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

144K characters. Original on sec.gov · Markdown

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' 2023 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 and nine months ended September 30, 2024 with the same periods in 2023. The PPL "Results of Operations" also includes "Segment Earnings," which provides a detailed analysis of earnings by reportable segment. These discussions include the non-GAAP financial measure "Earnings from Ongoing Operations" and provide an explanation of the non-GAAP financial measure and a reconciliation of the measure 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).

Table of Cont en ts


			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)

PPL is organized into three reportable segments as depicted in the chart above: Kentucky Regulated, which primarily represents the results of LG&E and KU, Pennsylvania Regulated, which primarily represents the results of PPL Electric, and Rhode Island Regulated, which primarily represents the results of RIE. "Corporate and Other" primarily includes corporate level financing

Table of Cont en ts

costs, certain unallocated costs and certain non-recoverable costs incurred in conjunction with the acquisition of Narragansett Electric.

Business Strategy

(All Registrants)

PPL operates four regulated utilities located in Pennsylvania, Kentucky and Rhode Island. Each of these jurisdictions has distinct regulatory structures and each of the utilities has distinct 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

*RIE Transition Services Agreement Completion (*PPL)

In connection with the acquisition of RIE in 2022, National Grid USA and Narragansett Electric entered into a transition services agreement (TSA), pursuant to which the National Grid entities agreed to provide certain transition services to Narragansett Electric to facilitate the transition of the operation of Narragansett Electric to PPL following the acquisition. The TSA was for an initial two-year term and was completed in the third quarter of 2024. TSA costs were $32 million and $129 million during the three and nine months ended September 30, 2024, and $59 million and $179 million during the three and nine months ended September 30, 2023.

Transfer of Certain Credits under the Inflation Reduction Act (PPL)

The IRS released the final Internal Revenue Code Section 6418 regulations related to the transfer of certain credits under the Inflation Reduction Act. The regulations became effective on July 1, 2024 and did not and are not expected to have a material impact on the financial statements regarding prior or future credit transfers.

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

Table of Cont en ts

process, LG&E and KU evaluate a range of factors including the impact of potential stricter environmental regulations, fuel price scenarios, the cost and availability 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 has sought and obtained approval to retire two older coal-fired units at the Mill Creek Plant. 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, subject to certain conditions.

On October 4, 2024, LG&E submitted an application related to the expected retirement of Mill Creek Unit 1 by December 31, 2024, requesting recovery of associated costs under the Retired Asset Recovery (RAR) rider. On October 28, 2024, the KPSC issued an order to establish a procedural schedule regarding its investigation of the reasonableness of the proposed tariff. The KPSC intends to rule on the matter by February 28, 2025. See Note 6 to the Financial Statements for additional information on the Mill Creek Unit 1 RAR rider application.

FERC Transmission Rate Filing

In 2018, LG&E and KU applied to the FERC requesting elimination of certain on-going waivers and 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 U.S. Court of Appeals - D.C. Circuit (D.C. Circuit Court of Appeals) regarding the FERC's orders on the elimination of the mitigation and required transition mechanism. In August 2022, the D.C. Circuit Court of Appeals issued an order remanding the proceedings back to the FERC. On May 18, 2023, the FERC issued an order on remand reversing its 2019 decision and requiring LG&E and KU to refund credits previously withheld, including under such transition mechanism. LG&E and KU filed a petition for review of the FERC's May 18, 2023 order with the D.C. Circuit Court of Appeals and provided refunds in accordance with the FERC order on December 1, 2023. The FERC issued an order on LG&E's and KU's compliance filing on November 16, 2023, and LG&E and KU filed a petition for review of this November 16, 2023 order on February 14, 2024. FERC issued the substantive order on rehearing on March 21, 2024, reaffirming its prior decision. LG&E and KU filed their opening brief with the D.C. Circuit Court of Appeals on June 24, 2024 and the FERC and the intervenors have filed briefs as well. LG&E's and KU's reply brief is due November 4, 2024. LG&E and KU cannot predict the ultimate outcome of the proceedings or any other post decision process but do not expect the annual impact to have a material effect on their operations or financial condition. LG&E and KU currently receive recovery of certain waivers and credits primarily through base rates increases, provided, however, that increases associated with the FERC's May 18, 2023 order are expected to be subject to future rate proceedings.

(PPL)

FY 2025 Gas ISR Plan

On December 22, 2023, RIE filed its FY 2025 Gas ISR Plan with the RIPUC with a budget that includes $185 million of capital investment spend, plus up to an additional $11 million of contingency plan spend in light of the Pipeline and Hazardous Materials Safety Administration's potential enactment of regulations during FY 2025 that, if enacted, would significantly alter RIE's leak detection and repair obligations under such regulations. RIE also filed its proposed gas ISR plan budgetary and reconciliation framework, addressing issues raised in connection with its FY 2024 submission, with its FY 2025 ISR Plan. The RIPUC held hearings in March 2024, and on March 26, 2024, approved the plan, including the proposed budgetary and reconciliation framework, with a total approved FY 2025 Gas ISR Plan of $180 million of which $168 million is for capital investment spend and $12 million spend for paving costs as operations and maintenance (O&M), plus the potential additional $11 million available if the above-mentioned regulations are implemented by the Pipeline and Hazardous Materials Safety Administration. On March 28, 2024, the RIPUC approved RIE's compliance filing for rates effective April 1, 2024.

Table of Cont en ts

FY 2025 Electric ISR Plan

On December 21, 2023, RIE filed its FY 2025 Electric ISR Plan with the RIPUC with a budget that includes $141 million of capital investment spend, $13 million of vegetation O&M spend and $1 million of Other O&M spend. RIE also filed its proposed electric ISR plan budgetary and reconciliation framework, addressing issues raised in connection with its FY 2024 submission, with its FY 2025 ISR Plan. The RIPUC held hearings in March 2024, and on March 26, 2024, approved the plan, including the proposed budgetary and reconciliation framework, with modifications to the proposed capital investment spend, resulting in a total approved FY 2025 Electric ISR Plan of $132 million for capital investment spend, $13 million for vegetation management O&M spend, and $1 million for Other O&M spend. On March 28, 2024, the RIPUC approved RIE's compliance filing for rates effective April 1, 2024.

Advanced Metering Functionality (AMF)

In 2021, RIE filed its Updated AMF Business Case and Grid Modernization Plan (GMP) with the RIPUC in accordance with the ASA approved by the RIPUC in August 2018, and which, among other things, sought approval to deploy smart meters throughout the service territory. After PPL completed the acquisition of RIE, RIE filed a new AMF Business Case with the RIPUC in 2022, consisting of a detailed proposal for full-scale deployment of AMF across its electric service territory.

On September 27, 2023, the RIPUC unanimously approved RIE to deploy an AMF-based metering system for the electric distribution business. RIE is authorized to seek recovery of the approved capital investment through the ISR process with an overall multi-year cap on recovery at approximately $153 million, subject to certain terms, conditions and limitations with respect to the potential offsets and recoverability of certain costs. RIE is required to continue spending, even if above the recovery cap, until it achieves the functionalities outlined in the AMF Business Case. RIE filed with the RIPUC for approval (i) an updated electric Service Quality Plan on December 27, 2023, (ii) additional compliance tariff provisions regarding recovery and updated cost schedules to reflect the RIPUC's decision on December 22, 2023, and (iii) electric and gas tariff advice filings for Automatic Meter Reading/AMF meter opt-out tariff provisions on September 19, 2024. RIE cannot predict the outcome of these matters.

Rate Case Proceedings (KU)

On April 30, 2024, KU filed a request with the VSCC for an annual increase in Virginia base electricity rates of approximately $9 million. KU's request is based on an authorized 10.5 % return on equity. Subject to regulatory review and approval, new rates would become effective February 1, 2025. Written testimony from VSCC staff, intervenor witnesses and KU rebuttal has been filed. A public hearing on the matter is scheduled to start on November 13, 2024. KU is discussing the potential resolution of open issues raised by the VSCC staff.

DSIC Petition (PPL and PPL Electric)

On April 26, 2024, PPL Electric filed a Petition with the PAPUC requesting that the PAPUC waive PPL Electric's DSIC cap of 5% of billed revenues and increase the maximum allowable DSIC to 9% for bills rendered on or after January 1, 2025. The publicly available procedural and litigation schedule currently contemplates that the PAPUC would issue a final order at its January 23, 2025 Public Meeting. PPL Electric cannot predict the outcome of this matter.

Long-Term Infrastructure Improvement Plan Petition (LTIIP) (PPL and PPL Electric)

On January 17, 2024, PPL Electric filed a petition with the PAPUC seeking to modify its LTIIP, which covers the period from 2023 through 2027, to increase the total projected capital spending for existing LTIIP programs and to add a new LTIIP program related to predictive failure technology. On July 11, 2024, the PAPUC approved the petition in part, allowing for an increase of $203 million for existing LTIIP programs. The proposed new LTIIP program was determined not to be eligible for recovery under the DSIC. However, investments in such programs are potentially recoverable through a base rate proceeding.

Labor Union Agreements

(PPL)

In May 2024, PPL and the Rhode Island UWUA locals ratified a five-year labor agreement through May 2029. The agreement covers over 530 employees. The terms of the new labor agreement are not expected to have a significant impact on the financial results of PPL.

Table of Cont en ts

(PPL and KU)

In July 2024, KU and the IBEW local reached, and local members subsequently ratified, a new three-year labor agreement through July 2027. The agreement covers approximately 60 employees. The terms of the new labor agreement are not expected to have a significant impact on the financial results of KU or PPL.

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 and nine months ended September 30, 2024 with the same periods in 2023. The "Segment Earnings" discussion provides a review of results by reportable segment. These discussions include the non-GAAP financial measure "Earnings from Ongoing Operations" and provide an explanation of the non-GAAP financial measure and a reconciliation of the measure 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 and nine months ended September 30, 2024 with the same periods in 2023.

(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 and Segment Earnings

Statement of Income Analysis

Net income for the periods ended September 30 includes the following results:


	Three Months						Nine Months
	2024		2023		$ Change		2024		2023		$ Change
Operating Revenues	$	2,066	$	2,043	$	23	$	6,251	$	6,281	$	(30)

Operating Expenses
Operation
Fuel	207		199		8		597		567		30
Energy purchases	338		356		(18)		1,133		1,430		(297)
Other operation and maintenance	681		637		44		1,930		1,805		125
Depreciation	322		314		8		957		940		17
Taxes, other than income	90		100		(10)		271		299		(28)
Total Operating Expenses	1,638		1,606		32		4,888		5,041		(153)
Operating Income	428		437		(9)		1,363		1,240		123
Other Income (Expense) - net	32		16		16		86		51		35
Interest Expense	188		165		23		549		494		55
Income Before Income Taxes	272		288		(16)		900		797		103
Income Taxes	58		58		—		189		170		19




Net Income	$	214	$	230	$	(16)	$	711	$	627	$	84

Table of Cont en ts

Operating Revenues

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


	Three Months		Nine Months
PPL Electric distribution price (a)	$	25	$	48
PPL Electric distribution volume (b)	1		34
PPL Electric PLR (c)	(53)		(262)
PPL Electric transmission formula rate (d)	5		40



LG&E volumes (b)	5		31

LG&E ECR mechanism (e)	(12)		(15)


KU volumes (b)	4		37
KU fuel and other energy purchases (f)	(2)		10
KU demand	2		6



KU ECR mechanism (e)	(7)		(9)

RIE energy purchases and other recoveries (g)	49		(8)
RIE capital investments	(1)		27
RIE transmission formula rate	—		14
Other	7		17








Total	$	23	$	(30)

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

(b)The increase for the nine months ended September 30, 2024 was primarily due to weather, along with other higher usage in 2024 at PPL Electric.

(c)The decreases were primarily the result of lower energy prices and fewer PLR customers, partially offset by higher customer volumes due to weather and other higher usage.

(d)The increases were primarily due to returns on additional transmission capital investments, returns of depreciation and O&M expenses and delayed implementation of moving to a calendar year rate in 2023, partially offset by the prior year point to point border rate settlement variance.

(e)The decreases were primarily due to an adjustment related to the ECR mechanism revenues.

(f)The increase for the nine months ended September 30, 2024 was primarily due to higher recoveries of fuel expenses.

(g)The increase for the three months ended September 30, 2024 was primarily due to higher recoveries of energy purchases and an increase in transmission expenses. The decrease for the nine months ended September 30, 2024 was primarily due to lower recoveries of energy purchases, gross earnings tax and pension expenses, partially offset by higher recoveries of gas maintenance expenses, an increase in transmission expenses and higher recovery of energy efficiency expenses.

Energy Purchases

Energy purchases decreased $18 million for the three months ended September 30, 2024 compared with 2023, primarily due to lower PLR prices of $47 million at PPL Electric, partially offset by an increase in commodity costs of $28 million at RIE.

Energy purchases decreased $297 million for the nine months ended September 30, 2024 compared with 2023, primarily due to lower PLR prices of $222 million and lower PLR volumes of $19 million at PPL Electric, an $18 million decrease at LG&E primarily due to a decrease in commodity costs and a decrease in commodity costs of $37 million at RIE.

Other Operation and Maintenance

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

Table of Cont en ts


	Three Months		Nine Months
PPL Electric storm costs	$	15	$	40
PPL Electric vegetation management expenses	3		11

PPL Electric bad debts	4		11
PPL Electric operations costs	—		(16)
PPL Electric Act 129	6		14

LG&E ECR expenses	(5)		(14)




KU ECR expenses	—		(8)






RIE gas maintenance expenses	—		45
RIE energy efficiency program expenses	(3)		10
RIE pension expenses	(6)		(24)
RIE bad debt expenses	8		22


Transition costs associated with RIE	16		57
Other	6		(23)
Total	$	44	$	125

Taxes, Other Than Income

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


	Three Months		Nine Months
State gross earnings and gross receipts tax (a)	$	—	$	(35)
Property tax expense (b)	(9)		8
Other	(1)		(1)
Total	$	(10)	$	(28)

(a)The decrease for the nine months ended September 30, 2024 was primarily due to the RIE Gross Earnings Tax Holiday Credit which provided relief from the tax to eligible utility companies between December 2023 through March 2024.

(b)The decrease for the three months ended September 30, 2024 was primarily due to a RIE property tax true-up to accruals based on bills received through September.

Other Income (Expense) - net

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


	Three Months		Nine Months
Defined benefit plans - non-service credits (Note 9)	$	(4)	$	2
Interest income	6		3
AFUDC	6		12
Other	8		18
Total	$	16	$	35

Interest Expense

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


	Three Months		Nine Months

Long-term debt (a)	$	22	$	54


Other	1		1
Total	$	23	$	55

(a) The increases were primarily due to increased borrowings. See Note 7 to the Financial Statements for additional information.

Segment Earnings

PPL's Net Income (Loss) by reportable segment for the periods ended September 30 were as follows:

Table of Cont en ts


	Three Months						Nine Months
	2024		2023		$ Change		2024		2023		$ Change

Kentucky Regulated	$	169	$	175	$	(6)	$	493	$	432	$	61
Pennsylvania Regulated	142		136		6		441		384		57
Rhode Island Regulated	14		6		8		90		70		20
Corporate and Other (a)	(111)		(87)		(24)		(313)		(259)		(54)

Net Income (Loss)	$	214	$	230	$	(16)	$	711	$	627	$	84

(a)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 September 30 were as follows:


	Three Months						Nine Months
	2024		2023		$ Change		2024		2023		$ Change
Kentucky Regulated	$	172	$	175	$	(3)	$	497	$	438	$	59
Pennsylvania Regulated	142		145		(3)		458		399		59
Rhode Island Regulated	32		22		10		138		116		22
Corporate and Other	(36)		(25)		(11)		(99)		(69)		(30)
Earnings from Ongoing Operations	$	310	$	317	$	(7)	$	994	$	884	$	110

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 LG&E's and KU's regulated electricity generation, transmission and distribution operations, as well as LG&E's regulated distribution and sale of natural gas.

Net Income and Earnings from Ongoing Operations for the periods ended September 30 include the following results:

Table of Cont en ts


	Three Months						Nine Months
	2024		2023		$ Change		2024		2023		$ Change
Operating Revenues	$	895	$	893	$	2	$	2,698	$	2,631	$	67
Fuel	207		199		8		597		567		30
Energy purchases	25		23		2		124		141		(17)
Other operation and maintenance	196		199		(3)		593		625		(32)
Depreciation	178		174		4		531		521		10
Taxes, other than income	25		24		1		74		70		4
Total Operating Expenses	631		619		12		1,919		1,924		(5)
Other Income (Expense) - net	8		3		5		20		9		11
Interest Expense	60		59		1		181		176		5
Income Taxes	43		43		—		125		108		17
Net Income	169		175		(6)		493		432		61
Less: Special Items	(3)		—		(3)		(4)		(6)		2
Earnings from Ongoing Operations	$	172	$	175	$	(3)	$	497	$	438	$	59

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 September 30.


	Income Statement Line Item		Three Months						Nine Months
		2024			2023			2024			2023
Strategic corporate initiatives, net of tax of $0, $0 (a)	Other operation and maintenance		$	—		$	—		$	(1)		$	(1)
FERC transmission credit refund, net of tax of $2 (b)	Other operation and maintenance		—			—			—			(5)
FERC transmission credit refund, net of tax of $0, $0 (b)	Operating Revenues		1			—			1			—
ECR beneficial reuse transition adjustment, net of tax of $2, $2 (c)	Operating Revenues		(4)			—			(4)			—


Total Special Items			$	(3)		$	—		$	(4)		$	(6)

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

(b)Prior period impact related to a FERC refund order.

(c)Prior period impact for an adjustment related to the ECR mechanism revenues.

The changes in the components of the Kentucky Regulated segment's results between these periods are due to the factors set forth below, which exclude the items that management considers special.


	Three Months		Nine Months
Operating Revenues	$	6	$	71
Fuel	(8)		(30)
Energy purchases	(2)		17
Other operation and maintenance	3		25
Depreciation	(5)		(10)
Taxes, other than income	(1)		(4)
Other Income (Expense) - net	5		11
Interest Expense	(1)		(5)
Income Taxes	—		(16)
Earnings from Ongoing Operations	(3)		59
Special Items, after-tax	(3)		2
Net Income	$	(6)	$	61

Higher operating revenues for the three month period primarily due to a $10 million increase in recoveries of fuel and energy purchases due to an increase in commodity costs and an $8 million increase in sales volumes related to weather, partially offset by an $8 million adjustment related to the ECR mechanism revenues.
Higher operating revenues for the nine month period primarily due to an increase in sales volumes related to weather.
Higher fuel expense for the nine month period primarily due to an increase in generation volumes.

Table of Cont en ts

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 September 30 include the following results:


	Three Months						Nine Months
	2024		2023		$ Change		2024		2023		$ Change
Operating Revenues	$	716	$	737	$	(21)	$	2,159	$	2,295	$	(136)

Energy purchases	177		226		(49)		544		788		(244)
Other operation and maintenance	176		151		25		511		454		57
Depreciation	101		99		2		300		297		3
Taxes, other than income	32		36		(4)		98		110		(12)
Total Operating Expenses	486		512		(26)		1,453		1,649		(196)
Other Income (Expense) - net	13		8		5		33		29		4
Interest Income from Affiliate	7		—		7		27		—		27
Interest Expense	61		54		7		184		165		19
Income Taxes	47		43		4		141		126		15
Net Income	142		136		6		441		384		57
Less: Special Items	—		(9)		9		(17)		(15)		(2)
Earnings from Ongoing Operations	$	142	$	145	$	(3)	$	458	$	399	$	59

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 September 30.


	Income Statement Line Item		Three Months						Nine Months
		2024			2023			2024			2023
PA tax rate change (a)	Income Taxes		$	—		$	—		$	—		$	1
PPL Electric billing issue, net of tax of $4, $5, $6 (b)	Other operation and maintenance		—			(8)			(13)			(14)
PPL Electric billing issue, net of tax of $0 (b)	Other Income (Expense) - net		—			—			—			(1)
Strategic corporate initiatives, net of tax of $1, $2, $0 (c)	Other operation and maintenance		—			(1)			(4)			(1)


Total Special Items			$	—		$	(9)		$	(17)		$	(15)

(a)Impact of Pennsylvania state tax reform.

(b)Certain expenses related to billing issues. See Note 6 to the Financial Statements for additional information.

(c)Costs incurred related to PPL's corporate centralization and other strategic efforts.

The changes in the components of the Pennsylvania Regulated segment's results between these periods are due to the factors set forth below, which exclude the items that management considers special.


	Three Months		Nine Months
Operating Revenues	$	(21)	$	(136)
Energy purchases	49		244
Other operation and maintenance	(37)		(55)
Depreciation	(2)		(3)
Taxes, other than income	4		12
Other Income (Expense) - net	5		4
Interest Income from Affiliate	7		27
Interest Expense	(7)		(19)
Income Taxes	(1)		(15)
Earnings from Ongoing Operations	(3)		59
Special Items, after-tax	9		(2)
Net Income	$	6	$	57

Lower operating revenues for the three month period primarily due to $53 million of lower PLR, partially offset by a $25 million increase in distribution prices and a $5 million increase in transmission formula rate returns.

Table of Cont en ts

Lower operating revenues for the nine month period primarily due to $262 million of lower PLR, partially offset by a $48 million increase in distribution prices, a $40 million increase in transmission formula rate returns and a $34 million increase in distribution volumes primarily due to weather and higher usage in 2024.
Lower energy purchases for the three month period primarily due to lower PLR prices.
Lower energy purchases for the nine month period primarily due to $222 million of lower PLR prices and $19 million of lower PLR volumes.
Higher operation and maintenance expense for the three month period primarily due to a $15 million increase in storm expenses, an $11 million increase in bad debt expenses and a $6 million increase in Act 129 related expenses.
Higher operation and maintenance expense for the nine month period primarily due to a $40 million increase in storm expenses, a $14 million increase in Act 129 related expenses, an $11 million increase in vegetation management expenses and a $9 million increase in universal service rider expenses, partially offset by a $16 million decrease in operations costs.
Higher interest income from affiliate for the nine month period primarily due to interest income on a short-term note receivable with an affiliated company.
Higher interest expense for the nine month period primarily due to $35 million related to increased long-term debt borrowings, partially offset by $11 million related to the redemption of floating rate first mortgage bonds in March 2023.

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 for the periods ended September 30 include the following results:


	Three Months						Nine Months
	2024		2023		$ Change		2024		2023		$ Change
Operating Revenues	$	455	$	413	$	42	$	1,393	$	1,355	$	38

Energy purchases	135		107		28		464		501		(37)
Other operation and maintenance	211		207		4		547		485		62
Depreciation	42		41		1		123		120		3
Taxes, other than income	33		39		(6)		99		119		(20)
Total Operating Expenses	421		394		27		1,233		1,225		8
Other Income (Expense) - net	7		6		1		20		10		10
Interest Expense	25		21		4		72		60		12
Income Taxes	2		(2)		4		18		10		8
Net Income	14		6		8		90		70		20
Less: Special Items	(18)		(16)		(2)		(48)		(46)		(2)
Earnings from Ongoing Operations	$	32	$	22	$	10	$	138	$	116	$	22

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 September 30.


	Income Statement Line Item		Three Months						Nine Months
		2024			2023			2024			2023



Acquisition integration, net of tax of $3, $4, $12, $12 (a)	Other operation and maintenance		$	(18)		$	(16)		$	(48)		$	(46)





Total Special Items			$	(18)		$	(16)		$	(48)		$	(46)

Table of Cont en ts

(a)Primarily includes certain TSA costs for IT systems that will not be part of PPL's ongoing operations.

The changes in the components of the Rhode Island Regulated segment's results between these periods are due to the factors set forth below, which exclude the items that management considers special.


	Three Months		Nine Months
Operating Revenues	$	42	$	38
Energy purchases	(28)		37
Other operation and maintenance	(1)		(58)
Depreciation	(1)		(3)
Taxes, other than income	6		20
Other Income (Expense) - net	—		9
Interest Expense	(4)		(12)
Income Taxes	(4)		(9)
Earnings from Ongoing Operations	10		22
Special Items, after-tax	(2)		(2)
Net Income	$	8	$	20

Higher operating revenues for the three month period primarily due to a $28 million increase in recovery of energy purchases and a $25 million increase related to recovery of transmission expenses, partially offset by a $6 million decrease in recovery of pension expenses and a $5 million decrease of other items that were not individually significant.
Higher operating revenues for the nine month period primarily due to a $45 million increase in recovery of gas maintenance expenses, a $27 million increase related to capital investments, a $20 million increase related to recovery of transmission expenses, a $13 million increase related to transmission formula rates, a $10 million increase in recovery of energy efficiency program expenses and a $10 million increase of other items that were not individually significant, partially offset by a $37 million decrease in recovery of energy purchases, a $24 million decrease in recovery of pension expenses and a $22 million decrease in recovery of gross earnings taxes.
Higher energy purchases for the three month period primarily due to an increase in commodity costs.
Lower energy purchases for the nine month period primarily due to a decrease in commodity costs.
Higher operation and maintenance expense for the three month period primarily due to a $25 million increase related to transmission expenses and an $8 million increase in bad debt expenses, partially offset by a $17 million decrease in operations costs, a $6 million decrease in pension expenses, a $3 million decrease in recovery of energy efficiency program expenses and a $6 million decrease of other items that were not individually significant.
Higher operation and maintenance expense for the nine month period primarily due to a $45 million increase in gas maintenance expenses, a $22 million increase in bad debt expenses, a $20 million increase in transmission expenses and a $10 million increase in energy efficiency program expenses, partially offset by a $24 million decrease in pension expenses and a $15 million decrease in operations costs.
Lower taxes, other than income for the three month period primarily due to a $10 million decrease in property taxes, partially offset by a $4 million increase in gross earnings taxes.
Lower taxes, other than income for the nine month period primarily due to a decrease in gross earnings taxes.
Higher interest expense for the three and nine month periods primarily due to increased borrowings.
Higher income taxes for the three month period primarily due to higher pre-tax income.

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 September 30.

Table of Cont en ts


	2024 Three Months
	KY Regulated		PA Regulated		RI Regulated		Corporate and Other		Total
Net Income (Loss)	$	169	$	142	$	14	$	(111)	$	214
Less: Special Items (expense) benefit:

Talen litigation costs, net of tax of $1 (a)	—		—		—		(2)		(2)
Strategic corporate initiatives, net of tax of $1 (b)	—		—		—		(2)		(2)
Acquisition integration, net of tax of $3, $19 (c)	—		—		(18)		(71)		(89)





FERC transmission credit refund, net of tax of $0 (d)	1		—		—		—		1
ECR beneficial reuse transition adjustment, net of tax of $2 (e)	(4)		—		—		—		(4)
Total Special Items	(3)		—		(18)		(75)		(96)
Earnings from Ongoing Operations	$	172	$	142	$	32	$	(36)	$	310

(a)PPL incurred legal expenses related to litigation associated with its former affiliate.

(b)Represents costs primarily related to PPL's centralization efforts and other strategic efforts.

(c)Rhode Island Regulated primarily includes certain TSA costs for IT systems that will not be part of PPL's ongoing operations. Corporate and Other primarily includes integration and related costs associated with the acquisition of RIE. See Note 8 to the Financial Statements for additional information.

(d)Prior period impact related to a FERC refund order.

(e)Prior period impact of an adjustment related to the ECR mechanism revenues.


	2023 Three Months
	KY Regulated		PA Regulated		RI Regulated		Corporate and Other		Total
Net Income (Loss)	$	175	$	136	$	6	$	(87)	$	230
Less: Special Items (expense) benefit:

Talen litigation costs, net of tax of $1 (a)	—		—		—		(3)		(3)
Strategic corporate initiatives, net of tax of $0, $1 (b)	—		(1)		—		(3)		(4)
Acquisition integration, net of tax of $4, $15 (c)	—		—		(16)		(55)		(71)
Sale of Safari Holdings, net of tax of ($1) (d)	—		—		—		1		1
PPL Electric billing issue, net of tax of $4 (e)	—		(8)		—		—		(8)

Other non-recurring charges, net of tax of $0 (f)	—		—		—		(2)		(2)


Total Special Items	—		(9)		(16)		(62)		(87)
Earnings from Ongoing Operations	$	175	$	145	$	22	$	(25)	$	317

(a)PPL incurred legal expenses related to litigation with its former affiliate, Talen Montana.

(b)Costs incurred primarily in connection with corporate centralization efforts.

(d)Final closing and other related adjustments for the sale of Safari Holdings.

(e)Certain expenses related to billing issues. See Note 6 to the Financial Statements for additional information.

(f)Certain expenses related to distributed energy investments.


	2024 Nine Months
	KY Regulated		PA Regulated		RI Regulated		Corporate and Other		Total
Net Income (Loss)	$	493	$	441	$	90	$	(313)	$	711
Less: Special Items (expense) benefit:
Talen litigation costs, net of tax of $1 (a)	—		—		—		(2)		(2)
Strategic corporate initiatives, net of tax of $0, $2, $2 (b)	(1)		(4)		—		(6)		(11)
Acquisition integration, net of tax of $12, $55 (c)	—		—		(48)		(206)		(254)



PPL Electric billing issue, net of tax of $5 (d)	—		(13)		—		—		(13)
FERC transmission credit refund, net of tax of $0 (e)	1		—		—		—		1
ECR beneficial reuse transition adjustment, net of tax of $2 (f)	(4)		—		—		—		(4)
Total Special Items	(4)		(17)		(48)		(214)		(283)
Earnings from Ongoing Operations	$	497	$	458	$	138	$	(99)	$	994

(a)PPL incurred legal expenses related to litigation associated with its former affiliate.

(b)Represents costs primarily related to PPL's centralization efforts and other strategic efforts.

(d)Certain expenses related to billing issues. See Note 6 to the Financial Statements for additional information.

(e)Prior period impact related to a FERC refund order.

Table of Cont en ts

(f)Prior period impact of an adjustment related to the ECR mechanism revenues.


	2023 Nine Months
	KY Regulated		PA Regulated		RI Regulated		Corporate and Other		Total
Net Income (Loss)	$	432	$	384	$	70	$	(259)	$	627
Less: Special Items (expense) benefit:
Talen litigation costs, net of tax of $2 (a)	—		—		—		(6)		(6)
Strategic corporate initiatives, net of tax of $0, $0, $2 (b)	(1)		(1)		—		(7)		(9)
Acquisition integration, net of tax of $12, $42 (c)	—		—		(46)		(159)		(205)

PA tax rate change (d)	—		1		—		—		1
Sale of Safari Holdings, net of tax of $1 (e)	—		—		—		(3)		(3)
PPL Electric billing issue, net of tax of $6 (f)	—		(15)		—		—		(15)
FERC transmission credit refund, net of tax of $2 (g)	(5)		—		—		—		(5)
Other non-recurring charges, net of tax of $0 (h)	—		—		—		(15)		(15)
Total Special Items	(6)		(15)		(46)		(190)		(257)
Earnings from Ongoing Operations	$	438	$	399	$	116	$	(69)	$	884

(a)PPL incurred legal expenses related to litigation with its former affiliate, Talen Montana.

(b)Costs incurred primarily in connection with corporate centralization efforts.

(d)Impact of Pennsylvania state tax reform.

(e)Final closing adjustments related to the sale of Safari Holdings.

(f)Certain expenses related to billing issues. See Note 6 to the Financial Statements for additional information.

(g)Prior period impact related to a FERC refund order.

(h)Certain expenses related to distributed energy investments.

PPL Electric: Statement of Income Analysis

Statement of Income Analysis

Net income for the periods ended September 30 includes the following results:


	Three Months						Nine Months
	2024		2023		$ Change		2024		2023		$ Change
Operating Revenues	$	716	$	737	$	(21)	$	2,159	$	2,295	$	(136)
Operating Expenses
Operation
Energy purchases	177		226		(49)		544		788		(244)

Other operation and maintenance	176		151		25		511		454		57
Depreciation	101		99		2		300		297		3
Taxes, other than income	32		36		(4)		98		110		(12)
Total Operating Expenses	486		512		(26)		1,453		1,649		(196)
Operating Income	230		225		5		706		646		60
Other Income (Expense) - net	13		8		5		33		29		4
Interest Income from Affiliate	7		—		7		27		—		27
Interest Expense	61		54		7		184		165		19
Income Before Income Taxes	189		179		10		582		510		72
Income Taxes	47		43		4		141		126		15
Net Income	$	142	$	136	$	6	$	441	$	384	$	57

Table of Cont en ts

Operating Revenues

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


	Three Months		Nine Months
Distribution price (a)	$	25	$	48
Distribution volume (b)	1		34
PLR (c)	(53)		(262)
Transmission formula rate (d)	5		40


Other	1		4
Total	$	(21)	$	(136)

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

(b)The increase for the nine months ended September 30, 2024 was primarily due to weather, along with other higher usage in 2024.

(c)The decreases were primarily the result of lower energy prices and fewer PLR customers, partially offset by higher customer volumes due to weather and other higher usage.

Energy Purchases

Energy purchases decreased $49 million for the three months ended September 30, 2024 compared with 2023, primarily due to lower PLR prices.

Energy purchases decreased $244 million for the nine months ended September 30, 2024 compared with 2023, primarily due to lower PLR prices of $222 million and lower PLR volumes of $19 million.

Other Operation and Maintenance

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


	Three Months		Nine Months

Support costs	$	(2)	$	(8)


Vegetation management expenses	3		11
Storm costs	15		40
Operations costs	—		(16)
Universal service rider	—		9
Bad debts	4		11

Act 129	6		14



Other	(1)		(4)
Total	$	25	$	57

Interest Income from Affiliate

Interest income from affiliate increased $27 million for the nine months ended September 30, 2024 compared with 2023, primarily due to interest income on a short-term note receivable with an affiliated company.

Interest Expense

Interest expense increased $19 million for the nine months ended September 30, 2024 compared with 2023, primarily due to $35 million related to increased long-term debt borrowings, partially offset by $11 million related to the redemption of floating rate first mortgage bonds in March 2023.

Table of Cont en ts

LG&E: Statement of Income Analysis

Statement of Income Analysis

Net income for the periods ended September 30 includes the following results:


	Three Months						Nine Months
	2024		2023		$ Change		2024		2023		$ Change
Operating Revenues
Retail and wholesale	$	396	$	396	$	—	$	1,219	$	1,204	$	15
Electric revenue from affiliate	1		2		(1)		20		23		(3)
Total Operating Revenues	397		398		(1)		1,239		1,227		12
Operating Expenses
Operation
Fuel	75		70		5		228		217		11
Energy purchases	19		17		2		105		123		(18)
Energy purchases from affiliate	11		8		3		19		11		8
Other operation and maintenance	84		91		(7)		259		275		(16)
Depreciation	76		76		—		229		227		2
Taxes, other than income	13		12		1		38		36		2
Total Operating Expenses	278		274		4		878		889		(11)
Operating Income	119		124		(5)		361		338		23
Other Income (Expense) - net	3		—		3		9		2		7
Interest Income from Affiliates	1		1		—		1		1		—
Interest Expense	26		25		1		78		76		2
Income Before Income Taxes	97		100		(3)		293		265		28
Income Taxes	20		21		(1)		61		55		6
Net Income	$	77	$	79	$	(2)	$	232	$	210	$	22

Operating Revenues

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


	Three Months		Nine Months



Fuel and other energy purchases (a)	$	7	$	(3)



Volumes (b)	5		31
ECR (c)	(12)		(15)

Other	(1)		(1)
Total	$	(1)	$	12

(a)The increase for the three months ended September 30, 2024 was primarily due to higher recoveries of energy purchases and fuel expense.

(b)The increase for the nine months ended September 30, 2024 was primarily due to weather.

(c)The decreases were primarily due to an adjustment related to the ECR mechanism revenues.

Fuel

Fuel expense increased $5 million and $11 million for the three and nine months ended September 30, 2024 compared with 2023, primarily due to an increase in commodity costs.

Energy Purchases

Energy purchases decreased $18 million for the nine months ended September 30, 2024 compared with 2023, primarily due to a decrease in commodity costs.

Table of Cont en ts

Other Operation and Maintenance

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


	Three Months		Nine Months
ECR expenses	$	(5)	$	(14)
Transmission expenses	—		(2)
Generation outage expenses	—		6






Overhead line expenses	(1)		(5)
Other	(1)		(1)
Total	$	(7)	$	(16)

KU: Statement of Income Analysis

Statement of Income Analysis

Net income for the periods ended September 30 includes the following results:


	Three Months						Nine Months
	2024		2023		$ Change		2024		2023		$ Change
Operating Revenues
Retail and wholesale	$	498	$	497	$	1	$	1,479	$	1,428	$	51
Electric revenue from affiliate	11		8		3		19		11		8
Total Operating Revenues	509		505		4		1,498		1,439		59
Operating Expenses
Operation
Fuel	131		129		2		369		350		19
Energy purchases	7		6		1		19		18		1
Energy purchases from affiliate	1		2		(1)		20		23		(3)
Other operation and maintenance	103		101		2		306		327		(21)
Depreciation	102		98		4		302		294		8
Taxes, other than income	12		12		—		36		34		2
Total Operating Expenses	356		348		8		1,052		1,046		6
Operating Income	153		157		(4)		446		393		53
Other Income (Expense) - net	4		1		3		10		6		4
Interest Expense	35		33		2		102		99		3
Interest Expense with Affiliate	—		—		—		1		1		—
Income Before Income Taxes	122		125		(3)		353		299		54
Income Taxes	24		24		—		70		59		11
Net Income	$	98	$	101	$	(3)	$	283	$	240	$	43

Operating Revenues

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


	Three Months		Nine Months



Fuel and other energy purchases (a)	$	1	$	18



Volumes (b)	4		37
ECR (c)	(7)		(9)
Demand	2		6
Other	4		7
Total	$	4	$	59

(a)The increase for the nine months ended September 30, 2024 was primarily due to higher recoveries of fuel expenses.

(b)The increase for the nine months ended September 30, 2024 was primarily due to weather.

(c)The decreases were primarily due to an adjustment related to the ECR mechanism revenues.

Table of Cont en ts

Fuel

Fuel expense increased $19 million for the nine months ended September 30, 2024 compared with 2023, primarily due to a $33 million increase in volumes due to weather, partially offset by a $14 million decrease in commodity costs.

Other Operation and Maintenance

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


	Three Months		Nine Months
ECR expenses	$	—	$	(8)
Transmission expenses	1		(4)







Overhead line expenses	—		(5)
Other	1		(4)
Total	$	2	$	(21)

Financial Condition

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

Liquidity and Capital Resources

(All Registrants)

The Registrants had the following at:


	PPL		PPL Electric		LG&E		KU
September 30, 2024
Cash and cash equivalents	$	542	$	35	$	10	$	16

Short-term debt	—		—		—		—
Long-term debt due within one year	1		—		—		—
Notes payable to affiliates			—		34		128

December 31, 2023
Cash and cash equivalents	$	331	$	51	$	18	$	14
Short-term debt	992		509		—		93
Long-term debt due within one year	1		—		—		—
Notes payable to affiliates			—		—		—

(All Registrants)

Net cash provided by (used in) operating, investing and financing activities for the nine month periods ended September 30, and the changes between periods, were as follows.

Table of Cont en ts


	PPL		PPL Electric		LG&E		KU
2024
Operating activities	$	1,829	$	689	$	456	$	612
Investing activities	(1,944)		(1,240)		(327)		(463)
Financing activities	316		535		(143)		(151)
2023
Operating activities	$	1,648	$	589	$	526	$	540
Investing activities	(1,739)		(655)		(277)		(425)
Financing activities	88		97		(334)		(128)
Change - Cash Provided (Used)
Operating activities	$	181	$	100	$	(70)	$	72
Investing activities	(205)		(585)		(50)		(38)
Financing activities	228		438		191		(23)

Operating Activities

The components of the change in cash provided by (used in) operating activities for the nine months ended September 30, 2024 compared with 2023 were as follows.


	PPL		PPL Electric		LG&E		KU
Change - Cash Provided (Used)
Net income	$	84	$	57	$	22	$	43
Non-cash components	39		51		13		(3)
Working capital	(38)		14		(110)		19
Defined benefit plan funding	4		3		—		—
Other operating activities	92		(25)		5		13
Total	$	181	$	100	$	(70)	$	72

(PPL)

PPL's cash provided by operating activities in 2024 increased $181 million compared with 2023.

Net income increased $84 million between the periods and included an increase in non-cash components of $39 million. The increase in non-cash components was primarily due to an increase in depreciation expense (primarily due to additional assets placed into service, net of retirements) and an increase in stock-based compensation (primarily due to overall market increases).
The $38 million decrease in cash from changes in working capital was primarily due to an increase in unbilled revenues (primarily due to weather), a decrease in accounts payable and an increase in prepayments (primarily due to the timing of payments) and a decrease in net regulatory liabilities (primarily due to the timing of rate recovery mechanisms), partially offset by a decrease in accounts receivable (primarily due to timing of payments).
The $92 million increase in cash provided by other operating activities was driven primarily by an increase in noncurrent regulatory liabilities.

(PPL Electric)

PPL Electric's cash provided by operating activities in 2024 increased $100 million compared with 2023.

Net income increased $57 million between the periods and included an increase in non-cash components of $51 million. The increase in non-cash components was primarily due to an increase in deferred income taxes and investment tax credits (primarily due to book versus tax plant timing differences).
The $14 million increase in cash from changes in working capital was primarily due to a decrease in accounts receivable (primarily due to timing of payments), partially offset by an increase in unbilled revenues (primarily due to weather), an increase in prepayments (primarily due to timing of payments) and an increase in net regulatory assets (primarily due to the timing of rate recovery mechanisms).

Table of Cont en ts

The $25 million decrease in cash provided by other operating activities was driven primarily by an increase in noncurrent regulatory assets.

(LG&E)

LG&E's cash provided by operating activities in 2024 decreased $70 million compared with 2023.

Net income increased $22 million between the periods and included an increase in non-cash components of $13 million. The increase in non-cash components was primarily due to an increase in deferred income taxes and investment tax credits (primarily due to book versus tax plant timing differences).
The $110 million decrease in cash from changes in working capital was primarily due to increases in accounts receivable and unbilled revenues (primarily due to weather), an increase in fuel, materials and supplies (primarily due to lower commodity costs in the prior year), an increase in accounts receivable from affiliates (primarily due to timing of payments) and an increase in net regulatory assets (primarily due to the timing of rate recovery mechanisms), partially offset by an increase in accounts payable (primarily due to timing of payments).
The $5 million increase in cash provided by other operating activities was driven by a decrease in other assets (primarily related to lower deferred storm costs recorded as noncurrent regulatory assets).

(KU)

KU's cash provided by operating activities in 2024 increased $72 million compared with 2023.

Net income increased $43 million between the periods and included a decrease in non-cash components of $3 million.
The $19 million increase in cash from changes in working capital was primarily due to an increase in accounts payable to affiliates (primarily due to timing of payments) and a decrease in fuel, materials and supplies (primarily due to weather), partially offset by an increase in accounts receivable and unbilled revenues (primarily due to weather).
The $13 million increase in cash provided by other operating activities was driven by a decrease in other assets (primarily related to preliminary survey costs for new generation projects in the prior year).

Investing Activities

(All Registrants)

The components of the change in cash provided by (used in) investing activities for the nine months ended September 30, 2024 compared with 2023 were as follows.


	PPL		PPL Electric		LG&E		KU
Change - Cash Provided (Used)
Expenditures for PP&E	$	(204)	$	(167)	$	(50)	$	(33)





Notes receivable from affiliate	—		(418)		—		—
Other investing activities	(1)		—		—		(5)
Total	$	(205)	$	(585)	$	(50)	$	(38)

For PPL, the increase in expenditures for PP&E was due to an increase in project expenditures at PPL Electric, RIE, LG&E and KU. The increase in expenditures at PPL Electric was primarily due to increases in transmission and distribution projects. The increase in expenditures at LG&E and KU was primarily due to Mill Creek Unit 5 and increases in the Advanced Metering Infrastructure initiative.

For PPL Electric, the change in "Notes receivable from affiliate" activity resulted from the funding of $418 million to an affiliate. See Note 11 to the Financial Statements for further discussion of intercompany borrowings.

Table of Cont en ts

Financing Activities

(All Registrants)

The components of the change in cash provided by (used in) financing activities for the nine months ended September 30, 2024 compared with 2023 were as follows.


	PPL		PPL Electric		LG&E		KU
Change - Cash Provided (Used)
Debt issuance/retirement, net	$	530	$	470	$	(99)	$	(86)




Dividends	(31)		(48)		(23)		(42)

Capital contributions/distributions, net	—		560		102		11


Change in short-term debt, net	(294)		(551)		179		(17)

Net increase (decrease) in notes payable with affiliate	—		—		28		107
Other financing activities	23		7		4		4
Total	$	228	$	438	$	191	$	(23)

See Note 7 to the Financial Statements in this Form 10-Q for information on 2024 short-term and long-term debt activity, equity transactions and PPL dividends. See Note 8 to the Financial Statements in the Registrants' 2023 Form 10-K for information on 2023 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. At September 30, 2024, 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 (a)	$	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 (b)	$	2,900	$	—	$	1	$	2,899

(a)Includes a $1.25 billion syndicated credit facility with a $250 million borrowing sublimit for RIE and a $1 billion sublimit for PPL Capital Funding. RIE’s borrowing sublimit is adjustable, at the borrowers’ option, from $0 to $600 million, with the remaining balance of the $1.25 billion available under the facility allocated to PPL Capital Funding. At September 30, 2024, PPL Capital Funding and RIE had no commercial paper outstanding. RIE's obligations under the facility are not guaranteed by PPL.

(b)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 - 9%, 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	$	34	$	—	$	716
KU Money Pool (a)	650		128		—		522

(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 SOFR.

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

Table of Cont en ts

Commercial Paper (All Registrants)

The Registrants, and PPL Capital Funding and RIE, 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, with PPL Capital Funding and RIE’s issuances supported by PPL Capital Funding’s syndicated credit facility. The following commercial paper programs were in place at September 30, 2024:


	Capacity		Commercial Paper Issuances		Unused Capacity
PPL Capital Funding (a)	$	1,350	$	—	$	1,350
Rhode Island Energy (a)	400		—		400
PPL Electric	650		—		650

LG&E	500		—		500
KU	400		—		400
Total PPL	$	3,300	$	—	$	3,300

(a)Issuances under the PPL Capital Funding and RIE commercial paper programs are supported by the PPL Capital Funding syndicated credit facility, which has a total capacity of $1.25 billion, currently with a $250 million borrowing sublimit for RIE and a $1 billion sublimit for PPL Capital Funding. PPL Capital Funding's Commercial paper program is also backed by a separate bilateral credit facility for $100 million.

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 August 2024, PPL declared a quarterly common stock dividend, payable October 1, 2024, of 25.75 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.

Since June 2023, the rating agencies have taken no ratings actions related to the Registrants and their subsidiaries.

Table of Cont en ts

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 September 30, 2024.

(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' 2023 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 September 30, 2024.


	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	$	(7)	$	(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 September 30, 2024 is shown below.

Table of Cont en ts


	10% Adverse Movement in Rates on Fair Value of Debt
PPL	$	613
PPL Electric	261
LG&E	88
KU	129

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' 2023 Form 10-K.

Credit Risk

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' 2023 Form 10-K for additional information.

Table of Cont en ts

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 acquisition, development, and divestiture activity.

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' 2023 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' 2023 Form 10-K for information on projected environmental capital expenditures for 2024 through 2026. 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” in the Registrants' 2023 Form 10-K.

Air (PPL, LG&E and KU)

NAAQS

The Clean Air Act has a significant impact on the operation of fossil fuel generation plants. The Clean Air Act requires the EPA periodically to establish and review NAAQS for six pollutants: carbon monoxide, lead, nitrogen dioxide, ozone (contributed to by nitrogen oxide emissions), particulate matter and sulfur dioxide. In December 2020, the EPA released final actions keeping the existing NAAQS standard for particulate matter and ozone without change, but the EPA subsequently announced reconsideration of those decisions in June 2021. On February 2, 2024, the D.C. Circuit Court granted the EPA’s motion for voluntary remand, without vacatur, of the ozone rule. EPA will complete a new review to incorporate new studies and updated analyses to determine the adequacy of the existing ozone standard. On March 6, 2024, the EPA finalized revisions to the particulate matter standard that lowers the primary standard for fine particulates. Based on the new standard, the EPA could potentially designate Jefferson County, Kentucky (Louisville) as being in nonattainment with the new particulate matter standard and require additional particulate matter reductions from sources including LG&E’s Mill Creek Station. The new particulate matter standard may also result in more stringent requirements for new generation located in nonattainment areas. PPL, LG&E, and KU are unable to predict future implementation actions or the outcome of future evaluations by the EPA and the states with respect to the NAAQS standards.

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

Table of Cont en ts

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 were 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. In response to judicial orders that stayed the EPA’s denial of certain state implementation plans, the EPA in July 2023 issued an interim stay of implementation of Good Neighbor Plan requirements for emission sources in several states including Kentucky. In June 2024, the U.S. Supreme Court issued a stay of the Good Neighbor Plan while the Court of Appeals for the D.C. Circuit considers numerous legal challenges to the Good Neighbor Plan. On September 12, 2024, the D.C. Circuit granted the EPA’s motion for voluntary partial remand of the Good Neighbor Plan to allow it to supplement the record. On October 18, 2024, several states filed a petition challenging the order in the U.S. Supreme Court.

PPL, LG&E, and KU are unable to predict the ultimate 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.

Modification of 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. On May 7, 2024, the EPA issued a final rule increasing the stringency of MATS and further reducing emissions of certain hazardous air pollutants to reflect perceived developments in control technologies. Legal challenges to the rule have been filed in the D.C. Circuit Court. PPL, LG&E, and KU are reviewing the final rule to determine its impact and do not expect significant operational changes or additional controls to be required.

Greenhouse Gas Standards

On May 9, 2024, the EPA issued a final rule under Section 111 of the Clean Air Act which establishes performance standards and emissions limits aimed at reducing GHG emissions from certain new, existing, and modified fossil fuel-fired electric generating units (EGUs). In the final rule, the EPA announced it would set performance standards for existing natural gas-fired turbines in a future rule. The standards require phased implementation of carbon mitigation technologies including state-of-the-art efficiency requirements, carbon capture and sequestration, and natural gas co-firing. New natural gas EGUs would be immediately subject to the stricter efficiency standard. Legal challenges to the rule have been filed in the D.C. Circuit Court. PPL, LG&E, and KU are unable to predict the impact of new GHG reduction requirements until completion of a comprehensive review and resolution of related legal and regulatory proceedings. While the impact of new GHG reduction requirements on operations and financial results of operations could potentially be substantial, the cost of complying with such requirements is expected to be subject to rate recovery.

New Accounting Guidance (All Registrants)

There has been no new accounting guidance adopted in 2024. See Note 17 to the Financial Statements for discussion of significant accounting guidance pending adoption as of September 30, 2024.

Other Matters

On March 6, 2024, the SEC adopted final rules that require registrants to disclose certain climate-related information in registration statements and annual reports. The final rules require registrants to disclose, among other things, material climate-related risks, activities to mitigate such risks and information about oversight by the registrant’s board of directors and management’s role in managing material climate-related risks. The final rule also requires registrants to provide information related to any climate-related targets or goals that are material to the registrant’s business, results of operations, or financial condition. A majority of the reporting requirements are applicable to the fiscal year beginning in 2025, with the addition of assurance reporting for greenhouse gas emissions starting in 2029 for large accelerated filers. Litigation challenging the new rule was filed by multiple parties in multiple jurisdictions, which have been consolidated and assigned to the U.S. Court of Appeals for the Eighth Circuit. On April 4, 2024, the SEC announced that it is voluntarily staying the implementation of the

Table of Cont en ts

climate disclosure regulations while the U.S. Court of Appeals considers the litigation. The Registrants are currently evaluating the impact of the final rules on their respective consolidated financial statements and related disclosures.

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' 2023 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

Table of Cont en ts

PPL Corporation

PPL Electric Utilities Corporation

Louisville Gas and Electric Company

Kentucky Utilities Company

Previous: Item 1. Financial Statements · Next: Item 3. Quantitative and Qualitative Disclosures About Market Risk