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

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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' 2024 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, 2025 with the same period in 2024. 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).

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			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 consists of corporate level financing

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costs, certain unallocated costs and certain non-recoverable costs incurred in conjunction with the acquisition of Rhode Island Energy.

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 focused on creating the utilities of the future to drive greater value for our customers and shareowners. Key objectives in support of this strategy include:

Strengthening the reliability and resilience of our electric and gas networks to improve service and protect against current and future weather and storms.
Advancing a cleaner energy future affordably and reliably. This includes expanding and modernizing our generation with natural gas, renewables and battery storage, while supporting research and development of low-carbon solutions.
Driving operational efficiencies to improve customer service and help keep energy affordable.
Utilizing artificial intelligence and other advanced technologies to inform decision making, optimize asset planning and maintenance and better manage supply and demand on the grid.
Empowering customers through expanded digital options and improved service.
Engaging with key stakeholders to strengthen resource adequacy, power economic development, and support the growth and success of the regions we serve.

This strategy supports our mission to provide safe, affordable, reliable and sustainable energy to our customers and competitive, long-term returns to shareowners.

Financial and Operational Developments

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 1,500 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 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, was 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 retirement of Mill Creek Unit 1, which occurred on December 31, 2024, requesting recovery of associated costs under the RAR rider. On February 24, 2025, the KPSC issued an order approving LG&E’s cost recovery for Mill Creek Unit 1 under the RAR rider. See Note 6 to the Financial Statements for additional information on the Mill Creek Unit 1 RAR rider application.

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2025 CPCN

On February 28, 2025, LG&E and KU filed an application with the KPSC regarding certain future plans for new generation and generation-related construction matters. The proposals included in the application are intended to serve anticipated load growth, including from potential data center demand in LG&E's or KU’s service territory. The proposals do not include retirements of coal or other fossil-fueled plants, which would require additional KPSC approval procedures under Kentucky legislation enacted in 2023 and 2024.

LG&E and KU submitted a joint application to the KPSC for approval of certain certificates of public convenience and necessity, site compatibility certificates, and accounting treatment, where applicable, relating to a number of generation-related plans or projects that generally are expected to become operational or established within the next six years. The aggregate projected capital expenditures associated with these proposals are currently expected to be $3.7 billion over the 2025 to 2031 period. Projected capital expenditures related to these proposals for the years 2025 through 2027 were included in PPL's, LG&E's and KU's projections in “Management Discussion and Analysis – Financial Condition - Liquidity and Capital Resources - Forecasted Uses of Cash – Capital Expenditures” in the 2024 Form 10-K. The application includes proposals:

*•*to build a 645 MW natural gas combined cycle (NGCC) generation unit at KU's E.W. Brown station,

*•*to build a 645 MW NGCC generation unit at LG&E's Mill Creek station,

*•*to build a four-hour 400 MW (1,600 MWh total) battery energy storage system (BESS) at LG&E's Cane Run station, and

*•*to build a selective catalytic reduction (SCR) environmental facility at KU’s Ghent station Unit 2.

The new NGCC units are anticipated to be wholly owned by LG&E and the BESS unit jointly owned by LG&E (32%) and KU (68%), with actual project costs allocated consistent with LG&E's and KU's ultimate ownership shares and existing shared dispatch, cost allocation, tariff or other frameworks. The proposed Mill Creek NGCC unit is in addition to a new NGCC unit currently under construction at that location.

The filing also notes projected in service dates for the projects, including the E.W. Brown NGCC unit in 2030, the Mill Creek NGCC unit in 2031, the Cane Run BESS in 2028 and the Ghent SCR facility in 2028.

LG&E and KU anticipate a ruling from the KPSC during the fourth quarter of 2025. LG&E and KU cannot predict the outcome of the proceedings.

2025 Kentucky Rate Cases

On April 4, 2025, LG&E and KU filed with the KPSC respective Notices of Intent to file, on or after May 30, 2025, applications for a general adjustment in their electric and gas rates following a four-year stay out provision included in the base rate cases that became effective July 1, 2021. These applications will be supported by a fully forecasted test period ending December 31, 2026. The applications will request an adjustment of their electric and gas rates and charges, request other changes to their electric and gas tariffs, including terms and conditions of service, and address certain regulatory and accounting treatments. In addition, pursuant to prior orders of the KPSC, LG&E and KU are required to include an assessment of a potential legal merger of LG&E and KU in each rate case proceeding. If LG&E and KU conclude a legal merger may be appropriate, LG&E and KU would formally seek regulatory approval for a merger in a future proceeding. There is no assurance that LG&E and KU would receive regulatory approval for a potential merger.

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

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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. The FERC issued the substantive order on rehearing on March 21, 2024, reaffirming its prior decision. Oral argument before the D.C. Circuit Court of Appeals occurred on January 21, 2025. 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 2026 Gas ISR Plan

On December 31, 2024, RIE filed its FY 2026 Gas ISR Plan with the RIPUC with a budget that included $187 million of capital investment spend and up to $15 million of additional contingency plan spend in connection with the PHMSA's potential enactment of regulations during FY 2026 that, if enacted, would significantly alter RIE's leak detection and repair obligations under federal regulations. The Plan also included proposed spending on curb-to-curb paving of $22 million. On March 28, 2025, the RIPUC approved a FY 2026 Gas ISR Plan of $165 million of which $147 million is for capital investment spend and $18 million spend for paving costs as operations and maintenance (O&M), plus a potential additional $15 million is available if the above-mentioned regulations are implemented by the PHMSA. On March 31, 2025, the RIPUC approved RIE's compliance filing for rates effective April 1, 2025.

FY 2026 Electric ISR Plan

On December 23, 2024, RIE filed its FY 2026 Electric ISR Plan with the RIPUC with a budget that included $248 million of capital investment spend (including $88 million for Advanced Metering Functionality (AMF)), $14 million of vegetation operation and maintenance (O&M) spend and $1 million of Other O&M spend. On March 28, 2025, the RIPUC approved a FY 2026 Electric ISR Plan of $219 million for capital investment spend (including $88 million for AMF), $14 million for vegetation management O&M spend, and $1 million for Other O&M spend. On March 31, 2025, the RIPUC approved RIE's compliance filing for rates effective April 1, 2025.

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. On February 28, 2025, the PAPUC issued its written order permitting PPL Electric to increase its DSIC cap from 5% to 7.5% for bills rendered on or after March 13, 2025 until the effective date of rates established in PPL Electric’s next base rate case or the end of the PPL Electric’s 2023-2027 Long-term Infrastructure Improvement Plan, whichever occurs first, at which time it will return to 5%.

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, 2025 with the same period in 2024. 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.

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(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, 2025 with the same period in 2024.

(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 March 31 includes the following results:


	Three Months
		2025		2024		$ Change
Operating Revenues		$	2,504	$	2,304	$	200

Operating Expenses
Operation
Fuel		234		209		25
Energy purchases		559		520		39
Other operation and maintenance		598		626		(28)
Depreciation		322		316		6
Taxes, other than income		113		88		25
Total Operating Expenses		1,826		1,759		67
Operating Income		678		545		133
Other Income (Expense) - net		28		22		6
Interest Expense		190		179		11
Income Before Income Taxes		516		388		128
Income Taxes		102		81		21




Net Income		$	414	$	307	$	107

Operating Revenues

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


	Three Months
PPL Electric distribution price (a)	$	(6)
PPL Electric distribution volume (b)	22
PPL Electric PLR (c)	18
PPL Electric transmission formula rate (d)	15



LG&E volumes (b)	10
LG&E fuel and other energy purchases (e)	25



KU volumes (b)	18
KU fuel and other energy purchases (f)	8
KU off-system sales (g)	9






RIE energy purchases and other recoveries (h)	28
RIE net metering presentation (i)	41
RIE capital investments	10

Other	2








Total	$	200

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

(b)The increases were primarily due to weather, along with other higher usage in 2025 at PPL Electric.

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

(d)The increase was primarily due to returns on additional transmission capital investments and return of depreciation, partially offset by O&M expenses.

(e)The increase was primarily due to higher recoveries of energy purchases.

(f)The increase was primarily due to higher recoveries of fuel expenses.

(g)The increase was primarily due to higher volumes.

(h)The increase was primarily due to higher transmission costs, higher recoveries of gas related maintenance expenses and higher gross earnings taxes, partially offset by lower recoveries of commodity costs.

(i)In conjunction with the completion of the transition services agreement associated with the RIE acquisition, PPL conformed the presentation of RIE’s net metering charges beginning in the fourth quarter of 2024 with the presentation of the other operating companies, resulting in an increase in Operating Revenues and a corresponding increase in Energy purchases. See Note 3 to the Financial Statements for additional information.

Fuel

Fuel increased $25 million for the three months ended March 31, 2025 compared with 2024, primarily due to an increase in volumes due to weather.

Energy Purchases

The increase (decrease) in energy purchases was due to:


	Three Months
PPL Electric PLR volumes	$	25
PPL Electric PLR prices	(15)
LG&E volumes	12
RIE commodity costs	(35)
RIE net metering presentation (a)	41
Other	11
Total	$	39

(a)In conjunction with the completion of the transition services agreement associated with the RIE acquisition, PPL conformed the presentation of RIE’s net metering charges beginning in the fourth quarter of 2024 with the presentation of the other operating companies, resulting in an increase in Operating Revenues and a corresponding increase in Energy purchases. See Note 3 to the Financial Statements for additional information.

Other Operation and Maintenance

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


	Three Months



PPL Electric bad debt expenses	$	(21)















RIE gas maintenance expenses	15

RIE transmission expenses	24
RIE bad debt expenses	6


Transition costs associated with RIE	(64)
Other	12
Total	$	(28)

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Taxes, Other Than Income

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


	Three Months
State gross earnings and gross receipts tax (a)	$	26

Other	(1)
Total	$	25

(a)The increase was primarily due to the RIE Gross Earnings Tax Holiday Credit that took place in 2024.

Interest Expense

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


	Three Months

Long-term debt (a)	$	15


Other	(4)
Total	$	11

(a) The increase was primarily due to increased borrowings.

Income Taxes

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


	Three Months
Change in pre-tax income	$	30










Utility rate-making tax adjustments (a)	(5)



Other	(4)
Total	$	21

(a) Primarily consists of tax impacts of AFUDC equity and related depreciation across PPL utilities and flow through tax impacts. Flow through occurs when the regulator excludes deferred tax expense or benefit from recoverable costs when determining income tax expense.

See Note 5 to the Financial Statements for additional information on income taxes.

Segment Earnings

PPL's Net Income (Loss) by reportable segment for the periods ended March 31 were as follows:


	Three Months
	2025		2024		$ Change

Kentucky Regulated	$	223	$	190	$	33
Pennsylvania Regulated	184		149		35
Rhode Island Regulated	70		64		6
Corporate and Other (a)	(63)		(96)		33

Net Income (Loss)	$	414	$	307	$	107

(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.

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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
	2025		2024		$ Change
Kentucky Regulated	$	225	$	191	$	34
Pennsylvania Regulated	185		161		24
Rhode Island Regulated	72		78		(6)
Corporate and Other	(38)		(28)		(10)
Earnings from Ongoing Operations	$	444	$	402	$	42

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 primarily consists of the regulated electricity generation, transmission and distribution operations conducted by LG&E and KU, as well as LG&E's regulated transmission, 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
	2025		2024		$ Change
Operating Revenues	$	1,059	$	984	$	75
Fuel	234		209		25
Energy purchases	96		77		19
Other operation and maintenance	200		202		(2)
Depreciation	176		176		—
Taxes, other than income	25		25		—
Total Operating Expenses	731		689		42
Other Income (Expense) - net	8		3		5
Interest Expense	60		60		—
Income Taxes	53		48		5
Net Income	223		190		33
Less: Special Items	(2)		(1)		(1)
Earnings from Ongoing Operations	$	225	$	191	$	34

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
		2025			2024
Strategic corporate initiatives, net of tax of $0 (a)	Other operation and maintenance		$	—		$	(1)
IT transformation, net of tax of $1 (b)	Other operation and maintenance		(1)			—
Office relocation and related costs, net of tax of $0 (c)	Other operation and maintenance		(1)			—



Total Special Items			$	(2)		$	(1)

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

(b)Costs associated with PPL's restructuring and rebuilding of its IT infrastructure, organization and systems.

(c)Certain costs related to the relocation of corporate offices.

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
Operating Revenues	$	75
Fuel	(25)
Energy purchases	(19)
Other operation and maintenance	4
Depreciation	—
Taxes, other than income	—
Other Income (Expense) - net	5
Interest Expense	—
Income Taxes	(6)
Earnings from Ongoing Operations	34
Special Items, after-tax	(1)
Net Income	$	33

Higher operating revenues primarily due to a $34 million increase in recoveries of fuel and energy purchases, a $28 million increase in sales volumes due to weather and a $14 million increase in off-system sales.
Higher fuel expense primarily due to an increase in volumes due to weather.
Higher energy purchases primarily due to an increase in volumes primarily due to weather.

Pennsylvania Regulated Segment

The Pennsylvania Regulated segment consists of 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
	2025		2024		$ Change
Operating Revenues	$	819	$	770	$	49

Energy purchases	229		214		15
Other operation and maintenance	162		181		(19)
Depreciation	102		99		3
Taxes, other than income	41		36		5
Total Operating Expenses	534		530		4
Other Income (Expense) - net	11		9		2
Interest Income from Affiliate	2		10		(8)
Interest Expense	60		62		(2)
Income Taxes	54		48		6
Net Income	184		149		35
Less: Special Items	(1)		(12)		11
Earnings from Ongoing Operations	$	185	$	161	$	24

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.

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	Income Statement Line Item		Three Months
		2025			2024
PPL Electric billing issue, net of tax of $4 (a)	Other operation and maintenance		$	—		$	(11)
Strategic corporate initiatives, net of tax of $0 (b)	Other operation and maintenance		—			(1)
Office relocation and related costs, net of tax of $1 (c)	Other operation and maintenance		(1)			—

Total Special Items			$	(1)		$	(12)

(a)Certain expenses related to billing issues.

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

(c)Certain costs related to the relocation of corporate offices.

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
Operating Revenues	$	49
Energy purchases	(15)
Other operation and maintenance	4
Depreciation	(3)
Taxes, other than income	(5)
Other Income (Expense) - net	2
Interest Income from Affiliate	(8)
Interest Expense	2
Income Taxes	(2)
Earnings from Ongoing Operations	24
Special Items, after-tax	11
Net Income	$	35

Higher operating revenues primarily due to a $22 million increase in distribution volumes primarily due to weather, $18 million of higher PLR and a $15 million increase in transmission formula rate returns, partially offset by a $6 million decrease in distribution prices.
Higher energy purchases primarily due to $25 million of higher PLR volumes, partially offset by $15 million of lower PLR prices.

Rhode Island Regulated Segment

The Rhode Island Regulated segment consists of the regulated electricity transmission and distribution and natural gas distribution operations of RIE.

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


	Three Months
	2025		2024		$ Change
Operating Revenues	$	626	$	549	$	77

Energy purchases	235		229		6
Other operation and maintenance	200		156		44
Depreciation	42		41		1
Taxes, other than income	47		27		20
Total Operating Expenses	524		453		71
Other Income (Expense) - net	7		7		—
Interest Income from Affiliate	2		—		2
Interest Expense	23		24		(1)
Income Taxes	18		15		3
Net Income	70		64		6
Less: Special Items	(2)		(14)		12
Earnings from Ongoing Operations	$	72	$	78	$	(6)

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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
		2025			2024



Acquisition integration, net of tax of $0, $4 (a)	Other operation and maintenance		$	(2)		$	(14)
Acquisition integration, net of tax of ($2) (b)	Other Income (Expense)		9			—
IT transformation, net of tax of $0 (c)	Other operation and maintenance		(1)			—
Energy efficiency programs settlement, net of tax of $0 (d)	Other Income (Expense)		(8)			—



Total Special Items			$	(2)		$	(14)

(a)2025 costs are related to distributed generation projects that PPL will not seek regulatory recovery of. 2024 primarily includes certain transition services agreement costs for IT systems that will not be part of PPL's ongoing operations.

(b)Costs associated with a final transition services agreement settlement.

(c)Costs associated with PPL's restructuring and rebuilding of its IT infrastructure, organization and systems.

(d)See Note 10 to the Financial Statements for additional information.

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
Operating Revenues	$	77
Energy purchases	(6)
Other operation and maintenance	(57)
Depreciation	(1)
Taxes, other than income	(20)
Other Income (Expense) - net	(1)
Interest Income from Affiliate	2
Interest Expense	1
Income Taxes	(1)
Earnings from Ongoing Operations	(6)
Special Items, after-tax	12
Net Income	$	6

Higher operating revenues primarily due to a $41 million increase related to the effects of conforming the presentation of RIE's net metering charges to that of PPL's other operating utilities beginning in the fourth quarter of 2024, a $24 million increase in recovery of transmission expenses, a $22 million increase in recovery of gross earnings taxes, a $15 million increase in recovery of gas maintenance expenses and a $10 million increase related to capital investments, partially offset by a $35 million decrease in recovery of commodity costs.
Higher energy purchases primarily due to a $41 million increase due to the effects of conforming the presentation of RIE's net metering charges to that of PPL's other operating utilities beginning in the fourth quarter of 2024, partially offset by a $35 million decrease in commodity costs.
Higher operation and maintenance expense primarily due to a $24 million increase in transmission expenses, a $15 million increase in gas maintenance expenses, a $6 million increase in bad debt expenses and an $11 million increase of other items that were not individually significant.
Higher taxes, other than income primarily due to an increase in gross earnings taxes.

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.

Table of Conte nts


	2025 Three Months
	KY Regulated		PA Regulated		RI Regulated		Corporate and Other		Total
Net Income (Loss)	$	223	$	184	$	70	$	(63)	$	414
Less: Special Items (expense) benefit:
Talen litigation costs, net of tax of $0 (a)	—		—		—		(1)		(1)
Acquisition integration, net of tax of ($2), $4 (b)	—		—		7		(14)		(7)
IT transformation, net of tax of $1, $0, $3 (c)	(1)		—		(1)		(10)		(12)
Energy efficiency programs settlement, net of tax of $0 (d)	—		—		(8)		—		(8)
Office relocation and related costs, net of tax of $0, $1 (e)	(1)		(1)		—		—		(2)




Total Special Items	(2)		(1)		(2)		(25)		(30)
Earnings from Ongoing Operations	$	225	$	185	$	72	$	(38)	$	444

(a)PPL incurred legal expenses related to litigation associated with its former affiliate, Talen Montana, LLC and certain affiliated entities.

(b)Rhode Island Regulated primarily includes a final transition services agreement settlement. Corporate and Other primarily includes integration and related costs associated with the acquisition of RIE.

(c)Costs associated with PPL’s restructuring and rebuilding of its IT infrastructure, organization and systems.

(d)See Note 10 to the Financial Statements for additional information.

(e)Certain costs related to the relocation of corporate offices.


	2024 Three Months
	KY Regulated		PA Regulated		RI Regulated		Corporate and Other		Total
Net Income (Loss)	$	190	$	149	$	64	$	(96)	$	307
Less: Special Items (expense) benefit:
Strategic corporate initiatives, net of tax of $0, $0, $1 (a)	(1)		(1)		—		(2)		(4)
Acquisition integration, net of tax of $4, $17 (b)	—		—		(14)		(66)		(80)
PPL Electric billing issue, net of tax of $4 (c)	—		(11)		—		—		(11)






Total Special Items	(1)		(12)		(14)		(68)		(95)
Earnings from Ongoing Operations	$	191	$	161	$	78	$	(28)	$	402

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

(b)Rhode Island Regulated primarily includes certain transition services agreement 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.

(c)Certain expenses related to billing issues.

PPL Electric: Statement of Income Analysis

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


	Three Months
		2025		2024		$ Change
Operating Revenues		$	819	$	770	$	49
Operating Expenses
Operation
Energy purchases		229		214		15

Other operation and maintenance		162		181		(19)
Depreciation		102		99		3
Taxes, other than income		41		36		5
Total Operating Expenses		534		530		4
Operating Income		285		240		45
Other Income (Expense) - net		11		9		2
Interest Income from Affiliate		2		10		(8)
Interest Expense		60		62		(2)
Income Before Income Taxes		238		197		41
Income Taxes		54		48		6
Net Income		$	184	$	149	$	35

Table of Conte nts

Operating Revenues

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


	Three Months
Distribution price (a)	$	(6)
Distribution volume (b)	22
PLR (c)	18
Transmission formula rate (d)	15



Total	$	49

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

(b)The increase was primarily due to weather, along with other higher usage in 2025.

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

(d)The increase was primarily due to returns on additional transmission capital investments and return of depreciation, partially offset by O&M expenses.

Energy Purchases

Energy purchases increased $15 million for the three months ended March 31, 2025 compared with 2024, primarily due to higher PLR volumes of $25 million, partially offset by lower PLR prices of $15 million.

Other Operation and Maintenance

Other operation and maintenance decreased $19 million for the three months ended March 31, 2025 compared with 2024, primarily due to lower bad debt expenses.

LG&E: Statement of Income Analysis

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


	Three Months
		2025		2024		$ Change
Operating Revenues
Retail and wholesale		$	500	$	460	$	40
Electric revenue from affiliate		5		16		(11)
Total Operating Revenues		505		476		29
Operating Expenses
Operation
Fuel		82		86		(4)
Energy purchases		88		71		17
Energy purchases from affiliate		5		1		4
Other operation and maintenance		89		88		1
Depreciation		74		76		(2)
Taxes, other than income		13		13		—
Total Operating Expenses		351		335		16
Operating Income		154		141		13
Other Income (Expense) - net		3		2		1

Interest Expense		26		26		—
Income Before Income Taxes		131		117		14
Income Taxes		26		24		2
Net Income		$	105	$	93	$	12

Operating Revenues

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

Table of Conte nts


	Three Months



Fuel and other energy purchases (a)	$	12



Volumes (b)	10
Off-system sales (c)	7

Total	$	29

(a)The increase was primarily due to higher recoveries of energy purchases and lower revenues from affiliates due to timing of plant outages and retirements.

(b)The increase was primarily due to weather.

(c)The increase was primarily due to higher volumes.

Energy Purchases

Energy purchases increased $17 million for the three months ended March 31, 2025 compared with 2024, primarily due to an increase in volumes due to weather.

KU: Statement of Income Analysis

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


	Three Months
		2025		2024		$ Change
Operating Revenues
Retail and wholesale		$	559	$	524	$	35
Electric revenue from affiliate		5		1		4
Total Operating Revenues		564		525		39
Operating Expenses
Operation
Fuel		152		123		29
Energy purchases		7		6		1
Energy purchases from affiliate		5		16		(11)
Other operation and maintenance		100		102		(2)
Depreciation		102		99		3
Taxes, other than income		12		12		—
Total Operating Expenses		378		358		20
Operating Income		186		167		19
Other Income (Expense) - net		5		2		3
Interest Expense		35		34		1

Income Before Income Taxes		156		135		21
Income Taxes		31		27		4
Net Income		$	125	$	108	$	17

Operating Revenues

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


	Three Months



Fuel and other energy purchases (a)	$	12



Volumes (b)	18
Off-system sales (c)	9


Total	$	39

(a)The increase was primarily due to higher recoveries of fuel expenses.

(b)The increase was primarily due to weather.

(c)The increase was primarily due to higher volumes.

Table of Conte nts

Fuel

Fuel expense increased $29 million for the three months ended March 31, 2025 compared with 2024, primarily due to an increase in volumes due to weather and lower energy purchases from affiliates.

Energy Purchases from affiliate

Energy purchases from affiliate decreased $11 million for the three months ended March 31, 2025 compared with 2024, primarily due to a decrease in volumes due to the timing and scope of plant outages and retirements.

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
March 31, 2025
Cash and cash equivalents	$	312	$	27	$	10	$	14

Short-term debt	778		55		89		208
Long-term debt due within one year	569		—		300		268
Notes payable to affiliates			—		—		8

December 31, 2024
Cash and cash equivalents	$	306	$	24	$	8	$	13
Short-term debt	303		—		25		140
Long-term debt due within one year	551		—		300		250
Notes payable to affiliates			—		43		73

(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
2025
Operating activities	$	513	$	134	$	199	$	253
Investing activities	(783)		(97)		(122)		(174)
Financing activities	271		(34)		(78)		(81)
2024
Operating activities	$	282	$	28	$	166	$	252
Investing activities	(591)		(780)		(120)		(148)
Financing activities	248		722		(60)		(108)
Change - Cash Provided (Used)
Operating activities	$	231	$	106	$	33	$	1
Investing activities	(192)		683		(2)		(26)
Financing activities	23		(756)		(18)		27

Table of Conte nts

Operating Activities

The components of the change in cash provided by (used in) operating activities for the three months ended March 31, 2025 compared with 2024 were as follows.


	PPL		PPL Electric		LG&E		KU
Change - Cash Provided (Used)
Net income	$	107	$	35	$	12	$	17
Non-cash components	(23)		(4)		(3)		5
Working capital	202		89		56		(3)

Other operating activities	(55)		(14)		(32)		(18)
Total	$	231	$	106	$	33	$	1

(PPL)

PPL's cash provided by operating activities in 2025 increased $231 million compared with 2024.

Net income increased $107 million between the periods and included a decrease in non-cash components of $23 million. The decrease in non-cash components was primarily due to a decrease in deferred income taxes and investment tax credits.
The $202 million increase in cash from changes in working capital was primarily due to increases in accounts payable and taxes payable (primarily due to timing of payments), a decrease in net regulatory assets (primarily due to the timing of rate recovery mechanisms), a decrease in unbilled revenues (primarily due to weather) and a decrease in prepayments (primarily due to the timing of payments), partially offset by an increase in accounts receivable (primarily due to timing of payments).
The $55 million decrease in cash provided by other operating activities was driven primarily by an increase in other assets (primarily related to preliminary survey costs for new generation projects) and an increase in noncurrent regulatory assets (primarily related to deferred storm costs recorded as noncurrent regulatory assets).

(PPL Electric)

PPL Electric's cash provided by operating activities in 2025 increased $106 million compared with 2024.

Net income increased $35 million between the periods and included a decrease in non-cash components of $4 million.
The $89 million increase in cash from changes in working capital was primarily due to increases in accounts payable and taxes payable (primarily due to timing of payments), a decrease in net regulatory assets (primarily due to the timing of rate recovery mechanisms) and a decrease in prepayments (primarily due to the timing of payments), partially offset by an increase in accounts receivable (primarily due to timing of payments).
The $14 million decrease in cash provided by other operating activities was driven primarily by an increase in noncurrent regulatory assets (primarily related to deferred storm costs recorded as noncurrent regulatory assets).

(LG&E)

LG&E's cash provided by operating activities in 2025 increased $33 million compared with 2024.

Net income increased $12 million between the periods and included a decrease in non-cash components of $3 million.
The $56 million increase in cash from changes in working capital was primarily due to a decrease in accounts receivable from affiliates (primarily due to timing of payments), an increase in accounts payable (primarily due to timing of payments) and decreases in fuel, materials and supplies and accounts receivable (primarily due to weather).
The $32 million decrease in cash provided by other operating activities was driven by an increase in other assets (primarily related to preliminary survey costs for new generation projects).

Table of Conte nts

(KU)

KU's cash provided by operating activities in 2025 increased $1 million compared with 2024.

Net income increased $17 million between the periods and included an increase in non-cash components of $5 million.
The $3 million decrease in cash from changes in working capital was primarily due to a decrease in accounts payable to affiliates (primarily due to timing of payments) and an increase in accounts receivable (primarily due to weather), partially offset by a decrease in unbilled revenues (primarily due to weather) and an increase in accounts payable (primarily due to timing of payments).
The $18 million decrease in cash provided by other operating activities was driven by an increase in other assets (primarily related to higher 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, 2025 compared with 2024 were as follows.


	PPL		PPL Electric		LG&E		KU
Change - Cash Provided (Used)
Expenditures for PP&E	$	(197)	$	(99)	$	(25)	$	(26)





Notes receivable from affiliate	—		776		23		—
Other investing activities	5		6		—		—
Total	$	(192)	$	683	$	(2)	$	(26)

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 payments received of $776 million from an affiliate. 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, 2025 compared with 2024 were as follows.


	PPL		PPL Electric		LG&E		KU
Change - Cash Provided (Used)
Debt issuance/retirement, net	$	(1,148)	$	(649)	$	—	$	—




Dividends	(13)		—		(6)		1

Capital contributions/distributions, net	—		(675)		(4)		13


Change in short-term debt, net	1,176		564		36		116

Net increase (decrease) in notes payable with affiliate	—		—		(43)		(102)
Other financing activities	8		4		(1)		(1)
Total	$	23	$	(756)	$	(18)	$	27

See Note 7 to the Financial Statements in this Form 10-Q for information on 2025 short-term and long-term debt activity, equity transactions and PPL dividends. See Note 8 to the Financial Statements in the Registrants' 2024 Form 10-K for information on 2024 activity.

Table of Conte nts

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 March 31, 2025, 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)	$	1,600	$	—	$	427	$	1,173
PPL Electric Credit Facility	750		—		56		694


LG&E Credit Facility	600		—		89		511
KU Credit Facility	600		—		209		391
Total Credit Facilities (b)	$	3,550	$	—	$	781	$	2,769

(a)Includes a $1.5 billion syndicated credit facility with a $250 million borrowing sublimit for RIE and a $1.25 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 $1.5 billion available under the facility allocated to PPL Capital Funding. At March 31, 2025, PPL Capital Funding had $427 million of commercial paper outstanding 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 - 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	$	—	$	89	$	661
KU Money Pool (a)	650		8		209		433

(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.

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 March 31, 2025:


	Capacity		Commercial Paper Issuances		Unused Capacity
PPL Capital Funding (a)	$	1,350	$	427	$	923
RIE (a)	250		—		250
PPL Electric	650		55		595

LG&E	500		89		411
KU	400		209		191
Total PPL	$	3,150	$	780	$	2,370

(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 $1.5 billion, currently with a $250 million borrowing sublimit for RIE and a $1.25 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.

Table of Conte nts

Long-term Debt (All Registrants)

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

(PPL)

Equity Security Activities

ATM Program

In February 2025, PPL entered into an equity distribution agreement, pursuant to which PPL may sell, from time to time, up to an aggregate of $2 billion of its common stock through an ATM Program, including an optional forward sales component. Each forward contract under the agreement must be settled within 24 months. The compensation paid to the selling agents by PPL may be up to 2% of the gross offering proceeds of the shares. During the three months ended March 31, 2025, PPL entered into a forward contract to sell approximately 2.0 million shares of its common stock at an initial forward price of $34.49 per share. The forward sale price may be adjusted based on changes in daily interest rates, for certain stock loan fees as determined by a third-party agent, and will be subject to predetermined reductions based on expected dividends. This forward contract must be settled on or before December 30, 2025. PPL may elect, at its discretion, to physically settle, net share settle or net cash settle the forward contracts. At March 31, 2025, PPL could have settled the forward sale contract with physical delivery of 2.0 million shares of common stock for proceeds of approximately $70 million. In April 2025, PPL entered into forward contracts to sell approximately 2.8 million additional shares at a blended initial forward price of approximately $35.22 per share. The forward contracts under the ATM program are classified as equity transactions.

Common Stock Dividends

In February 2025, PPL declared a quarterly common stock dividend, payable April 1, 2025, of 27.25 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.

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

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Contingent Features," including a discussion of the potential additional collateral requirements for PPL for derivative contracts in a net liability position at March 31, 2025.

(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' 2024 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, 2025.


	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	$	(5)	$	(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, 2025 is shown below.


	10% Adverse Movement in Rates on Fair Value of Debt
PPL	$	601
PPL Electric	257
LG&E	86
KU	127

Commodity Price Risk

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

Table of Conte nts

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 also 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. Additionally, 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, including as a result of tariffs. 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 invest in 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' 2024 Form 10-K.

Credit Risk

See Notes 13 and 14 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' 2024 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 acquisition, development, and divestiture activity.

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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' 2024 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' 2024 Form 10-K for information on projected environmental capital expenditures for 2025 through 2027. 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' 2024 Form 10-K.

(PPL, LG&E and KU)

EPA Deregulatory Initiative

On March 12, 2025, the EPA announced a plan to reconsider 31 environmental rules including the Section 111 performance standards and emissions limits for greenhouse gases, the endangerment finding for greenhouse gases, the Good Neighbor Plan, the Mercury and Air Toxics Standards, revisions to the fine particulate matter standard, the ELGs, and the CCRs Rule. Supplementing previous Executive Orders directing various regulatory changes, on April 9, 2025, President Trump issued an Executive Order and Presidential Memorandum directing review of existing rules, repeal of unlawful rules, and initiation of a zero-based budgeting process by which certain rules would automatically expire unless extended. While the administration may seek to implement some regulatory changes outside of the rulemaking process, changes to existing rules are generally expected to require formal rulemaking proceedings. Any final EPA actions repealing or revising current rules will likely result in legal challenges. PPL, LG&E, and KU are unable to predict future regulatory changes, if any, that may result from the EPA’s deregulatory plan or the outcome of any associated legal challenges. PPL, LG&E, and KU will closely monitor the ongoing EPA initiative and any related litigation for the impact to our business including planned capital expenditures to comply with the EPA rules.

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Air

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 including ozone (contributed to by nitrogen oxide emissions) and particulate matter, which are particularly relevant for fossil fuel generation plants. On February 2, 2024, the D.C. Circuit Court granted the EPA’s motion for voluntary remand, without vacatur, of the ozone rule, which was under legal challenge. The 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. Several states and trade groups challenged the EPA’s finalized revisions to the particulate matter standard in the D.C. Circuit Court. In March 2025, the EPA announced that it would reconsider the revised fine particulate standard. Nonattainment designations for counties in which LG&E and KU generation is located, including Jefferson County, Kentucky, could potentially require additional particulate matter and nitrogen oxide reductions from sources including LG&E’s Mill Creek Station, and more stringent requirements for new generation. 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. In March 2023, the EPA 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. The rules provide for reduced availability of nitrogen oxide 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 June 2024, the U.S. Supreme Court issued a stay of the Good Neighbor Plan while the D.C. Circuit Court considers legal challenges to the rule. On December 10, 2024, EPA published in the Federal Register a supplement to the record. In March 2025, the EPA announced that it would reconsider the Good Neighbor Plan. On December 6, 2024, the U.S. Court of Appeals for the Sixth Circuit vacated and remanded the EPA’s disapproval of Kentucky’s state implementation plan for the ozone NAAQS. PPL, LG&E, and KU are monitoring ongoing legal and regulatory developments.

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 have reviewed the final rule and do not expect significant operational changes or additional controls to be required. In March 2025, the EPA announced that it would reconsider the final rule.

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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. In March 2025, the EPA announced that it would reconsider the final rule.

New Accounting Guidance (All Registrants)

There has been no new accounting guidance adopted in 2025. See Note 17 to the Financial Statements for discussion of significant accounting guidance pending adoption as of March 31, 2025.

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' 2024 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

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PPL Corporation

PPL Electric Utilities Corporation

Louisville Gas and Electric Company

Kentucky Utilities Company

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