | Asset/Liability Category | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :------------ | :---------------- | | Total Current Assets | $467 | $468 | | Property, Plant and Equipment, net | $6,722 | $6,548 | | Total Other Noncurrent Assets | $1,007 | $976 | | **Total Assets** | **$8,196** | **$7,992** | | Total Current Liabilities | $852 | $762 | | Long-term Debt | $2,172 | $2,171 | | Total Deferred Credits and Other Noncurrent Liabilities | $1,805 | $1,788 | | Total Equity | $3,367 | $3,271 | | **Total Liabilities and Equity** | **$8,196** | **$7,992** | [Kentucky Utilities Company](index=36&type=section&id=Kentucky%20Utilities%20Company) This subsection provides the condensed financial statements for Kentucky Utilities Company (KU), including statements of income, cash flows, balance sheets, and equity, for the three and six months ended June 30, 2025, and 2024, and balance sheet data as of December 31, 2024 Kentucky Utilities Company: Condensed Statements of Income (Millions of Dollars) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total Operating Revenues | $472 | $464 | $1,036 | $989 | | Total Operating Expenses | $345 | $338 | $723 | $696 | | Operating Income | $127 | $126 | $313 | $293 | | Other Income (Expense) - net | $5 | $4 | $10 | $6 | | Interest Expense | $35 | $33 | $70 | $67 | | Interest Expense with Affiliate | $0 | $1 | $0 | $1 | | Income Before Income Taxes | $97 | $96 | $253 | $231 | | Income Taxes | $19 | $19 | $50 | $46 | | Net Income | $78 | $77 | $203 | $185 | Kentucky Utilities Company: Condensed Statements of Cash Flows (Millions of Dollars) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $351 | $352 | | Net cash used in investing activities | $(391) | $(296) | | Net cash provided by (used in) financing activities | $33 | $(63) | | Net Decrease in Cash, Cash Equivalents, and Restricted Cash | $(7) | $(7) | | Cash, Cash Equivalents, and Restricted Cash at End of Period | $22 | $31 | Kentucky Utilities Company: Condensed Balance Sheets (Millions of Dollars) | Asset/Liability Category | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :------------ | :---------------- | | Total Current Assets | $514 | $491 | | Property, Plant and Equipment, net | $8,565 | $8,334 | | Total Other Noncurrent Assets | $1,252 | $1,248 | | **Total Assets** | **$10,331** | **$10,073** | | Total Current Liabilities | $988 | $849 | | Long-term Debt | $2,799 | $2,816 | | Total Deferred Credits and Other Noncurrent Liabilities | $2,116 | $2,109 | | Total Equity | $4,428 | $4,299 | | **Total Liabilities and Equity** | **$10,331** | **$10,073** | [Combined Notes to Condensed Financial Statements (Unaudited)](index=41&type=section&id=Combined%20Notes%20to%20Condensed%20Financial%20Statements%20%28Unaudited%29) This section provides combined notes to the condensed financial statements, offering detailed explanations of accounting policies, segment information, revenue recognition, earnings per share, income taxes, utility rate regulation, financing activities, acquisitions, defined benefits, commitments and contingencies, related party transactions, other income/expense, fair value measurements, derivative instruments, asset retirement obligations, accumulated other comprehensive income, and new accounting guidance [1. Interim Financial Statements](index=41&type=section&id=1.%20Interim%20Financial%20Statements) This note clarifies that the unaudited condensed financial statements are prepared in accordance with GAAP for interim reporting and Form 10-Q instructions, and thus do not include all disclosures required for complete annual financial statements - The unaudited condensed financial statements are prepared in accordance with GAAP for interim financial information and Form 10-Q instructions, and do not include all information and footnote disclosures required for complete financial statements[133](index=133&type=chunk) - All adjustments considered necessary for a fair presentation are reflected and are of a normal recurring nature, unless otherwise disclosed[133](index=133&type=chunk) - Interim results are not necessarily indicative of results to be expected for the full year or other future periods due to various factors, developments, and seasonal variations[133](index=133&type=chunk) [2. Segment and Related Information](index=42&type=section&id=2.%20Segment%20and%20Related%20Information) PPL is organized into three reportable segments: Kentucky Regulated (LG&E and KU), Pennsylvania Regulated (PPL Electric), and Rhode Island Regulated (RIE) - PPL is organized into three segments: **Kentucky Regulated** (LG&E and KU), **Pennsylvania Regulated** (PPL Electric), and **Rhode Island Regulated** (RIE)[134](index=134&type=chunk)[135](index=135&type=chunk) PPL Segment Net Income (Millions of Dollars) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Kentucky Regulated | $126 | $134 | $349 | $324 | | Pennsylvania Regulated | $139 | $150 | $323 | $299 | | Rhode Island Regulated | $(17) | $12 | $53 | $76 | | Corporate and Other | $(65) | $(106) | $(128) | $(202) | | **Consolidated Net Income** | **$183** | **$190** | **$597** | **$497** | PPL Segment Total Assets (Millions of Dollars) | Segment | June 30, 2025 | December 31, 2024 | | :--------------------- | :------------ | :---------------- | | Kentucky Regulated | $18,076 | $17,626 | | Pennsylvania Regulated | $15,892 | $15,475 | | Rhode Island Regulated | $7,125 | $7,055 | | Corporate and Other | $1,270 | $913 | | **Total** | **$42,363** | **$41,069** | [3. Revenue from Contracts with Customers](index=45&type=section&id=3.%20Revenue%20from%20Contracts%20with%20Customers) This note reconciles operating revenues with revenues from contracts with customers for PPL and its subsidiaries, disaggregated by customer class (Residential, Commercial, Industrial, Other, Wholesale, Transmission) PPL Revenues from Contracts with Customers (Millions of Dollars) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Operating Revenues | $2,025 | $1,881 | $4,529 | $4,185 | | Alternative revenue programs | $20 | $(3) | $70 | $5 | | Other | $(5) | $(4) | $(13) | $(12) | | **Revenues from Contracts with Customers** | **$2,040** | **$1,874** | **$4,586** | **$4,178** | - PPL conformed the presentation of RIE's net metering charges with other segments starting Q4 2024, increasing Operating Revenues and Energy purchases For Q2 2025, **$55 million** (3 months) and **$96 million** (6 months) of net metering was included in Energy purchases, compared to being a reduction of Operating Revenues in Q2 2024 (**$53 million** and **$85 million** respectively)[150](index=150&type=chunk) PPL Revenues from Contracts with Customers by Class (Three Months Ended June 30, 2025, Millions of Dollars) | Customer Class | PA Regulated | KY Regulated | RI Regulated | Total PPL | | :--------------- | :----------- | :----------- | :----------- | :-------- | | Residential | $345 | $328 | $214 | $887 | | Commercial | $106 | $247 | $160 | $513 | | Industrial | $13 | $158 | $20 | $191 | | Other | $13 | $71 | $62 | $146 | | Wholesale - municipality | $0 | $5 | $0 | $5 | | Wholesale - other | $0 | $24 | $0 | $24 | | Transmission | $223 | $0 | $51 | $274 | | **Total** | **$700** | **$833** | **$507** | **$2,040**| [4. Earnings Per Share](index=49&type=section&id=4.%20Earnings%20Per%20Share) This note details the calculation of basic and diluted Earnings Per Share (EPS) for PPL, using the Two-Class Method or Treasury Stock Method for dilutive securities - Basic EPS is calculated by dividing income available to PPL common shareowners by the weighted-average common shares outstanding Diluted EPS includes incremental shares from potentially dilutive share-based payment awards (Two-Class or Treasury Stock Method) and Exchangeable Senior Notes (If-Converted Method)[160](index=160&type=chunk) PPL Earnings Per Share Reconciliation (Millions of Dollars, except share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income available to PPL common shareowners - Basic and Diluted | $183 | $189 | $596 | $496 | | Weighted-average shares - Basic EPS (in thousands) | 739,276 | 737,748 | 738,986 | 737,630 | | Add: Dilutive share-based payment awards (in thousands) | 2,504 | 1,815 | 2,606 | 1,561 | | Add: Forward sale agreements (in thousands) | 23 | 0 | 11 | 0 | | Add: Exchangeable Notes (in thousands) | 738 | 0 | 369 | 0 | | Weighted-average shares - Diluted EPS (in thousands) | 742,541 | 739,563 | 741,972 | 739,191 | | Basic EPS | $0.25 | $0.26 | $0.81 | $0.67 | | Diluted EPS | $0.25 | $0.26 | $0.80 | $0.67 | - For the six months ended June 30, 2025, PPL issued **386 thousand** common shares related to DRIP For the three months ended June 30, 2025, **196 thousand** stock-based compensation awards and **5,648 thousand** forward sale agreements were excluded from diluted EPS calculations as they were antidilutive[163](index=163&type=chunk)[164](index=164&type=chunk) [5. Income Taxes](index=50&type=section&id=5.%20Income%20Taxes) This note provides reconciliations of income tax expense for PPL, PPL Electric, LG&E, and KU, detailing the impact of statutory rates, state income taxes, valuation allowances, investment tax credits, utility rate-making adjustments, and amortization of excess deferred taxes PPL Income Tax Expense Reconciliation (Millions of Dollars) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Federal income tax on Income Before Income Taxes at statutory tax rate - 21% | $48 | $50 | $157 | $132 | | Total increase (decrease) | $(1) | $0 | $(8) | $(1) | | **Total income tax expense (benefit)** | **$47** | **$50** | **$149** | **$131** | - On July 4, 2025, the 'One Big Beautiful Bill Act' was signed into law, and Registrants are assessing its material impacts On July 7, 2025, an Executive Order directed strict enforcement of clean electricity tax credit termination for wind and solar under IRC Sections 45Y and 48E, which PPL is monitoring to preserve eligibility for Kentucky projects[171](index=171&type=chunk)[172](index=172&type=chunk) [6. Utility Rate Regulation](index=51&type=section&id=6.%20Utility%20Rate%20Regulation) This note provides detailed information on the regulatory assets and liabilities of PPL and its utility subsidiaries, including current and noncurrent balances PPL Current Regulatory Assets (Millions of Dollars) | Asset Category | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :------------ | :---------------- | | Rate adjustment mechanisms | $99 | $95 | | Renewable energy certificates | $21 | $14 | | Storm damage expense rider | $45 | $68 | | Gas supply clause | $20 | $3 | | Transmission service charge | $52 | $44 | | DSIC | $9 | $8 | | TCJA customer refund and recovery | $30 | $21 | | ISR deferral | $6 | $22 | | Other | $21 | $45 | | **Total current regulatory assets** | **$303** | **$320** | PPL Noncurrent Regulatory Assets (Millions of Dollars) | Asset Category | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :------------ | :---------------- | | Defined benefit plans | $959 | $967 | | Plant outage costs | $27 | $30 | | Net metering | $159 | $147 | | Environmental cost recovery | $96 | $96 | | Storm costs | $114 | $113 | | Unamortized loss on debt | $19 | $20 | | Terminated interest rate swaps | $49 | $53 | | Accumulated cost of removal of utility plant | $168 | $173 | | AROs | $275 | $280 | | RAR | $80 | $83 | | Gas line inspections | $24 | $24 | | Advanced metering infrastructure | $35 | $28 | | Other | $50 | $46 | | **Total noncurrent regulatory assets** | **$2,055** | **$2,060** | - RIE's FY 2026 Gas ISR Plan of **$165 million** (including **$147 million** capital investment and **$18 million** O&M for paving) and Electric ISR Plan of **$219 million** (including **$88 million** for AMF) were approved by RIPUC, effective April 1, 2025[177](index=177&type=chunk)[178](index=178&type=chunk) - LG&E and KU filed requests for annual electricity and gas revenue increases of approximately **$391 million** (**8.3%** and **11.5%** for LG&E and KU electricity, **14.0%** for LG&E gas), based on a forecasted test year of 2026, with a requested return on equity of **10.95%** A ruling is expected in Q4 2025[180](index=180&type=chunk)[181](index=181&type=chunk) - LG&E and KU filed a CPCN application for **$3.7 billion** in capital expenditures (2025-2031) for new generation projects, including two **645 MW** NGCC units, a **400 MW** BESS, and an SCR environmental facility A stipulation recommends approval of most projects, withdrawal of the BESS, and recovery of Mill Creek NGCC costs via a new rate tracker[183](index=183&type=chunk)[185](index=185&type=chunk)[186](index=186&type=chunk) - PPL Electric's DSIC cap was increased from **5%** to **7.5%** for bills rendered on or after March 13, 2025, until the next base rate case or end of the Long-term Infrastructure Improvement Plan[192](index=192&type=chunk) [7. Financing Activities](index=58&type=section&id=7.%20Financing%20Activities) This note details the Registrants' financing activities, including credit arrangements, short-term debt, and equity securities - PPL Capital Funding, PPL Electric, LG&E, and KU amended their syndicated credit facilities in January 2025, extending termination dates to December 2029 and increasing borrowing capacities[200](index=200&type=chunk)[201](index=201&type=chunk)[202](index=202&type=chunk)[203](index=203&type=chunk) Credit Facilities at June 30, 2025 (Millions of Dollars) | Registrant | Capacity | Borrowed | Letters of Credit and Commercial Paper Issued | Unused Capacity | | :----------------------- | :------- | :------- | :-------------------------------------------- | :-------------- | | PPL Capital Funding | $1,700 | $0 | $490 | $1,210 | | PPL Electric Utilities | $750 | $0 | $386 | $364 | | Louisville Gas and Electric | $600 | $0 | $158 | $442 | | Kentucky Utilities | $600 | $0 | $275 | $325 | | **Total** | **$3,650** | **$0** | **$1,309** | **$2,341** | Commercial Paper Programs at June 30, 2025 (Millions of Dollars) | Registrant | Weighted-Average Interest Rate | Capacity | Commercial Paper Issuances | Unused Capacity | | :----------------------- | :----------------------------- | :------- | :------------------------- | :-------------- | | PPL Capital Funding | 4.66% | $1,350 | $470 | $880 | | RIE | - | $250 | $0 | $250 | | PPL Electric Utilities | 4.63% | $650 | $385 | $265 | | Louisville Gas and Electric | 4.66% | $500 | $158 | $342 | | Kentucky Utilities | 4.66% | $400 | $275 | $125 | | **Total** | | **$3,150** | **$1,288** | **$1,862** | - In February 2025, PPL launched an ATM Program to sell up to **$2 billion** of common stock, including an optional forward sales component As of June 30, 2025, PPL entered into forward contracts to sell approximately **9.9 million** shares at a blended initial forward price of **$34.77** per share, with settlement by December 30, 2025[209](index=209&type=chunk) - In May 2025, PPL declared a quarterly cash dividend of **27.25 cents** per share, payable July 1, 2025[210](index=210&type=chunk) [8. Acquisitions, Developments and Divestitures](index=60&type=section&id=8.%20Acquisitions%2C%20Development%20and%20Divestitures) This note provides an update on the acquisition of Narragansett Electric (RIE) by PPL Rhode Island Holdings in May 2022 - PPL Rhode Island Holdings acquired Narragansett Electric (now RIE) on May 25, 2022 The transition services agreement (TSA) related to the acquisition was completed in Q3 2024[211](index=211&type=chunk)[212](index=212&type=chunk) - PPL committed to hold Rhode Island customers harmless from future rate increases due to changes in Accumulated Deferred Income Taxes (ADIT) from the acquisition An agreement on June 13, 2025, proposes to resolve approximately **$155 million** through bill credits in Q1 2026 (**$74 million**) and Q1 2027 (**$81 million**)[213](index=213&type=chunk)[179](index=179&type=chunk) - RIE will forgo recovery of certain transition costs, which were expensed as incurred These costs were **$17 million** (3 months) and **$34 million** (6 months) for 2025, and **$83 million** (3 months) and **$165 million** (6 months) for 2024[213](index=213&type=chunk) [9. Defined Benefits](index=61&type=section&id=9.%20Defined%20Benefits) This note outlines the net periodic defined benefit costs (credits) for PPL and its subsidiaries' pension and other postretirement benefit plans PPL Pension Benefits - Net Periodic Defined Benefit Costs (Credits) (Millions of Dollars) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Service cost | $8 | $8 | $15 | $17 | | Interest cost | $47 | $46 | $92 | $92 | | Expected return on plan assets | $(72) | $(75) | $(143) | $(150) | | Amortization of: Prior service cost | $0 | $0 | $0 | $1 | | Amortization of: Actuarial loss | $4 | $3 | $9 | $5 | | **Net periodic defined benefit costs (credits)** | **$(13)** | **$(18)** | **$(27)** | **$(35)** | PPL Other Postretirement Benefits - Net Periodic Defined Benefit Costs (Credits) (Millions of Dollars) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Service cost | $2 | $2 | $3 | $3 | | Interest cost | $8 | $7 | $15 | $14 | | Expected return on plan assets | $(8) | $(8) | $(15) | $(15) | | Amortization of: Prior service cost | $0 | $1 | $0 | $1 | | Amortization of: Actuarial loss | $(1) | $(2) | $(2) | $(3) | | **Net periodic defined benefit costs (credits)** | **$1** | **$0** | **$1** | **$0** | - The non-service cost components of net periodic defined benefit costs (credits) are presented in 'Other Income (Expense) - net' on the Statements of Income[215](index=215&type=chunk) [10. Commitments and Contingencies](index=61&type=section&id=10.%20Commitments%20and%20Contingencies) This note addresses legal proceedings, environmental assessments, and regulatory issues that could result in material liabilities for PPL and its subsidiaries - A Settlement Agreement was approved by RIPUC on March 5, 2025, requiring RIE to refund **$10 million** related to energy efficiency programs, with **$2 million** already refunded and **$8 million** to reduce a storm cost regulatory asset[218](index=218&type=chunk) - The EPA announced plans to reconsider **31 environmental rules**, including GHG emissions, ELGs, and CCRs President Trump issued Executive Orders directing review and repeal of unlawful rules PPL, LG&E, and KU are monitoring these initiatives for potential impacts on capital expenditures and operations[220](index=220&type=chunk) - The 2024 CCR Rule establishes new requirements for inactive surface impoundments and CCR management units LG&E and KU recognized ARO obligations in Q2 2024 related to preliminary risk assessments Compliance plans are being finalized, and costs are expected to be subject to rate recovery[222](index=222&type=chunk)[223](index=223&type=chunk) - PPL Electric has a recorded liability of **$8 million** for remediating certain contaminated sites RIE has a recorded liability of **$98 million** for environmental remediation activities, expected to be incurred over ~30 years and generally subject to rate recovery[228](index=228&type=chunk)[230](index=230&type=chunk) Guarantees Provided at June 30, 2025 (Millions of Dollars) | Registrant | Exposure | Expiration Date | | :--------------------------------- | :------- | :-------------- | | PPL: Indemnifications related to U.K. utility business tax liabilities | £50 | 2028 | | PPL: Safari payment obligations under sale/leaseback transactions | $88 | 2028 | | PPL: Indemnifications for losses not covered by Aspen Power's insurance | $140 | 2028 | | LG&E and KU: Obligation of shortfall related to OVEC | (d) | Undeterminable | [11. Related Party Transactions](index=66&type=section&id=11.%20Related%20Party%20Transactions) This note details related party transactions, primarily focusing on support costs charged by PPL Services and LKS to PPL Electric, LG&E, and KU Support Costs Charged by PPL Services and LKS (Millions of Dollars) | Recipient | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | PPL Electric from PPL Services | $67 | $53 | $131 | $109 | | LG&E from LKS | $18 | $28 | $48 | $57 | | LG&E from PPL Services | $42 | $20 | $62 | $31 | | KU from LKS | $22 | $30 | $60 | $68 | | KU from PPL Services | $42 | $19 | $61 | $30 | - PPL Electric's subsidiary maintains an **$800 million** revolving line of credit with CEP Reserves At June 30, 2025, CEP Reserves had no borrowings outstanding, down from **$222 million** at December 31, 2024[247](index=247&type=chunk) - LG&E and KU participate in intercompany money pool agreements At June 30, 2025, LG&E had no borrowings outstanding from affiliates, while KU had **$46 million** outstanding[248](index=248&type=chunk)[249](index=249&type=chunk) - PPL Electric's intercompany receivable balance from VEBA funds was **$1 million** at June 30, 2025, down from **$7 million** at December 31, 2024[250](index=250&type=chunk) [12. Other Income (Expense) - net](index=68&type=section&id=12.%20Other%20Income%20%28Expense%29%20-%20net) This note provides a breakdown of 'Other Income (Expense) - net' for PPL, PPL Electric, LG&E, and KU PPL Other Income (Expense) - net (Millions of Dollars) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Defined benefit plans - non-service credits | $7 | $15 | $15 | $23 | | Interest income | $2 | $6 | $8 | $15 | | AFUDC - equity component | $20 | $12 | $35 | $21 | | Miscellaneous | $(6) | $(1) | $(7) | $(5) | | **Other Income (Expense) - net** | **$23** | **$32** | **$51** | **$54** | PPL Electric Other Income (Expense) - net (Millions of Dollars) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Defined benefit plans - non-service credits | $4 | $4 | $7 | $9 | | AFUDC - equity component | $8 | $7 | $15 | $11 | | Miscellaneous | $(1) | $0 | $0 | $0 | | **Other Income (Expense) - net** | **$11** | **$11** | **$22** | **$20** | [13. Fair Value Measurements](index=68&type=section&id=13.%20Fair%20Value%20Measurements) This note describes the fair value measurements for PPL and its subsidiaries, categorizing assets and liabilities into Level 1, 2, or 3 based on input observability - Fair value is measured using market, income, and/or cost approaches, incorporating observable and unobservable inputs, including nonperformance risk[255](index=255&type=chunk) PPL Recurring Fair Value Measurements (June 30, 2025, Millions of Dollars) | Asset/Liability | Total | Level 1 | Level 2 | Level 3 | | :--------------------------------- | :---- | :------ | :------ | :------ | | **Assets:** | | | | | | Cash and cash equivalents | $294 | $294 | $0 | $0 | | Restricted cash and cash equivalents | $24 | $24 | $0 | $0 | | Special use funds | $14 | $1 | $0 | $0 | | Price risk management assets | $12 | $0 | $12 | $0 | | **Total Assets** | **$344**| **$319**| **$12** | **$0** | | **Liabilities:** | | | | | | Price risk management liabilities | $13 | $0 | $8 | $5 | | **Total Liabilities** | **$13** | **$0** | **$8** | **$5** | - Special use funds are investments restricted for paying active union employee medical costs, primarily in commingled debt and equity funds measured at NAV[259](index=259&type=chunk) - Interest rate derivatives are used to manage interest rate risk, with fair values measured using an income approach Gas contracts are used to manage commodity price risk, valued using NYMEX/ICE inputs or internally developed models (Black-Scholes)[260](index=260&type=chunk)[261](index=261&type=chunk)[262](index=262&type=chunk) Long-term Debt Carrying Amount and Fair Value (Millions of Dollars) | Registrant | June 30, 2025 Carrying Amount | June 30, 2025 Fair Value | December 31, 2024 Carrying Amount | December 31, 2024 Fair Value | | :----------------------- | :------------------------------ | :----------------------- | :-------------------------------- | :----------------------------- | | PPL | $16,511 | $15,750 | $16,503 | $15,562 | | PPL Electric Utilities | $5,215 | $4,901 | $5,214 | $4,862 | | Louisville Gas and Electric | $2,472 | $2,316 | $2,471 | $2,295 | | Kentucky Utilities | $3,067 | $2,771 | $3,066 | $2,750 | [14. Derivative Instruments and Hedging Activities](index=71&type=section&id=14.%20Derivative%20Instruments%20and%20Hedging%20Activities) This note outlines PPL's risk management objectives and strategies for market risks (commodity price, interest rate, volumetric, equity securities price) and credit risk - PPL's risk management policy, approved by the Board, manages market risk (commodities, interest rates, liquidity, volumetric) and credit risk Derivatives are used to minimize earnings fluctuations[268](index=268&type=chunk)[269](index=269&type=chunk) - PPL and its subsidiaries are exposed to interest rate risk from debt issuances and defined benefit plans, commodity price risk (mitigated by cost recovery mechanisms), volumetric risk (mitigated by regulatory mechanisms for RIE), and equity securities price risk (mitigated by recovery methods for defined benefit plans)[273](index=273&type=chunk)[274](index=274&type=chunk)[279](index=279&type=chunk) - All derivative instruments are recorded at fair value on the Balance Sheet unless the NPNS (normal purchases and normal sales) exception is elected[287](index=287&type=chunk) PPL Derivative Instruments Fair Value (June 30, 2025, Millions of Dollars) | Category | Assets | Liabilities | | :--------------------------------- | :----- | :---------- | | Derivatives designated as hedging instruments | $2 | $0 | | Derivatives not designated as hedging instruments | $10 | $13 | | **Total derivatives** | **$12** | **$13** | - Certain derivative contracts contain credit risk-related contingent features that could require additional collateral or contract termination if credit ratings fall below investment grade or if adequate assurance of performance is demanded[304](index=304&type=chunk)[305](index=305&type=chunk) [15. Asset Retirement Obligations](index=79&type=section&id=15.%20Asset%20Retirement%20Obligations) This note details the Asset Retirement Obligations (AROs) for PPL, LG&E, and KU, primarily related to Coal Combustion Residuals (CCR) closure costs - PPL's, LG&E's, and KU's ARO liabilities are primarily related to CCR closure costs LG&E and RIE also have AROs for natural gas mains and wells[307](index=307&type=chunk) - For LG&E, KU, and RIE, all ARO accretion and depreciation expenses are reclassified as regulatory assets or liabilities[307](index=307&type=chunk) Changes in Carrying Amounts of AROs (Millions of Dollars) | Metric | PPL | LG&E | KU | | :----------------------- | :-- | :--- | :-- | | Balance at December 31, 2024 | $157 | $84 | $64 | | Accretion | $4 | $2 | $2 | | Obligations settled | $(8) | $(4) | $(4) | | **Balance at June 30, 2025** | **$153** | **$82** | **$62** | [16. Accumulated Other Comprehensive Income (Loss)](index=79&type=section&id=16.%20Accumulated%20Other%20Comprehensive%20Income%20%28Loss%29) This note presents the after-tax changes in Accumulated Other Comprehensive Income (Loss) (AOCI) by component for PPL, including unrealized gains/losses on qualifying derivatives, equity investees' AOCI, prior service costs, and actuarial gains/losses from defined benefit plans, for the periods ended June 30, 2025 and 2024 PPL After-Tax Changes in AOCI by Component (Millions of Dollars) | Component | March 31, 2025 | Amounts arising during the period | Reclassifications from AOCI | Net OCI during the period | June 30, 2025 | | :--------------------------------- | :------------- | :-------------------------------- | :-------------------------- | :------------------------ | :------------ | | Unrealized gains (losses) on qualifying derivatives | $10 | $1 | $0 | $1 | $11 | | Equity investees' AOCI | $4 | $0 | $0 | $0 | $4 | | Defined benefit plans: Prior service costs | $(3) | $0 | $0 | $0 | $(3) | | Defined benefit plans: Actuarial gain (loss) | $(195) | $(8) | $1 | $(7) | $(202) | | **Total** | **$(184)** | **$(7)** | **$1** | **$(6)** | **$(190)** | PPL Gains (Losses) and Related Income Taxes for Reclassifications from AOCI (Three Months Ended June 30, 2025, Millions of Dollars) | AOCI Component | Pre-tax | Income Taxes | After-tax | | :--------------------------------- | :------ | :----------- | :-------- | | Qualifying derivatives: Interest rate derivatives | $(1) | $1 | $0 | | Defined benefit plans: Net actuarial loss | $(1) | $0 | $(1) | | **Total reclassifications during the period** | **$(2)** | **$1** | **$(1)** | [17. New Accounting Guidance Pending Adoption](index=81&type=section&id=17.%20New%20Accounting%20Guidance%20Pending%20Adoption) This note discusses new accounting guidance pending adoption, specifically 'Improvements to Income Tax Disclosures' and 'Disaggregation of Income Statement Expenses' - New FASB guidance on 'Improvements to Income Tax Disclosures' requires additional disaggregated rate reconciliation and income taxes paid information It is effective for annual periods beginning after December 15, 2024 Registrants plan to adopt retrospectively for the year ending December 31, 2025[315](index=315&type=chunk)[316](index=316&type=chunk)[317](index=317&type=chunk) - New FASB guidance on 'Disaggregation of Income Statement Expenses' requires disclosure of specific cost categories (purchases of inventory, employee compensation, depreciation, intangible asset amortization, oil/gas DD&A) within relevant income statement expense captions It is effective for annual periods beginning after December 15, 2026 Registrants are assessing the impact[318](index=318&type=chunk)[319](index=319&type=chunk)[320](index=320&type=chunk) [Item 2. Combined Management's Discussion and Analysis of Financial Condition and Results of Operations](index=82&type=section&id=Item%202.%20Combined%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides a combined management discussion and analysis for PPL and its subsidiaries, covering business strategy, financial and operational developments, results of operations, financial condition, liquidity and capital resources, risk management, related party transactions, acquisitions, environmental matters, new accounting guidance, and critical accounting policies [Overview](index=82&type=section&id=Overview) This overview introduces PPL as a utility holding company operating regulated utilities in Pennsylvania, Kentucky, Virginia, and Rhode Island [Introduction](index=82&type=section&id=Introduction) PPL Corporation, headquartered in Allentown, Pennsylvania, is a utility holding company that delivers electricity and natural gas through its regulated utility subsidiaries in Pennsylvania, Kentucky, Virginia, and Rhode Island - PPL is a utility holding company delivering electricity and natural gas in Pennsylvania, Kentucky, Virginia, and Rhode Island through regulated utility subsidiaries[323](index=323&type=chunk) - PPL's principal subsidiaries are PPL Capital Funding, PPL Electric Utilities Corporation, LKE (parent of Louisville Gas and Electric Company and Kentucky Utilities Company), and Rhode Island Energy[324](index=324&type=chunk)[326](index=326&type=chunk) [Business Strategy](index=84&type=section&id=Business%20Strategy) PPL's business strategy focuses on creating the utilities of the future to enhance value for customers and shareholders - PPL's strategy is to create the utilities of the future, focusing on: **strengthening network reliability and resilience**, **advancing affordable and reliable cleaner energy** (natural gas, renewables, battery storage, low-carbon solutions R&D), **driving operational efficiencies**, **utilizing AI and advanced technologies**, **empowering customers with digital options**, and **engaging stakeholders** for economic development and resource adequacy[332](index=332&type=chunk)[338](index=338&type=chunk) - This strategy supports PPL's mission to provide safe, affordable, reliable, and sustainable energy to customers and competitive, long-term returns to shareowners[333](index=333&type=chunk) [Financial and Operational Developments](index=84&type=section&id=Financial%20and%20Operational%20Developments) This section highlights significant financial and operational developments, including PPL's joint venture with Blackstone Infrastructure to build new generation stations for data centers in Pennsylvania - PPL and Blackstone Infrastructure announced a joint venture (PPL **51%**, Blackstone **49%**) to build, own, and operate new electricity generation stations for data centers in Pennsylvania under long-term energy services agreements[334](index=334&type=chunk) - LG&E and KU are subject to extensive environmental regulations (CCRs, GHG, ELGs), leading to the retirement of ~**1,500 MW** of coal-fired plants since 2010 Mill Creek Unit 1 (**300 MW**) was retired in 2024, and Unit 2 (**297 MW**) is expected to retire in 2027[336](index=336&type=chunk)[337](index=337&type=chunk) - LG&E and KU filed a CPCN application for **$3.7 billion** in capital expenditures (2025-2031) for new generation projects, including two **645 MW** NGCC units, a **400 MW** BESS (proposed withdrawal), and an SCR environmental facility A stipulation recommends approval of most projects[342](index=342&type=chunk)[344](index=344&type=chunk)[347](index=347&type=chunk) - LG&E and KU filed for a **$391 million** increase in annual electricity and gas revenues (**8.3%** and **11.5%** for electricity, **14.0%** for gas) in their 2025 Rate Case, with a requested **10.95%** return on equity, expected to be effective January 1, 2026[346](index=346&type=chunk)[348](index=348&type=chunk) - RIE's FY 2026 Gas ISR Plan (**$165 million** capital/O&M) and Electric ISR Plan (**$219 million** capital/O&M) were approved by RIPUC, effective April 1, 2025[351](index=351&type=chunk)[352](index=352&type=chunk) - PPL Electric's DSIC cap was increased from **5%** to **7.5%** for bills rendered on or after March 13, 2025[353](index=353&type=chunk) [Results of Operations](index=89&type=section&id=Results%20of%20Operations) This section analyzes the results of operations for PPL and its subsidiaries, comparing the three and six months ended June 30, 2025, with the same periods in 2024 [PPL: Statement of Income Analysis and Segment Earnings](index=89&type=section&id=PPL%3A%20Statement%20of%20Income%20Analysis%20and%20Segment%20Earnings) This subsection provides a comprehensive analysis of PPL's consolidated statement of income, detailing changes in operating revenues, expenses, and net income [Statement of Income Analysis](index=89&type=section&id=Statement%20of%20Income%20Analysis) PPL's consolidated net income decreased by $7 million for the three months ended June 30, 2025, but increased by $100 million for the six months ended June 30, 2025, compared to the same periods in 2024 PPL Consolidated Statement of Income Analysis (Millions of Dollars) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | $ Change (3M) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | $ Change (6M) | | :--------------------------------- | :------------------------------- | :------------------------------- | :------------ | :----------------------------- | :----------------------------- | :------------ | | Operating Revenues | $2,025 | $1,881 | $144 | $4,529 | $4,185 | $344 | | Fuel | $192 | $181 | $11 | $426 | $390 | $36 | | Energy purchases | $388 | $275 | $113 | $947 | $795 | $152 | | Other operation and maintenance | $614 | $623 | $(9) | $1,212 | $1,249 | $(37) | | Depreciation | $324 | $319 | $5 | $646 | $635 | $11 | | Taxes, other than income | $101 | $93 | $8 | $214 | $181 | $33 | | Total Operating Expenses | $1,619 | $1,491 | $128 | $3,445 | $3,250 | $195 | | Operating Income | $406 | $390 | $16 | $1,084 | $935 | $149 | | Other Income (Expense) - net | $23 | $32 | $(9) | $51 | $54 | $(3) | | Interest Expense | $199 | $182 | $17 | $389 | $361 | $28 | | Income Before Income Taxes | $230 | $240 | $(10) | $746 | $62

Financial Data and Key Metrics Changes - The company reported second quarter GAAP earnings of $0.25 per share, down from $0.26 per share in Q2 2024. Adjusted earnings from ongoing operations were $0.32 per share, a decrease of $0.06 compared to Q2 2024 [4][33] - The decline in earnings was attributed to several factors, including the timing of operating costs, favorable weather in Q2 2024, and higher interest expenses [33][34] - The company remains confident in achieving at least the midpoint of its 2025 ongoing earnings forecast of $1.81 per share, with expectations of stronger growth in the second half of the year [5][34] Business Line Data and Key Metrics Changes - The Kentucky segment results were flat compared to 2024, with lower sales volumes offset by other factors [36] - The Pennsylvania Regulated segment results decreased by $0.02 per share due to higher operating costs and timing of transmission revenue true-ups [36] - The Rhode Island segment results decreased by $0.03 per share, with higher distribution revenues offset by timing of operating costs [36] Market Data and Key Metrics Changes - The company anticipates a significant increase in demand in Pennsylvania, with approximately 14.5 gigawatts of data center projects in advanced stages of development [17][60] - In Kentucky, the economic development pipeline remains robust, with an estimated 8.5 gigawatts of economic development load potential [30][31] Company Strategy and Development Direction - The company is focused on infrastructure improvements, projecting $20 billion in investments from 2025 to 2028, resulting in average annual rate base growth of 9.8% [5][6] - A joint venture with Blackstone Infrastructure aims to build new generation resources to support data centers, with a focus on long-term energy service agreements [19][20] - The company is actively engaging with stakeholders to strengthen resource adequacy and support economic development [39][40] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving financial targets despite current challenges, emphasizing the importance of infrastructure investments and regulatory support [5][39] - The company is optimistic about the potential for new generation resources to be built, contingent on long-term agreements with hyperscalers [23][24] Other Important Information - The company filed a stipulation agreement with the KPSC for new generation in Kentucky, which includes mechanisms to reduce lag on investments and support cost recovery [8][9] - The company is seeking a combined $391 million increase in annual electric and gas revenues in Kentucky to support safety and reliability investments [11][12] Q&A Session Summary Question: Can you elaborate on the $17 billion to $19 billion CapEx needs? - Management indicated that this estimate reflects the potential shift from a net long to a net short position in generation due to data center load, with the joint venture and existing IPPs likely addressing this need [43][44] Question: How will power risk be allocated within the joint venture? - The joint venture aims for a regulated-like risk profile, focusing on long-term contracted generation with creditworthy counterparties [48][49] Question: What are the future equity needs and plans for capital? - The company plans to issue $400 million to $500 million in equity this year, utilizing an ATM program for cost-effective capital [51] Question: What is the outlook on PJM capacity auctions? - Management expressed concerns about the current auction outcomes and the need for new generation, emphasizing the importance of the joint venture and legislative support [56][62] Question: How is the company addressing industrial sales contraction? - The decline in industrial sales is attributed to specific customers rather than a broader trend, with management not concerned about the overall industrial load [81][82]