Item 2. Combined Management's Discussion and Analysis of Financial Condition and

Results of Operations

(All Registrants)

This "Item 2. Combined Management's Discussion and Analysis of Financial Condition and Results of Operations" is separately filed by PPL, PPL Electric, LG&E and KU. Information contained herein relating to any individual Registrant is filed by such Registrant solely on its own behalf, and no Registrant makes any representation as to information relating to any other Registrant. The specific Registrant to which disclosures are applicable is identified in parenthetical headings in italics above the applicable disclosure or within the applicable disclosure for each Registrant's related activities and disclosures. Within combined disclosures, amounts are disclosed for individual Registrants when significant.

The following should be read in conjunction with the Registrants' Condensed Consolidated Financial Statements and the accompanying Notes and with the Registrants' 2022 Form 10-K. Capitalized terms and abbreviations are defined in the glossary. Dollars are in millions, except per share data, unless otherwise noted.

"Management's Discussion and Analysis of Financial Condition and Results of Operations" includes the following information:

• "Overview" provides a description of each Registrant's business strategy and a discussion of important financial and operational developments.

• "Results of Operations" for all Registrants includes a "Statement of Income Analysis," which discusses significant changes in principal line items on the Statements of Income, comparing the three months ended March 31, 2023 with the same period in 2022. The PPL "Results of Operations" also includes "Segment Earnings" and "Adjusted Gross Margins," which provide a detailed analysis of earnings by reportable segment. These discussions include non-GAAP financial measures, including "Earnings from Ongoing Operations" and "Adjusted Gross Margins" and provide explanations of the non-GAAP financial measures and a reconciliation of the non-GAAP financial measures to the most comparable GAAP measure.

• "Financial Condition - Liquidity and Capital Resources" provides an analysis of the Registrants' liquidity positions and credit profiles. This section also includes a discussion of rating agency actions.

• "Financial Condition - Risk Management" provides an explanation of the Registrants' risk management programs relating to market and credit risk.

Overview

Introduction

(PPL)

PPL, headquartered in Allentown, Pennsylvania, is a utility holding company. PPL, through its regulated utility subsidiaries, delivers electricity to customers in Pennsylvania, Kentucky, Virginia, and Rhode Island; delivers natural gas to customers in Kentucky and Rhode Island; and generates electricity from power plants in Kentucky.

PPL's principal subsidiaries are shown below (* denotes a Registrant).

																								PPL Corporation*
																																							PPL Capital Funding Provides financing for the operations of PPL and certain subsidiaries
						PPL Electric* Engages in the regulated transmission and distribution of electricity in Pennsylvania																		LKE A holding company that owns regulated utility operations through its subsidiaries, LG&E and KU																		RIE Engages in the regulated transmission, distribution and sale of electricity and regulated distribution and sale of natural gas in Rhode Island
															LG&E* Engages in the regulated generation, transmission, distribution and sale of electricity and regulated distribution and sale of natural gas in Kentucky																		KU* Engages in the regulated generation, transmission, distribution and sale of electricity, primarily in Kentucky
						Pennsylvania Regulated Segment																		Kentucky Regulated Segment																		Rhode Island Regulated Segment

In addition to PPL, the other Registrants included in this filing are as follows.

(PPL Electric)

PPL Electric, headquartered in Allentown, Pennsylvania, is a wholly-owned subsidiary of PPL and a regulated public utility that is an electricity transmission and distribution service provider in eastern and central Pennsylvania. PPL Electric is subject to regulation as a public utility by the PAPUC, and certain of its transmission activities are subject to the jurisdiction of the FERC under the Federal Power Act. PPL Electric delivers electricity in its Pennsylvania service area and provides electricity supply to retail customers in that area as a PLR under the Customer Choice Act. PPL Electric was organized in 1920 as Pennsylvania Power & Light Company.

(LG&E)

LG&E, headquartered in Louisville, Kentucky, is a wholly-owned subsidiary of LKE and a regulated utility engaged in the generation, transmission, distribution and sale of electricity and distribution and sale of natural gas in Kentucky. LG&E is subject to regulation as a public utility by the KPSC, and certain of its transmission activities are subject to the jurisdiction of the FERC under the Federal Power Act.

(KU)

KU, headquartered in Lexington, Kentucky, is a wholly-owned subsidiary of LKE and a regulated utility engaged in the generation, transmission, distribution and sale of electricity in Kentucky and Virginia. KU is subject to regulation as a public utility by the KPSC and the VSCC, and certain of its transmission and wholesale power activities are subject to the jurisdiction of the FERC under the Federal Power Act. KU serves its Kentucky customers under the KU name and its Virginia customers under the Old Dominion Power name.

Segment Information (PPL)

Beginning on January 1, 2023, the Kentucky Regulated segment consists primarily of the regulated electricity generation, transmission and distribution operations conducted by LG&E and KU, as well as LG&E's regulated distribution and sale of natural gas. Prior to January 1, 2023, the Kentucky Regulated segment also included the financing activities of LKE. The financing activity of LKE is presented in "Corporate and Other" beginning on January 1, 2023. Prior periods have been adjusted to reflect this change. As a result, PPL’s segments consist of its regulated operations in Kentucky, Pennsylvania and Rhode

Island and exclude any incremental financing activities of holding companies, which Management believes is a more meaningful presentation as it provides information on the core regulated operations of PPL.

Business Strategy

(All Registrants)

PPL operates four fully regulated utilities located in Pennsylvania, Kentucky and Rhode Island, which are constructive regulatory jurisdictions with distinct regulatory structures and customer classes.

PPL's strategy, which is supported by the other Registrants and subsidiaries, is to achieve industry-leading performance in safety, reliability, customer satisfaction and operational efficiency; to advance a clean energy transition while maintaining affordability and reliability; to maintain a strong financial foundation and create long-term value for our shareowners; to foster a diverse and exceptional workplace; and to build strong communities in areas that we serve.

Central to PPL's and the other Registrants' strategy is recovering capital project costs efficiently through various rate-making mechanisms, including periodic base rate case proceedings using forward test years, annual FERC formula rate mechanisms and other regulatory agency-approved recovery mechanisms designed to limit regulatory lag. In Kentucky, in addition to FERC formula rates, the KPSC has adopted a series of regulatory mechanisms (ECR, DSM, GLT, fuel adjustment clause, and gas supply clause) and recovery on construction work-in-progress that reduce regulatory lag and provide timely recovery of and return on, as appropriate, prudently incurred costs. In Pennsylvania, FERC formula rates, DSIC mechanism, Smart Meter Rider and other recovery mechanisms operate to reduce regulatory lag and provide for timely recovery of and a return on, as appropriate, prudently incurred costs. In Rhode Island, FERC formula rates, the gas cost adjustment, net metering, infrastructure, safety and reliability (ISR) and revenue decoupling mechanisms and other rate adjustment mechanisms operate to reduce regulatory lag and provide timely recovery of and return on, as appropriate, prudently incurred costs.

Financial and Operational Developments

IRS Revenue Procedure 2023-15 (PPL and LG&E)

On April 14, 2023, the IRS issued Revenue Procedure 2023-15, which provides a safe harbor method of accounting that taxpayers may use to determine whether expenses to repair, maintain, replace, or improve natural gas transmission and distribution property must be capitalized for tax purposes. The Registrants are currently reviewing the revenue procedure to determine what impact the newly issued guidance may have on their financial statements.

Regulatory Requirements

(All Registrants)

The Registrants cannot predict the impact that future regulatory requirements may have on their financial condition or results of operations.

(PPL, LG&E and KU)

Environmental Considerations for Coal-Fired Generation

The businesses of LG&E and KU are subject to extensive federal, state and local environmental laws, rules and regulations, including those pertaining to CCRs, GHG, and ELGs. See Notes 6, 10 and 15 to the Financial Statements for a discussion of these significant environmental matters. These and other environmental requirements led PPL, LG&E and KU to retire approximately 1,200 MW of coal-fired generating plants in Kentucky since 2010. As part of the long-term generation planning process, LG&E and KU evaluate a range of factors including the impact of potential stricter environmental regulations, fuel price scenarios, the cost of replacement generation, continued operations and major maintenance costs and the risk of major equipment failures in determining when to retire generation assets.

As a result of environmental requirements and aging infrastructure, LG&E anticipates retiring two older coal-fired units at the Mill Creek Plant and KU anticipates retiring one coal-fired unit at each of the E.W. Brown and Ghent plants. Mill Creek Unit 1, with 300 MW of capacity, is expected to be retired in 2024. Mill Creek Unit 2, with 297 MW of capacity, is expected to be retired in 2027. E.W. Brown Unit 3, with 412 MW of capacity, and Ghent Unit 2, with 486 MW of capacity, are expected to be

retired in 2028. LG&E and KU anticipate requesting KPSC approval in May 2023 to retire these facilities. LG&E and KU expect to recover the associated retirement costs, including the remaining net book value, for these coal-fired generating units through the RAR or other rate mechanisms in the future.

CPCN

On December 15, 2022, LG&E and KU filed an application with the KPSC for a CPCN for the construction of two 621 MW net summer rating NGCC combustion turbine facilities, one at LG&E's Mill Creek Generating Station in Jefferson County, Kentucky and the other at KU's E.W. Brown Generating Station in Mercer County, Kentucky, including on-site natural gas and electric transmission construction associated with those facilities and site compatibility certificates. LG&E and KU also applied for a CPCN to construct a 120 MWac solar photovoltaic electric generating facility in Mercer County, Kentucky, and for a CPCN to acquire a 120 MWac solar facility to be built by a third-party solar developer in Marion County, Kentucky. LG&E and KU further applied for a CPCN to construct a 125 MW, 4-hour battery energy storage system facility at KU's E.W. Brown Generating Station and for approval of their proposed 2024-2030 DSM programs. The plan includes adding 14 new, adjusted or expanded energy efficiency programs, which would reduce LG&E's and KU's overall need by approximately 100 MW each. Finally, LG&E and KU requested a declaratory order to confirm that their entry into non-firm energy-only power-purchase agreements for the output of four solar photovoltaic facilities with a combined capacity of 637 MW does not require KPSC approval and that LG&E and KU may recover the costs of the solar PPAs through their fuel adjustment clause mechanisms as previously approved for a prior solar PPA. LG&E and KU plan to accrue AFUDC on the constructed NGCC facilities, the solar facility in Mercer County, Kentucky and the battery energy storage system facility and have requested regulatory asset treatment to recover the financing costs of these projects.

The plan is consistent with PPL's goal to achieve net-zero carbon emissions by 2050. PPL has estimated that the replacement strategy contemplated by the plan would reduce the carbon intensity of LG&E and KU's generation fleet and result in nearly a 25% reduction in CO2 emissions from existing levels by 2050.

The KPSC accepted the filing as of January 6, 2023 and has indicated its intention to issue an order on all issues by November 6, 2023. LG&E and KU cannot predict the outcome of these matters.

Kentucky Law on Retirement of Fossil-Fueled Generation

On March 24, 2023, the Kentucky General Assembly enacted legislation requiring Kentucky public utilities to apply for and receive KPSC approval prior to retiring fossil-fuel electric generating units. The law establishes a rebuttable presumption against retirement and certain regulatory standards for approval of such retirements or recovery of related costs, including relating to matters of reliability and resiliency, avoidable incremental ratepayer costs, and absence of federal incentives. The law provides for a 30-day prior notice and an approximate 180-day approval process for such regulatory applications and approvals. On April 10, 2023, LG&E and KU filed their notice of intent to make such a filing and anticipate submitting an application in May 2023 in connection with relevant proposed retirements of certain existing coal-fired generation units contemplated in LG&E's and KU's December 2022 CPCN application. PPL, LG&E and KU do not expect the new law to impact the timing of a KPSC decision on the CPCN filing as discussed above. PPL, LG&E and KU cannot predict the ultimate outcome of any such proceedings. PPL, LG&E and KU continue to assess the new law, but do not currently anticipate that it will have a material effect on their operations or financial condition or materially alter LG&E and KU's generation investment plans.

Kentucky March 2023 Storm

On March 3, 2023, LG&E and KU experienced significant windstorm activity in their service territories, resulting in substantial damage to certain of LG&E's and KU's assets with total costs incurred through March 31, 2023 of $72 million ($31 million at LG&E and $41 million at KU). On March 17, 2023, LG&E and KU submitted a filing with the KPSC requesting regulatory asset treatment of the extraordinary operations and maintenance expenses portion of the costs incurred related to the windstorm. On April 5, 2023, the KPSC issued an order approving the request for accounting purposes, noting that approval for recovery would be determined in LG&E’s and KU’s next base rate cases. As of March 31, 2023, LG&E and KU recorded regulatory assets related to the storm of $8 million and $11 million.

FERC Transmission Rate Filing

In 2018, LG&E and KU applied to the FERC requesting elimination of certain on-going credits to a sub-set of transmission customers relating to the 1998 merger of LG&E's and KU's parent entities and the 2006 withdrawal of LG&E and KU from the

Midcontinent Independent System Operator, Inc. (MISO), a regional transmission operator and energy market. The application sought termination of LG&E's and KU's commitment to provide certain Kentucky municipalities mitigation for certain horizontal market power concerns arising out of the 1998 LG&E and KU merger and 2006 MISO withdrawal. The amounts at issue are generally waivers or credits granted to a limited number of Kentucky municipalities for either certain LG&E and KU or MISO transmission charges incurred for transmission service received. In 2019, the FERC granted LG&E's and KU's request to remove the ongoing credits, conditioned upon the implementation by LG&E and KU of a transition mechanism for certain existing power supply arrangements, which was subsequently filed, modified, and approved by the FERC in 2020 and 2021. In 2020, LG&E and KU and other parties filed appeals with the D.C. Circuit Court of Appeals regarding the FERC's orders on the elimination of the mitigation and required transition mechanism. On August 4, 2022, the D.C. Circuit Court of Appeals issued an order remanding the proceedings back to the FERC. LG&E and KU cannot predict the outcome of the proceedings at the FERC on remand. LG&E and KU currently receive recovery of the waivers and credits provided through other rate mechanisms and such rate recovery would be anticipated to be adjusted consistent with potential changes or terminations of the waivers and credits, as such become effective.

(PPL)

FY 2024 Gas Infrastructure, Safety and Reliability (ISR) Plan

On December 23, 2022, RIE filed its FY 2024 Gas ISR Plan with the RIPUC. At its January 20, 2023 Open Meeting, the RIPUC directed RIE to file supplemental budget and rate schedules to reflect an April 1 to March 31 fiscal year. The supplemental budget that was filed with the RIPUC on January 27, 2023 includes $187 million of capital investment spend. The supplemental rate schedules were filed on February 3, 2023. RIE and the Division reached an agreement on an approximately $171 million capital investment spending plan, and RIE filed a second supplemental budget on March 13, 2023. The RIPUC held a hearing on the plan on March 14, 2023. At an Open Meeting on March 29, 2023, the RIPUC approved the plan with an adjustment to the budget for the Proactive Main Replacement Program category resulting in a total approved FY 2024 Gas ISR Plan of $163 million for capital investment spend. On March 31, 2023, the RIPUC approved RIE's March 30, 2023 compliance filing for rates effective April 1, 2023.

FY 2024 Electric ISR Plan

On December 23, 2022, RIE filed its FY 2024 Electric ISR Plan with the RIPUC. At its January 20, 2023 Open Meeting, the RIPUC directed RIE to file supplemental budget and rate schedules to reflect an April 1 to March 31 fiscal year. The supplemental budget filed with the RIPUC on January 27, 2023 includes $176 million of capital investment spend, $14 million of vegetation operations and management (O&M) spend and $3 million of Other O&M spend. The supplemental rate schedules were filed on February 3, 2023. RIE filed second supplemental budget schedules on March 21, 2023, which includes $166 million of capital investment spend, $14 million of vegetation management O&M spend and $1 million of Other O&M spend. The RIPUC held hearings in March 2023, and on March 29, 2023, approved the plan with modifications to the proposed capital investment spend, resulting in a total approved FY 2024 Electric ISR Plan of $112 million for capital investment spend, $14 million for vegetation management O&M spend, and $1 million for Other O&M spend. On March 31, 2023, the RIPUC approved RIE's March 30, 2023 compliance filing for rates effective April 1, 2023.

Results of Operations

(PPL)

The "Statement of Income Analysis" discussion below describes significant changes in principal line items on the Statements of Income, comparing the three months ended March 31, 2023 with the same period in 2022. The "Segment Earnings" and "Adjusted Gross Margins" discussions provide a review of results by reportable segment. These discussions include non-GAAP financial measures, including "Earnings from Ongoing Operations" and "Adjusted Gross Margins," and provide explanations of the non-GAAP financial measures and a reconciliation of those measures to the most comparable GAAP measure.

(PPL Electric, LG&E and KU)

A "Statement of Income Analysis" is presented separately for PPL Electric, LG&E and KU. The "Statement of Income Analysis" discussion below describes significant changes in principal line items on the Statements of Income, comparing the three months ended March 31, 2023 with the same period in 2022.

(All Registrants)

The results for interim periods can be disproportionately influenced by numerous factors and developments and by seasonal variations. As such, the results of operations for interim periods do not necessarily indicate results or trends for the year or future periods.

PPL: Statement of Income Analysis, Segment Earnings and Adjusted Gross Margins

Statement of Income Analysis

Net income for the periods ended March 31 includes the following results:

									Three Months
																					2023						2022						$ Change
Operating Revenues																					$	2,415					$	1,782					$	633
Operating Expenses
Operation
Fuel																					201						212						(11)
Energy purchases																					734						352						382
Other operation and maintenance																					559						433						126
Depreciation																					313						271						42
Taxes, other than income																					110						60						50
Total Operating Expenses																					1,917						1,328						589
Other Income (Expense) - net																					30						—						30
Interest Expense																					164						107						57
Income Before Income Taxes																					364						347						17
Income Taxes																					79						74						5
Net Income																					$	285					$	273					$	12

Operating Revenues

The increase (decrease) in operating revenues was due to:

									Three Months
PPL Electric distribution price (a)									$	27
PPL Electric distribution volume (b)									(29)
PPL Electric PLR (c)									113
PPL Electric transmission formula rate (d)									8
LG&E volumes (b)									(43)
LG&E fuel and other energy prices (e)									11
LG&E economic relief billing credit, net of amortization of $0									6
KU volumes (b)									(45)
KU fuel and other energy prices (e)									9
KU economic relief billing credit, net of amortization of $0									3
Rhode Island Energy									565
Other									8
Total									$	633

(a)The increase was primarily due to reconcilable cost recovery mechanisms approved by the PAPUC.

(b)The decrease was primarily due to weather.

(c)The increase was primarily due to higher energy prices, lower volumes of shopping customers, partially offset by lower customer volumes including weather.

(d)The increase was primarily due to the point to point border rate settlement variance and returns on additional transmission capital investments, partially offset by a lower PPL zonal peak load billing factor in 2023.

(e)The increase was primarily due to higher recoveries of fuel and energy purchases due to higher commodity costs.

Fuel

Fuel decreased $11 million for the three months ended March 31, 2023 compared with 2022, primarily due to a $15 million decrease in volumes due to weather, partially offset by a $7 million increase in commodity costs at KU.

Energy Purchases

Energy purchases increased $382 million for the three months ended March 31, 2023 compared with 2022, primarily due to higher PLR prices of $124 million at PPL Electric, an increase in commodity costs at LG&E of $14 million and an additional $286 million due to the operations of RIE, partially offset by lower PLR volumes of $26 million at PPL Electric and a $22 million decrease in volumes at LG&E due to weather.

Other Operation and Maintenance

The increase (decrease) in other operation and maintenance was due to:

									Three Months
LG&E gas losses									$	(3)
LG&E vegetation management expenses									(3)
LG&E storm costs									(2)
KU plant outages									(3)
KU storm expenses									(3)
KU vegetation management expenses									(2)
Rhode Island Energy (a)									143
Other									(1)
Total									$	126

(a)Includes activity associated with the operations of RIE, along with integration and related costs. See Note 8 to the Financial Statements for additional information.

Depreciation

The increase (decrease) in depreciation was due to:

									Three Months
Additions to PP&E, net									$	5
Rhode Island Energy									39
Other									(2)
Total									$	42

Taxes, Other Than Income

The increase (decrease) in taxes, other than income was due to:

									Three Months
State gross receipts tax (a)									$	27
Domestic property tax expense (a)									22
Other									1
Total									$	50

(a)The increase was primarily due to the acquisition of RIE.

Other Income (Expense) - net

The increase (decrease) in other income (expense) - net was due to:

									Three Months
Defined benefit plans - non-service credits (Note 9)									$	7
Interest income									10
Other									13
Total									$	30

Interest Expense

The increase (decrease) in interest expense was due to:

									Three Months
Long-term debt (a)									$	34
Rhode Island Energy									17
Short-term debt									5
Other									1
Total									$	57

(a) The increase was primarily due to increased borrowings at LG&E, KU and PPL Electric, along with higher rates at PPL Electric and PPL Capital Funding.

Segment Earnings

PPL's Net Income by reportable segment for the periods ended March 31 was as follows:

									Three Months
																					2023						2022						$ Change
Kentucky Regulated (a)																					$	166					$	189					$	(23)
Pennsylvania Regulated																					138						143						(5)
Rhode Island Regulated																					54						—						54
Corporate and Other (a) (b)																					(73)						(59)						(14)
Net Income																					$	285					$	273					$	12

(a)The financing activity of LKE is presented in Corporate and Other beginning on January 1, 2023. Prior periods have been adjusted to reflect this change.

(b)Primarily represents financing and certain other costs incurred at the corporate level that have not been allocated or assigned to the segments, which are presented to reconcile segment information to PPL's consolidated results.

Earnings from Ongoing Operations

Management utilizes "Earnings from Ongoing Operations" as a non-GAAP financial measure that should not be considered as an alternative to net income, an indicator of operating performance determined in accordance with GAAP. PPL believes that Earnings from Ongoing Operations is useful and meaningful to investors because it provides management's view of PPL's earnings performance as another criterion in making investment decisions. In addition, PPL's management uses Earnings from Ongoing Operations in measuring achievement of certain corporate performance goals, including targets for certain executive incentive compensation. Other companies may use different measures to present financial performance.

Earnings from Ongoing Operations is adjusted for the impact of special items. Special items are presented in the financial tables on an after-tax basis with the related income taxes on special items separately disclosed. Income taxes on special items, when applicable, are calculated based on the statutory tax rate of the entity where the activity is recorded. Special items may include items such as:

• Gains and losses on sales of assets not in the ordinary course of business.

• Impairment charges.

• Significant workforce reduction and other restructuring effects.

• Acquisition and divestiture-related adjustments.

• Significant losses on early extinguishment of debt.

• Other charges or credits that are, in management's view, non-recurring or otherwise not reflective of the company's ongoing operations.

PPL's Earnings from Ongoing Operations by reportable segment for the periods ended March 31 were as follows:

									Three Months
																					2023						2022						$ Change
Kentucky Regulated (a)																					$	167					$	193					$	(26)
Pennsylvania Regulated																					137						143						(6)
Rhode Island Regulated																					71						—						71
Corporate and Other (a)																					(23)						(31)						8
Earnings from Ongoing Operations																					$	352					$	305					$	47

(a)The financing activity of LKE is presented in Corporate and Other beginning on January 1, 2023. Prior periods have been adjusted to reflect this change.

See "Reconciliation of Earnings from Ongoing Operations" below for a reconciliation of this non-GAAP financial measure to Net Income.

Kentucky Regulated Segment

The Kentucky Regulated segment consists primarily of the regulated electricity generation, transmission and distribution operations conducted by LG&E and KU, as well as LG&E's regulated distribution and sale of natural gas.

Net Income and Earnings from Ongoing Operations for the periods ended March 31 include the following results.

									Three Months
																					2023						2022 (a)						$ Change
Operating revenues																					$	960					$	1,004					$	(44)
Fuel																					201						212						(11)
Energy purchases																					90						96						(6)
Other operation and maintenance																					209						225						(16)
Depreciation																					173						169						4
Taxes, other than income																					23						23						—
Total operating expenses																					696						725						(29)
Other Income (Expense) - net																					3						(2)						5
Interest Expense																					58						47						11
Income Taxes																					43						41						2
Net Income																					166						189						(23)
Less: Special Items																					(1)						(4)						3
Earnings from Ongoing Operations																					$	167					$	193					$	(26)

(a)The financing activity of LKE is presented in Corporate and Other beginning on January 1, 2023. Prior periods have been adjusted to reflect this change.

The following after-tax gains (losses), which management considers special items, impacted the Kentucky Regulated segment's results and are excluded from Earnings from Ongoing Operations during the periods ended March 31.

			Income Statement Line Item												Three Months
																		2023						2022
Strategic corporate initiatives, net of tax of $0, $0 (a)			Other operation and maintenance																		$	(1)					$	—
Strategic corporate initiatives, net of tax of $0, $1 (a)			Other Income (Expense) - net																		—						(4)
Total Special Items																					$	(1)					$	(4)

(a)Costs incurred related to PPL's corporate centralization efforts.

The changes in the components of the Kentucky Regulated segment's results between these periods were due to the factors set forth below, which reflect amounts classified as Kentucky Adjusted Gross Margins and the items that management considers special on separate lines and not in their respective Statement of Income line items.

									Three Months
Kentucky Adjusted Gross Margins									$	(26)
Other operation and maintenance									15
Depreciation									(4)
Taxes, other than income									1
Other Income (Expense) - net									(1)
Interest Expense									(10)
Income Taxes									(1)
Earnings from Ongoing Operations									(26)
Special items, after-tax									3
Net Income									$	(23)

• See "Adjusted Gross Margins - Changes in Adjusted Gross Margins" for an explanation of Kentucky Adjusted Gross Margins.

• Lower other operation and maintenance expense primarily due to a $5 million decrease in vegetation management expenses, a $5 million decrease in storm expenses and a $3 million decrease in outage expenses.

• Higher interest expense primarily due to increased borrowings.

Pennsylvania Regulated Segment

The Pennsylvania Regulated segment includes the regulated electricity transmission and distribution operations of PPL Electric.

Net Income and Earnings from Ongoing Operations for the periods ended March 31 include the following results.

									Three Months
																					2023						2022						$ Change
Operating revenues																					$	891					$	775					$	116
Energy purchases																					358						256						102
Other operation and maintenance																					162						160						2
Depreciation																					99						98						1
Taxes, other than income																					44						37						7
Total operating expenses																					663						551						112
Other Income (Expense) - net																					12						8						4
Interest Expense																					57						39						18
Income Taxes																					45						50						(5)
Net Income																					138						143						(5)
Less: Special Items																					1						—						1
Earnings from Ongoing Operations																					$	137					$	143					$	(6)

The following after-tax gains (losses), which management considers special items, impacted the Pennsylvania Regulated segment's results and are excluded from Earnings from Ongoing Operations during the periods ended March 31.

			Income Statement Line Item												Three Months
																		2023						2022
PA tax rate change (a)			Income Taxes																		$	1					$	—
Total Special Items																					$	1					$	—

(a)Impact of Pennsylvania state tax reform. See Note 5 to the Financial Statements for additional information.

The changes in the components of the Pennsylvania Regulated segment's results between these periods are due to the factors set forth below, which reflect amounts classified as Pennsylvania Adjusted Gross Margins and the items that management considers special on separate lines and not in their respective Statement of Income line items.

									Three Months
Pennsylvania Adjusted Gross Margins									$	4
Other operation and maintenance									(2)
Depreciation									2
Taxes, other than income									—
Other Income (Expense) - net									4
Interest Expense									(18)
Income Taxes									4
Earnings from Ongoing Operations									(6)
Special Items, after tax									1
Net Income									$	(5)

• See "Adjusted Gross Margins - Changes in Adjusted Gross Margins" for an explanation of Pennsylvania Adjusted Gross Margins.

• Higher interest expense primarily due to increased borrowings and higher rates.

Rhode Island Regulated Segment

The Rhode Island Regulated segment consists primarily of the regulated electricity transmission and distribution operations and

regulated distribution and sale of natural gas conducted by RIE.

Net Income and Earnings from Ongoing Operations from acquisition through the periods ended March 31 include the following results.

									Three Months
																					2023						2022						$ Change
Operating revenues																					$	565					$	—					$	565
Energy purchases																					286						—						286
Other operation and maintenance																					120						—						120
Depreciation																					39						—						39
Taxes, other than income																					43						—						43
Total operating expenses																					488						—						488
Other Income (Expense) - net																					10						—						10
Interest Expense																					19						—						19
Income Taxes																					14						—						14
Net Income																					54						—						54
Less: Special Items																					(17)						—						(17)
Earnings from Ongoing Operations																					$	71					$	—					$	71

The following after-tax gains (losses), which management considers special items, impacted the Rhode Island Regulated segment's results and are excluded from Earnings from Ongoing Operations during the periods ended March 31.

			Income Statement Line Item						Three Months
						2023												2022
Acquisition integration, net of tax of $5, $0 (a)			Other operation and maintenance						$	(17)											$	—
Total Special Items									$	(17)											$	—

(a)Certain TSA costs related to IT for systems that will not be part of PPL’s ongoing operations.

Reconciliation of Earnings from Ongoing Operations

The following tables contain after-tax gains (losses), in total, which management considers special items, that are excluded from Earnings from Ongoing Operations and a reconciliation to PPL's "Net Income" for the periods ended March 31.

									2023 Three Months
									KY Regulated						PA Regulated						RI Regulated						Corporate and Other												Total
Net Income									$	166					$	138					$	54					$	(73)											$	285
Less: Special Items (expense) benefit:
Talen litigation costs, net of tax of $0 (a)									—						—						—						(1)												(1)
Strategic corporate initiatives, net of tax of $0, $0 (b)									(1)						—						—						(1)												(2)
Acquisition integration, net of tax of $5, $12 (c)									—						—						(17)						(44)												(61)
PA tax rate change									—						1						—						—												1
Sale of Safari Holdings, net of tax of $0 (d)									—						—						—						(4)												(4)
Total Special Items									(1)						1						(17)						(50)												(67)
Earnings from Ongoing Operations									$	167					$	137					$	71					$	(23)											$	352
									2022 Three Months
									KY Regulated (e)						PA Regulated						RI Regulated						Corporate and Other (e)												Total
Net Income									$	189					$	143					$	—					$	(59)											$	273
Less: Special Items (expense) benefit:
Talen litigation costs, net of tax of $1 (a)									—						—						—						(4)												(4)
Strategic corporate initiatives, net of tax of $1, $1 (b)									(4)						—						—						(4)												(8)
Acquisition integration, net of tax of $6 (c)									—						—						—						(21)												(21)
Solar panel impairment, net of tax of $0									—						—						—						1												1
Total Special Items									(4)						—						—						(28)												(32)
Earnings from Ongoing Operations									$	193					$	143					$	—					$	(31)											$	305

(a)PPL incurred legal expenses related to litigation with its former affiliate, Talen Montana. See Note 10 to the Financial Statements for additional information.

(b)Costs related to PPL’s strategic repositioning and corporate centralization efforts.

(c)Primarily integration and related costs associated with the acquisition of Rhode Island Energy.

(d)Final closing adjustments related to the sale of Safari Holdings. See Note 8 to the Financial Statements for additional information.

(e)The financing activity of LKE is presented in Corporate and Other beginning on January 1, 2023. Prior periods have been adjusted to reflect this change.

Adjusted Gross Margins

Management also utilizes the following non-GAAP financial measures as indicators of performance for its businesses:

• "Kentucky Adjusted Gross Margins" is a single financial performance measure of the electricity generation, transmission and distribution operations of the Kentucky Regulated segment, as well as the Kentucky Regulated segment's distribution and sale of natural gas. In calculating this measure, fuel, energy purchases and certain variable costs of production (recorded in "Other operation and maintenance" on the Statements of Income) are deducted from operating revenues. In addition, certain other expenses, recorded in "Other operation and maintenance," "Depreciation" and "Taxes, other than income" on the Statements of Income, associated with approved cost recovery mechanisms are offset against the recovery of those expenses, which are included in revenues. These mechanisms allow for direct recovery of these expenses and, in some cases, returns on capital investments and performance incentives. As a result, this measure represents the net revenues from electricity and gas operations.

• "Pennsylvania Adjusted Gross Margins" is a single financial performance measure of the electricity transmission and distribution operations of the Pennsylvania Regulated segment. In calculating this measure, utility revenues and expenses associated with approved recovery mechanisms, including energy provided as a PLR, are offset with minimal impact on earnings. Costs associated with these mechanisms are recorded in "Energy purchases," "Other operation and maintenance" (which are primarily Act 129, Storm Damage and Universal Service program costs), "Depreciation" (which is primarily related to the Act 129 Smart Meter program) and "Taxes, other than income" (which is primarily gross receipts tax) on the Statements of Income. This measure represents the net revenues from the Pennsylvania Regulated segment's electricity delivery operations.

• "Rhode Island Adjusted Gross Margins" is a single financial performance measure of the electricity transmission and distribution operations of the Rhode Island Regulated segment, as well as the Rhode Island Regulated segment's distribution and sale of natural gas. In calculating this measure, utility revenues and expenses associated with approved

recovery mechanisms are offset with minimal impact on earnings. Costs associated with these mechanisms are recorded in "Energy purchases," "Other operation and maintenance" (which are primarily regional network transmission service, energy efficiency and storm cost related) and "Taxes, other than income" (which is primarily gross earnings tax) on the Statements of Income. This measure represents the net revenues from Rhode Island Regulated segment's electricity and gas delivery operations.

These measures are not intended to replace "Operating Income," which is determined in accordance with GAAP, as an indicator of overall operating performance. Other companies may use different measures to analyze and report their results of operations. Management believes these measures provide additional useful criteria to make investment decisions. These performance measures are used, in conjunction with other information, by senior management and PPL's Board of Directors to manage operations and analyze actual results compared with budget.

Changes in Adjusted Gross Margins

The following table shows Adjusted Gross Margins by PPL's reportable segment and by component, as applicable for the periods ended March 31 as well as the change between periods. The factors that gave rise to the changes are described following the table.

									Three Months
																					2023						2022						$ Change
Kentucky Regulated
Kentucky Adjusted Gross Margins																					$	633					$	659					$	(26)
Pennsylvania Regulated
Pennsylvania Adjusted Gross Margins
Distribution																					$	261					$	265					$	(4)
Transmission																					191						183						8
Total Pennsylvania Adjusted Gross Margins																					$	452					$	448					$	4
Rhode Island Regulated
Rhode Island Adjusted Gross Margins																					$	251					$	—					$	251

Kentucky Adjusted Gross Margins

Kentucky Adjusted Gross Margins decreased for the three months ended March 31, 2023 compared with 2022, driven by lower sales volumes of $45 million primarily related to weather, partially offset by a $9 million increase due to the expiration of the economic relief billing credit in June 2022 and $5 million of higher demand revenues.

Pennsylvania Adjusted Gross Margins

Distribution

Distribution Adjusted Gross Margins decreased for the three months ended March 31, 2023 compared with 2022, primarily due to unfavorable weather of $16 million, partially offset by $11 million of higher returns on distribution system improvement capital investments.

Transmission

Transmission Adjusted Gross Margins increased for the three months ended March 31, 2023 compared with 2022, primarily due to a $9 million point to point border rate settlement variance. A significant portion of the settlement variance will be reconciled throughout the remainder of the year through the FERC formula rate accrual.

Rhode Island Adjusted Gross Margins

Rhode Island Adjusted Gross Margins increased for the three months ended March 31, 2023 compared with 2022 due to the acquisition of Narragansett Electric on May 25, 2022.

Reconciliation of Adjusted Gross Margins

The following tables contain the components from the Statement of Income that are included in the non-GAAP financial measures and a reconciliation to PPL's "Operating Income" for the periods ended March 31.

									2023 Three Months
									Kentucky Adjusted Gross Margins						Pennsylvania Adjusted Gross Margins						Rhode Island Adjusted Gross Margins						Other (a)						Operating Income (b)
Operating Revenues									$	960					$	891					$	565					$	(1)					$	2,415
Operating Expenses
Fuel									201						—						—						—						201
Energy purchases									90						358						286						—						734
Other operation and maintenance									22						29						8						500						559
Depreciation									14						9						—						290						313
Taxes, other than income									—						43						20						47						110
Total Operating Expenses									327						439						314						837						1,917
Total									$	633					$	452					$	251					$	(838)					$	498
									2022 Three Months
									Kentucky Adjusted Gross Margins						Pennsylvania Adjusted Gross Margins						Rhode Island Adjusted Gross Margins						Other (a)						Operating Income (b)
Operating Revenues									$	1,004					$	775					$	—					$	3					$	1,782
Operating Expenses
Fuel									212						—						—						—						212
Energy purchases									96						256						—						—						352
Other operation and maintenance									24						29						—						380						433
Depreciation									13						6						—						252						271
Taxes, other than income									—						36						—						24						60
Total Operating Expenses									345						327						—						656						1,328
Total									$	659					$	448					$	—					$	(653)					$	454

(a)Represents amounts excluded from Adjusted Gross Margins.

(b)As reported on the Statements of Income.

PPL Electric: Statement of Income Analysis

Statement of Income Analysis

Net income for the periods ended March 31 includes the following results.

									Three Months
																					2023						2022						$ Change
Operating Revenues																					$	891					$	775					$	116
Operating Expenses
Operation
Energy purchases																					358						256						102
Other operation and maintenance																					162						160						2
Depreciation																					99						98						1
Taxes, other than income																					44						37						7
Total Operating Expenses																					663						551						112
Other Income (Expense) - net																					12						6						6
Interest Income from Affiliate																					—						2						(2)
Interest Expense																					57						39						18
Income Taxes																					45						50						(5)
Net Income																					$	138					$	143					$	(5)

Operating Revenues

The increase (decrease) in operating revenues was due to:

									Three Months
Distribution price (a)									$	27
Distribution volume (b)									(29)
PLR (c)									113
Transmission formula rate (d)									8
Other									(3)
Total									$	116

(a)The increase was primarily due to reconcilable cost recovery mechanisms approved by the PAPUC.

(b)The decrease was primarily due to weather.

(c)The increase was primarily due to higher energy prices, lower volumes of shopping customers, partially offset by lower customer volumes including weather.

(d)The increase was primarily due to the point to point border rate settlement variance and returns on additional transmission capital investments, partially offset by a lower PPL zonal peak load billing factor in 2023.

Energy Purchases

Energy purchases increased $102 million for the three months ended March 31, 2023 compared with 2022. This increase was primarily due to higher PLR prices of $124 million, partially offset by lower PLR volumes of $26 million.

Interest Expense

Interest expense increased $18 million for the three months ended March 31, 2023 compared with 2022, primarily due to increased borrowings and higher rates.

LG&E: Statement of Income Analysis

Statement of Income Analysis

Net income for the periods ended March 31 includes the following results.

									Three Months
																					2023						2022						$ Change
Operating Revenues
Retail and wholesale																					$	461					$	481					$	(20)
Electric revenue from affiliate																					13						12						1
Total Operating Revenues																					474						493						(19)
Operating Expenses
Operation
Fuel																					79						81						(2)
Energy purchases																					84						91						(7)
Energy purchases from affiliate																					1						2						(1)
Other operation and maintenance																					91						100						(9)
Depreciation																					75						74						1
Taxes, other than income																					12						12						—
Total Operating Expenses																					342						360						(18)
Other Income (Expense) - net																					2						(1)						3
Interest Expense																					25						20						5
Income Taxes																					23						19						4
Net Income																					$	86					$	93					$	(7)

Operating Revenues

The increase (decrease) in operating revenues was due to:

									Three Months
Fuel and other energy prices (a)									$	11
Volumes (b)									(44)
Economic relief billing credit, net of amortization of $0									6
Other									8
Total									$	(19)

(a)The increase was primarily due to higher recoveries of fuel and energy purchases due to higher commodity costs.

(b)The decrease was primarily due to weather.

Energy Purchases

Energy purchases decreased $7 million for the three months ended March 31, 2023 compared with 2022, primarily due to a $22 million decrease in volumes due to weather, partially offset by a $14 million increase in commodity costs.

Other Operation and Maintenance

Other operation and maintenance decreased $9 million for the three months ended March 31, 2023 compared with 2022, primarily due to a $3 million decrease in gas losses, a $3 million decrease in vegetation management expenses and a $2 million decrease in storm restoration expenses.

Interest Expense

Interest expense increased $5 million for the three months ended March 31, 2023 compared with 2022, primarily due to increased borrowings.

KU: Statement of Income Analysis

Statement of Income Analysis

Net income for the periods ended March 31 includes the following results.

									Three Months
																					2023						2022						$ Change
Operating Revenues
Retail and wholesale																					$	498					$	523					$	(25)
Electric revenue from affiliate																					1						2						(1)
Total Operating Revenues																					499						525						(26)
Operating Expenses
Operation
Fuel																					122						131						(9)
Energy purchases																					6						5						1
Energy purchases from affiliate																					13						12						1
Other operation and maintenance																					109						113						(4)
Depreciation																					98						95						3
Taxes, other than income																					10						11						(1)
Total Operating Expenses																					358						367						(9)
Other Income (Expense) - net																					2						—						2
Interest Expense																					33						27						6
Income Taxes																					22						24						(2)
Net Income																					$	88					$	107					$	(19)

Operating Revenues

The increase (decrease) in operating revenues was due to:

									Three Months
Fuel and other energy prices (a)									$	9
Economic relief billing credit, net of amortization of $0									3
Volumes (b)									(46)
Other									8
Total									$	(26)

(a)The increase was primarily due to higher recoveries of fuel and energy purchases due to higher commodity costs.

(b)The decrease was primarily due to weather.

Fuel

Fuel decreased $9 million for the three months ended March 31, 2023 compared with 2022, primarily due to a $15 million decrease in volumes due to weather, partially offset by a $7 million increase in commodity costs.

Interest Expense

Interest expense increased $6 million for the three months ended March 31, 2023 compared with 2022, primarily due to increased borrowings.

Financial Condition

The remainder of this Item 2 in this Form 10-Q is presented on a combined basis, providing information, as applicable, for all Registrants.

Liquidity and Capital Resources

(All Registrants)

The Registrants had the following at:

			PPL						PPL Electric						LG&E						KU
March 31, 2023
Cash and cash equivalents			$	460					$	56					$	28					$	9
Short-term debt			—						—						—						—
Long-term debt due within one year			104						90						—						13
Notes payable to affiliates									—						—						9
December 31, 2022
Cash and cash equivalents			$	356					$	25					$	93					$	21
Short-term debt			985						145						179						101
Long-term debt due within one year			354						340						—						13
Notes payable to affiliates									—						—						—

(PPL)

The Statements of Cash Flows separately report the cash flows of discontinued operations. The "Operating Activities", "Investing Activities" and "Financing Activities" sections below include only the cash flows of continuing operations.

(All Registrants)

Net cash provided by (used in) operating, investing and financing activities for the three month periods ended March 31, and the changes between periods, were as follows.

			PPL						PPL Electric						LG&E						KU
2023
Operating activities			$	430					$	39					$	264					$	214
Investing activities			(503)						(156)						(95)						(141)
Financing activities			177						148						(234)						(85)
2022
Operating activities			$	502					$	122					$	218					$	219
Investing activities			(427)						15						(103)						(129)
Financing activities			603						(112)						(115)						(95)
Change - Cash Provided (Used)
Operating activities			$	(72)					$	(83)					$	46					$	(5)
Investing activities			(76)						(171)						8						(12)
Financing activities			(426)						260						(119)						10

Operating Activities

The components of the change in cash provided by (used in) operating activities for the three months ended March 31, 2023 compared with 2022 were as follows.

			PPL						PPL Electric						LG&E						KU
Change - Cash Provided (Used)
Net income			$	12					$	(5)					$	(7)					$	(19)
Non-cash components			73						(13)						8						4
Working capital			(76)						(29)						50						17
Defined benefit plan funding			—						(1)						—						—
Other operating activities			(81)						(35)						(5)						(7)
Total			$	(72)					$	(83)					$	46					$	(5)

(PPL)

PPL's cash provided by operating activities in 2023 decreased $72 million compared with 2022.

• Net income increased $12 million between the periods and included an increase in non-cash charges of $73 million. The increase in non-cash charges was primarily due to an increase in depreciation (primarily due to Rhode Island Energy) and an increase in deferred income taxes and investment tax credits (primarily related to book versus tax plant timing differences and Rhode Island Energy).

• The $76 million decrease in cash from changes in working capital was primarily due to a decrease in accounts receivable (primarily due to pricing), a decrease in accounts payable (primarily due to timing of payments) and a decrease in taxes payable (primarily due to timing of payments), partially offset by an increase in unbilled revenues (primarily due to weather).

• The $81 million decrease in cash provided by other operating activities was driven primarily by other assets (primarily related to an increase in costs associated with work optimization and management projects).

(PPL Electric)

PPL Electric's cash provided by operating activities in 2023 decreased $83 million compared with 2022.

• Net income decreased $5 million between the periods and included a decrease in non-cash components of $13 million. The decrease in non-cash components was primarily due to a decrease in deferred income taxes and investment tax credits (primarily related to book versus tax plant timing differences).

• The $29 million decrease in cash from changes in working capital was primarily due to a decrease in accounts receivable (primarily due to pricing) and a decrease in regulatory assets (primarily due to a decrease in rate recoveries driven by increased energy prices), partially offset by an increase in regulatory liabilities (primarily due to prior years' refunds to customers related to the transmission formula rate return on equity reduction).

• The $35 million decrease in cash provided by other operating activities was driven primarily by other assets (primarily related to an increase in costs associated with work optimization and management projects).

(LG&E)

LG&E's cash provided by operating activities in 2023 increased $46 million compared with 2022.

• Net income decreased $7 million between the periods and included an increase in non-cash components of $8 million. The increase in non-cash components was driven by an increase in amortization expense and an increase in deferred income tax expense (primarily due to lower amortization of excess deferred taxes).

• The increase in cash from changes in working capital was primarily due to an increase in accounts payable with affiliates (primarily due to timing of payments), a decrease in accounts receivable and unbilled revenues (primarily due to weather), a decrease in net regulatory assets (primarily due to the timing of rate recovery mechanisms) and a decrease in accounts receivable from affiliates (primarily due to timing of payments), partially offset by a decrease in accounts payable and taxes payable (primarily due to timing of payments).

• The decrease in cash provided by other operating activities was driven by an increase in other assets (primarily related to deferred storm costs recorded as noncurrent regulatory assets).

(KU)

KU's cash provided by operating activities in 2023 decreased $5 million compared with 2022.

• Net income decreased $19 million between the periods and included an increase in non-cash components of $4 million. The increase in non-cash components was driven by an increase in depreciation expense (primarily due to additional assets placed into service, net of retirements).

• The increase in cash from changes in working capital was primarily due to a decrease in accounts receivable and unbilled revenue (primarily due to weather), an increase in accounts payable with affiliates (primarily due to timing of payments) and a decrease in net regulatory assets (primarily due to the timing of rate recovery mechanisms), partially offset by a decrease in taxes payable and accounts payable (primarily due to timing of payments), and an increase in fuels, materials and supplies (primarily due to lower generation).

• The decrease in cash provided by other operating activities was driven by an increase in other assets (primarily related to deferred storm costs recorded as noncurrent regulatory assets).

Investing Activities

(All Registrants)

The components of the change in cash provided by (used in) investing activities for the three months ended March 31, 2023 compared with 2022 were as follows.

			PPL						PPL Electric						LG&E						KU
Change - Cash Provided (Used)
Expenditures for PP&E			$	(72)					$	32					$	13					$	(12)
Notes receivable from affiliate			—						(203)						(5)						—
Other investing activities			(4)						—						—						—
Total			$	(76)					$	(171)					$	8					$	(12)

For PPL, the increase in expenditures for PP&E was due to project expenditures at RIE and an increase in project expenditures at KU, offset by lower project expenditures at PPL Electric and LG&E. The increase in expenditures at KU was primarily due to higher spending on various projects that are not individually significant.

For PPL Electric, the change in "Notes receivable from affiliate" activity resulted from payments received on the short-term note between affiliates in 2022, issued to support general corporate purposes. See Note 11 to the Financial Statements for further discussion of intercompany borrowings.

Financing Activities

(All Registrants)

The components of the change in cash provided by (used in) financing activities for the three months ended March 31, 2023 compared with 2022 were as follows.

			PPL						PPL Electric						LG&E						KU
Change - Cash Provided (Used)
Debt issuance/retirement, net			$	1,377					$	179					$	99					$	99
Dividends			135						(2)						44						55
Capital contributions/distributions, net			—						240						(120)						(54)
Change in short-term debt, net			(1,901)						(145)						(463)						(386)
Net increase (decrease) in notes payable with affiliate			—						—						324						299
Other financing activities			(37)						(12)						(3)						(3)
Total			$	(426)					$	260					$	(119)					$	10

See Note 7 to the Financial Statements in this Form 10-Q for information on 2023 short-term and long-term debt activity, equity transactions and PPL dividends. See Note 8 to the Financial Statements in the Registrants' 2022 Form 10-K for information on 2022 activity.

Credit Facilities

The Registrants maintain credit facilities to enhance liquidity, provide credit support and provide a backstop to commercial paper programs. Amounts borrowed under these credit facilities are reflected in "Short-term debt" on the Balance Sheets except for borrowings under PPL Electric's, LG&E's, and KU's term loan agreements, which are reflected in "Long-term debt" on the Balance Sheets. At March 31, 2023, the total committed borrowing capacity under credit facilities and the borrowings under these facilities were:

External

			Committed Capacity						Borrowed						Letters of Credit and Commercial Paper Issued						Unused Capacity
PPL Capital Funding Credit Facilities			$	1,350					$	—					$	—					$	1,350
PPL Electric Credit Facility			650						—						1						649
LG&E Credit Facilities			500						—						—						500
KU Credit Facilities			400						—						—						400
Total Credit Facilities (a)			$	2,900					$	—					$	1					$	2,899

(a)The commitments under the credit facilities are provided by a diverse bank group, with no one bank and its affiliates providing an aggregate commitment of more than the following percentages of the total committed capacity: PPL - 8%, PPL Electric - 7%, LG&E - 7% and KU - 7%.

See Note 7 to the Financial Statements for further discussion of the Registrants' credit facilities.

Intercompany (LG&E and KU)

			Committed Capacity						Borrowed						Commercial Paper Issued						Unused Capacity
LG&E Money Pool (a)			$	750					$	—					$	—					$	750
KU Money Pool (a)			650						9						—						641

(a)LG&E and KU participate in an intercompany money pool agreement whereby LKE and/or KU make available to LG&E, and LKE and/or LG&E make available to KU funds up to the difference between LG&E's and KU's FERC borrowing limit and LG&E's and KU's commercial paper issued, at an interest rate based on the lower of a market index of commercial paper issues and two additional rate options based on LIBOR.

See Note 11 to the Financial Statements for further discussion of intercompany credit facilities.

Commercial Paper (All Registrants)

The Registrants maintain commercial paper programs to provide an additional financing source to fund short-term liquidity needs, as necessary. Commercial paper issuances, included in "Short-term debt" on the Balance Sheets, are supported by the respective Registrant's credit facility. The following commercial paper programs were in place at March 31, 2023:

			Capacity						Commercial Paper Issuances						Unused Capacity
PPL Capital Funding			$	1,350					$	—					$	1,350
PPL Electric			650						—						650
LG&E			500						—						500
KU			400						—						400
Total PPL			$	2,900					$	—					$	2,900

Long-term Debt (All Registrants)

See Note 7 to the Financial Statements for information regarding the Registrants’ long-term debt activities.

Forecasted Uses of Cash (PPL)

Common Stock Dividends

In February 2023, PPL declared a quarterly common stock dividend, payable April 3, 2023, of 24.0 cents per share. Future dividends, declared at the discretion of the Board of Directors, will depend upon future earnings, cash flows, financial and legal requirements and other factors.

Rating Agency Actions

(All Registrants)

Moody's and S&P periodically review the credit ratings of the debt of the Registrants and their subsidiaries. Based on their respective independent reviews, the rating agencies may make certain ratings revisions or ratings affirmations.

A credit rating reflects an assessment by the rating agency of the creditworthiness associated with an issuer and particular securities that it issues. The credit ratings of the Registrants and their subsidiaries are based on information provided by the Registrants and other sources. The ratings of Moody's and S&P are not a recommendation to buy, sell or hold any securities of the Registrants or their subsidiaries. Such ratings may be subject to revisions or withdrawal by the agencies at any time and should be evaluated independently of each other and any other rating that may be assigned to the securities.

The credit ratings of the Registrants and their subsidiaries affect their liquidity, access to capital markets and cost of borrowing under their credit facilities. A downgrade in the Registrants' or their subsidiaries' credit ratings could result in higher borrowing costs and reduced access to capital markets. The Registrants and their subsidiaries have no credit rating triggers that would result in the reduction of access to capital markets or the acceleration of maturity dates of outstanding debt.

The rating agencies did not take any actions related to the Registrants and their subsidiaries in the first quarter of 2023.

Ratings Triggers

(PPL, LG&E and KU)

Various derivative and non-derivative contracts, including contracts for the sale and purchase of electricity and fuel, commodity transportation and storage, and interest rate instruments, contain provisions that require the posting of additional collateral or permit the counterparty to terminate the contract, if PPL's, LG&E's or KU's or their subsidiaries' credit rating, as applicable, were to fall below investment grade. See Note 14 to the Financial Statements for a discussion of "Credit Risk-Related Contingent Features," including a discussion of the potential additional collateral requirements for PPL for derivative contracts in a net liability position at March 31, 2023.

(All Registrants)

For additional information on the Registrants' liquidity and capital resources, see "Item 7. Combined Management's Discussion and Analysis of Financial Condition and Results of Operations," in the Registrants' 2022 Form 10-K.

Risk Management (All Registrants)

Market Risk

See Notes 13 and 14 to the Financial Statements for information about the Registrants' risk management objectives, valuation techniques and accounting designations.

The forward-looking information presented below provides estimates of what may occur in the future, assuming certain adverse market conditions and model assumptions. Actual future results may differ materially from those presented. These are not precise indicators of expected future losses, but are rather only indicators of possible losses under normal market conditions at a given confidence level.

Interest Rate Risk

PPL and its subsidiaries issue debt to finance their operations, which exposes them to interest rate risk. A variety of financial derivative instruments are utilized to adjust the mix of fixed and floating interest rates in their debt portfolios, adjust the duration of the debt portfolios and lock in benchmark interest rates in anticipation of future financing, when appropriate. Risk limits under PPL's risk management program are designed to balance risk exposure to volatility in interest expense and changes in the fair value of the debt portfolio due to changes in benchmark interest rates. In addition, the interest rate risk of certain subsidiaries is potentially mitigated as a result of the existing regulatory framework or the timing of rate cases.

The following interest rate hedges were outstanding at March 31, 2023.

			Exposure Hedged						Fair Value, Net - Asset (Liability) (a)						Effect of a 10% Adverse Movement in Rates (b)						Maturities Ranging Through
PPL and LG&E
Economic hedges
Interest rate swaps (c)			$	64					$	(8)					$	(1)					2033

(a)Includes accrued interest, if applicable.

(b)Effects of adverse movements decrease assets or increase liabilities, as applicable, which could result in an asset becoming a liability. Sensitivities represent a 10% adverse movement in interest rates.

(c)Realized changes in the fair value of such economic hedges are recoverable through regulated rates and any subsequent changes in the fair value of these derivatives are included in regulatory assets or regulatory liabilities.

The Registrants are exposed to a potential increase in interest expense and to changes in the fair value of their debt portfolios. The estimated impact of a 10% adverse movement in interest rates on the fair value of debt at March 31, 2023 is shown below.

			10% Adverse Movement in Rates on Fair Value of Debt
PPL			$	604
PPL Electric			254
LG&E			97
KU			139

Commodity Price Risk

PPL is exposed to commodity price risk through its subsidiaries as described below.

• PPL Electric is required to purchase electricity to fulfill its obligation as a PLR. Potential commodity price risk is mitigated through its PAPUC-approved cost recovery mechanism and full-requirement supply agreements to serve its PLR customers which transfer the risk to energy suppliers.

• LG&E's and KU's rates include certain mechanisms for fuel, fuel-related expenses and energy purchases. In addition, LG&E's rates include a mechanism for natural gas supply costs. These mechanisms generally provide for timely recovery of market price fluctuations associated with these costs.

• RIE utilizes derivative instruments pursuant to its RIPUC-approved plan to manage commodity price risk associated with its natural gas purchases. RIE's commodity price risk management strategy is to reduce fluctuations in firm gas sales prices to its customers. RIE's costs associated with derivatives instruments are recoverable through its RIPUC-approved cost recovery mechanisms. RIE is required to purchase electricity to fulfill its obligation to provide Last Resort Service (LRS). Potential commodity price risk is mitigated through its RIPUC-approved cost recovery mechanisms and full requirements service agreements to serve LRS customers, which transfer the risk to energy suppliers. RIE is required to contract through long-term agreements for clean energy supply under the Rhode Island Renewable Energy Growth program and Long-term Clean Energy Standard. Potential commodity price risk is mitigated through its RIPUC-approved cost recovery mechanisms, which true-up cost differences between contract prices and market prices.

Volumetric Risk

Volumetric risk is the risk related to the changes in volume of retail sales due to weather, economic conditions or other factors. PPL is exposed to volumetric risk through its subsidiaries as described below:

• PPL Electric, LG&E and KU are exposed to volumetric risk on retail sales, mainly due to weather and other economic conditions for which there is limited mitigation between rate cases.

• RIE is exposed to volumetric risk, which is significantly mitigated by regulatory mechanisms. RIE's electric and gas distribution rates both have a revenue decoupling mechanism, which allows for annual adjustments to RIE's delivery rates.

Inflation and Supply Chain Related Risk

PPL and its subsidiaries continue to monitor the impact of inflation and supply chain disruptions. PPL and its subsidiaries monitor the cost of fuel, construction, regulatory and environmental compliance costs and other costs. Mechanisms are in place to mitigate the risk of inflationary effects and supply chain disruptions, to the extent possible, but increased costs and supply chain disruptions may directly or indirectly affect our ongoing operations. These mechanisms include pricing strategies, productivity improvements and cost reductions in order to ensure that the Registrants are able to procure the necessary materials and other resources needed to maintain services in a safe and reliable manner, and to grow infrastructure consistent with the capital expenditure plan. For additional information see "Forward-looking Information” at the beginning of this report and “Item 1A. Risk Factors" of the Registrants' 2022 Form 10-K.

Credit Risk

Credit risk is the potential loss that may be incurred due to a counterparty's non-performance.

PPL is exposed to credit risk from "in-the-money" transactions with counterparties as well as additional credit risk through certain of its subsidiaries, as discussed below.

In the event a supplier of PPL, PPL Electric, LG&E or KU defaults on its contractual obligation, those Registrants would be required to seek replacement power or replacement fuel in the market. In general, subject to regulatory review or other processes, appropriate incremental costs incurred by these entities would be recoverable from customers through applicable rate mechanisms, thereby mitigating the financial risk for these entities.

PPL and its subsidiaries have credit policies in place to manage credit risk, including the use of an established credit approval process, daily monitoring of counterparty positions and the use of master netting agreements or provisions. These agreements generally include credit mitigation provisions, such as margin, prepayment or collateral requirements. PPL and its subsidiaries may request additional credit assurance, in certain circumstances, in the event that the counterparties' credit ratings fall below investment grade, their tangible net worth falls below specified percentages or their exposures exceed an established credit limit.

See Notes 13 and14 to the Financial Statements in this Form 10-Q and "Item 7. Combined Management's Discussion and Analysis of Financial Condition and Results of Operations - Financial Condition - Risk Management - Credit Risk" in the Registrants' 2022 Form 10-K for additional information

Related Party Transactions (All Registrants)

The Registrants are not aware of any material ownership interests or operating responsibility by senior management in outside partnerships, including leasing transactions with variable interest entities, or other entities doing business with the Registrants. See Note 11 to the Financial Statements for additional information on related party transactions for PPL Electric, LG&E and KU.

Acquisitions, Development and Divestitures (All Registrants)

The Registrants from time to time evaluate opportunities for potential acquisitions, divestitures and development projects. Development projects are reexamined based on market conditions and other factors to determine whether to proceed with, modify or terminate the projects. Any resulting transactions may impact future financial results. See Note 8 to the Financial Statements for additional information on the share purchase agreement to acquire Narragansett Electric.

Environmental Matters (All Registrants)

Extensive federal, state and local environmental laws and regulations are applicable to the Registrants' air emissions, water discharges and the management of hazardous and solid waste, as well as other aspects of the Registrants' businesses. The costs of compliance or alleged non-compliance cannot be predicted with certainty but could be significant. In addition, costs may increase significantly if the requirements or scope of environmental laws or regulations, or similar rules, are expanded or changed. Costs may take the form of increased capital expenditures or operating and maintenance expenses, monetary fines, penalties or other restrictions. Many of these environmental law considerations are also applicable to the operations of key suppliers, or customers, such as coal producers and industrial power users, and may impact the costs for their products or their demand for the Registrants' services. Increased capital and operating costs are expected to be subject to rate recovery. The Registrants can provide no assurances as to the ultimate outcome of future environmental or rate proceedings before regulatory authorities.

See "Environmental Matters" in Item 1. "Business" in the Registrants' 2022 Form 10-K for information about environmental laws and regulations affecting the Registrants' business. See "Financial Condition - Liquidity and Capital Resources - Forecasted Uses of Cash - Capital Expenditures" in "Item 7. Combined Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Registrants' 2022 Form 10-K for information on projected environmental capital expenditures for 2023 through 2025. See "Legal Matters" in Note 10 to the Financial Statements for a discussion of the more significant environmental claims. See Note 15 to the Financial Statements for information related to the impacts of CCRs on AROs.

The information below represents an update to “Item 1. Business – Environmental Matters – Air” in the Registrants' 2022 Form 10-K.

(PPL, LG&E and KU)

NAAQS

In March 2021, the EPA released final revisions to the Cross-State Air Pollution Rule (CSAPR), aimed at ensuring compliance with the 2008 ozone NAAQS and providing for reductions in ozone season nitrogen oxide emissions for 2021 and subsequent years. Additionally, the EPA reversed its previous approval of the Kentucky State Implementation Plan with respect to these requirements. In March 2023, the EPA Administrator released a final Federal Implementation Plan under the Good Neighbor provisions of the Clean Air Act providing for significant additional nitrogen oxide emission reductions for compliance with the revised 2015 ozone NAAQS. The reductions in Kentucky state-wide nitrogen oxide budgets are scheduled to commence in 2023, with the largest reductions planned for 2026, based on the installation time frame for certain selective catalytic reduction controls, subject to future specific allowance calculations. PPL, LG&E and KU are currently assessing the potential impact of the Good Neighbor Plan revisions on operations. The rules provide for reduced availability of NOx allowances that have historically permitted operational flexibility for fossil units and could potentially result in constraints that may require implementation of additional emission controls or accelerate implementation of lower emission generation technologies. Legal challenges to CSAPR and related determinations remain pending. In January 2023, the EPA released a proposed revision to increase the stringency of the current NAAQS for particulate matter. The EPA is continuing review of its previous determinations made in December 2020 to retain the existing NAAQS for ozone without change.

PPL, LG&E, and KU are unable to predict the outcome of pending litigation or future emission reductions that may be required by future federal rules or state implementation actions. Compliance with the NAAQS, CSAPR, Good Neighbor Plan, and related requirements may require installation of additional pollution controls or other compliance actions, inclusive of retirements, the costs of which PPL, LG&E and KU believe would be subject to rate recovery.

Mercury and Air Toxics Standards

In 2012, the EPA issued the Mercury and Air Toxics Standards (MATS) rule requiring reductions in mercury and other hazardous air pollutants from fossil fuel-fired power plants. LG&E and KU installed significant controls to achieve compliance with MATS and other rules. In April 2023, the EPA proposed to increase the stringency of MATS and further reduce emissions of certain hazardous air pollutants by reducing certain particulate matter standards by approximately two-thirds to reflect developments in control technologies. While the exact impact will depend on the provisions adopted in the final rule, PPL, LG&E, and KU do not expect significant operational changes or additional controls. PPL, LG&E, and KU will continue to monitor the ongoing rulemaking process.

New Accounting Guidance (All Registrants)

There has been no new accounting guidance adopted in 2023 and there is no new significant accounting guidance pending adoption as of March 31, 2023.

Application of Critical Accounting Policies (All Registrants**)**

Financial condition and results of operations are impacted by the methods, assumptions and estimates used in the application of critical accounting policies. The following table summarizes the accounting policies by Registrant that are particularly important to an understanding of the reported financial condition or results of operations and require management to make estimates or other judgments of matters that are inherently uncertain. See "Item 7. Combined Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Registrants' 2022 Form 10-K for a discussion of each critical accounting policy.

												PPL
			PPL									Electric									LG&E									KU
Defined Benefits			X									X									X									X
Income Taxes			X									X									X									X
Regulatory Assets and Liabilities			X									X									X									X
Price Risk Management			X
Goodwill Impairment			X																		X									X
AROs																					X									X
Revenue Recognition - Unbilled Revenue			X									X									X									X

Following is an update to the critical accounting policies disclosed in PPL's 2022 Form 10-K.

Revenue Recognition - Unbilled Revenues (PPL and PPL Electric)

For PPL Electric, unbilled revenues for a month are typically calculated by multiplying the actual unbilled volumes by the price per tariff. In the first quarter of 2023, PPL Electric estimated deliveries to customers due to a temporary issue. Unbilled volumes are expected to resume being calculated by multiplying the actual unbilled volumes by the price per tariff later in 2023.

PPL Corporation

PPL Electric Utilities Corporation

Louisville Gas and Electric Company

Kentucky Utilities Company