filings.toolsItem 1. Financial Statements
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Item 1. Financial Statements
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
PPL Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars, except share data)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Operating Revenues | $ | 2,239 | $ | 2,066 | $ | 6,768 | $ | 6,251 | |||||||||||||||
| Operating Expenses | |||||||||||||||||||||||
| Operation | |||||||||||||||||||||||
| Fuel | 231 | 207 | 657 | 597 | |||||||||||||||||||
| Energy purchases | 422 | 338 | 1,369 | 1,133 | |||||||||||||||||||
| Other operation and maintenance | 586 | 681 | 1,798 | 1,930 | |||||||||||||||||||
| Depreciation | 331 | 322 | 977 | 957 | |||||||||||||||||||
| Taxes, other than income | 100 | 90 | 314 | 271 | |||||||||||||||||||
| Total Operating Expenses | 1,670 | 1,638 | 5,115 | 4,888 | |||||||||||||||||||
| Operating Income | 569 | 428 | 1,653 | 1,363 | |||||||||||||||||||
| Other Income (Expense) - net (Note 12) | 39 | 32 | 90 | 86 | |||||||||||||||||||
| Interest Expense | 210 | 188 | 599 | 549 | |||||||||||||||||||
| Income Before Income Taxes | 398 | 272 | 1,144 | 900 | |||||||||||||||||||
| Income Taxes | 80 | 58 | 229 | 189 | |||||||||||||||||||
| Net Income | $ | 318 | $ | 214 | $ | 915 | $ | 711 | |||||||||||||||
| Earnings Per Share of Common Stock: | |||||||||||||||||||||||
| Net Income Available to PPL Common Shareowners: | |||||||||||||||||||||||
| Basic | $ | 0.43 | $ | 0.29 | $ | 1.24 | $ | 0.96 | |||||||||||||||
| Diluted | $ | 0.43 | $ | 0.29 | $ | 1.23 | $ | 0.96 | |||||||||||||||
| Weighted-Average Shares of Common Stock Outstanding (in thousands) | |||||||||||||||||||||||
| Basic | 739,525 | 737,773 | 739,167 | 737,678 | |||||||||||||||||||
| Diluted | 744,290 | 739,965 | 742,747 | 739,450 |
The accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
PPL Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Net income | $ | 318 | $ | 214 | $ | 915 | $ | 711 | |||||||||||||||
| Other comprehensive income (loss): | |||||||||||||||||||||||
| Amounts arising during the period - gains (losses), net of tax (expense) benefit: | |||||||||||||||||||||||
| Qualifying derivatives, net of tax of $0, $0, $0, $0 | — | — | 1 | — | |||||||||||||||||||
| Equity investees' other comprehensive income (loss), net of tax of $0, $0, $0, $0 | — | — | — | 1 | |||||||||||||||||||
| Defined benefit plans: | |||||||||||||||||||||||
| Net actuarial gain (loss), net of tax of $1, $1, $4, $0 | (3) | (4) | (11) | (2) | |||||||||||||||||||
| Reclassifications from AOCI - (gains) losses, net of tax expense (benefit): | |||||||||||||||||||||||
| Qualifying derivatives, net of tax of $0, $1, $0, $0 | 1 | 2 | 2 | 3 | |||||||||||||||||||
| Defined benefit plans: | |||||||||||||||||||||||
| Net actuarial (gain) loss, net of tax of $0, $0, $0, $1 | (1) | (1) | (1) | (2) | |||||||||||||||||||
| Total other comprehensive income (loss) | (3) | (3) | (9) | — | |||||||||||||||||||
| Comprehensive income | $ | 315 | $ | 211 | $ | 906 | $ | 711 |
The accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
PPL Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)
| Nine Months Ended September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Cash Flows from Operating Activities | |||||||||||
| Net income | $ | 915 | $ | 711 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities | |||||||||||
| Depreciation | 977 | 957 | |||||||||
| Amortization | 73 | 61 | |||||||||
| Defined benefit plans - income | (44) | (52) | |||||||||
| Deferred income taxes and investment tax credits | 177 | 147 | |||||||||
| Other | (3) | 13 | |||||||||
| Change in current assets and current liabilities | |||||||||||
| Accounts receivable | (72) | 259 | |||||||||
| Accounts payable | (159) | (236) | |||||||||
| Unbilled revenues | 130 | 109 | |||||||||
| Fuel, materials and supplies | 3 | (9) | |||||||||
| Prepayments | (9) | (75) | |||||||||
| Taxes payable | 29 | (8) | |||||||||
| Regulatory assets and liabilities, net | 73 | (54) | |||||||||
| Accrued interest | 80 | 104 | |||||||||
| Other | (31) | (78) | |||||||||
| Other operating activities | |||||||||||
| Defined benefit plans - funding | (9) | (10) | |||||||||
| Other assets | (116) | (66) | |||||||||
| Other liabilities | 67 | 56 | |||||||||
| Net cash provided by operating activities | 2,081 | 1,829 | |||||||||
| Cash Flows from Investing Activities | |||||||||||
| Expenditures for property, plant and equipment | (2,868) | (1,945) | |||||||||
| Other investing activities | 8 | 1 | |||||||||
| Net cash used in investing activities | (2,860) | (1,944) | |||||||||
| Cash Flows from Financing Activities | |||||||||||
| Issuance of long-term debt | 1,895 | 1,894 | |||||||||
| Payment of common stock dividends | (593) | (557) | |||||||||
| Net increase (decrease) in short-term debt | 292 | (992) | |||||||||
| Other financing activities | (35) | (29) | |||||||||
| Net cash provided by financing activities | 1,559 | 316 | |||||||||
| Net Increase in Cash, Cash Equivalents and Restricted Cash | 780 | 201 | |||||||||
| Cash, Cash Equivalents and Restricted Cash at Beginning of Period | 339 | 382 | |||||||||
| Cash, Cash Equivalents and Restricted Cash at End of Period | $ | 1,119 | $ | 583 | |||||||
| Supplemental Disclosures of Cash Flow Information | |||||||||||
| Significant non-cash transactions: | |||||||||||
| Accrued expenditures for property, plant and equipment at September 30, | $ | 486 | $ | 281 | |||||||
The accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.
CONDENSED CONSOLIDATED BALANCE SHEETS
PPL Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars, shares in thousands)
| September 30, 2025 | December 31, 2024 | ||||||||||
| Assets | |||||||||||
| Current Assets | |||||||||||
| Cash and cash equivalents | $ | 1,102 | $ | 306 | |||||||
| Accounts receivable (less reserve: 2025, $133; 2024, $147) | |||||||||||
| Customer | 1,002 | 961 | |||||||||
| Other | 101 | 76 | |||||||||
| Unbilled revenues (less reserve: 2025, $3; 2024, $6) | 355 | 485 | |||||||||
| Fuel, materials and supplies | 517 | 511 | |||||||||
| Prepayments | 145 | 136 | |||||||||
| Regulatory assets | 312 | 320 | |||||||||
| Other current assets | 98 | 85 | |||||||||
| Total Current Assets | 3,632 | 2,880 | |||||||||
| Property, Plant and Equipment | |||||||||||
| Regulated utility plant | 41,776 | 40,391 | |||||||||
| Less: accumulated depreciation - regulated utility plant | 10,182 | 9,682 | |||||||||
| Regulated utility plant, net | 31,594 | 30,709 | |||||||||
| Non-regulated property, plant and equipment | 81 | 79 | |||||||||
| Less: accumulated depreciation - non-regulated property, plant and equipment | 35 | 29 | |||||||||
| Non-regulated property, plant and equipment, net | 46 | 50 | |||||||||
| Construction work in progress | 3,513 | 2,390 | |||||||||
| Property, Plant and Equipment, net | 35,153 | 33,149 | |||||||||
| Other Noncurrent Assets | |||||||||||
| Regulatory assets | 2,058 | 2,060 | |||||||||
| Goodwill | 2,247 | 2,247 | |||||||||
| Other intangibles | 312 | 314 | |||||||||
| Other noncurrent assets (less reserve for accounts receivable: 2025, $2; 2024, $1) | 537 | 419 | |||||||||
| Total Other Noncurrent Assets | 5,154 | 5,040 | |||||||||
| Total Assets | $ | 43,939 | $ | 41,069 |
The accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.
CONDENSED CONSOLIDATED BALANCE SHEETS
PPL Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars, shares in thousands)
| September 30, 2025 | December 31, 2024 | ||||||||||
| Liabilities and Equity | |||||||||||
| Current Liabilities | |||||||||||
| Short-term debt | $ | 595 | $ | 303 | |||||||
| Long-term debt due within one year | 1,455 | 551 | |||||||||
| Accounts payable | 1,188 | 1,196 | |||||||||
| Taxes | 132 | 103 | |||||||||
| Interest | 237 | 157 | |||||||||
| Dividends | 197 | 186 | |||||||||
| Regulatory liabilities | 291 | 223 | |||||||||
| Other current liabilities | 596 | 614 | |||||||||
| Total Current Liabilities | 4,691 | 3,333 | |||||||||
| Long-term Debt | 16,936 | 15,952 | |||||||||
| Deferred Credits and Other Noncurrent Liabilities | |||||||||||
| Deferred income taxes | 3,575 | 3,356 | |||||||||
| Investment tax credits | 109 | 111 | |||||||||
| Accrued pension obligations | 284 | 317 | |||||||||
| Asset retirement obligations | 141 | 136 | |||||||||
| Regulatory liabilities | 3,322 | 3,335 | |||||||||
| Other deferred credits and noncurrent liabilities | 468 | 452 | |||||||||
| Total Deferred Credits and Other Noncurrent Liabilities | 7,899 | 7,707 | |||||||||
| Commitments and Contingent Liabilities (Notes 6 and 10) | |||||||||||
| Equity | |||||||||||
| Common stock - $0.01 par value (a) | 8 | 8 | |||||||||
| Additional paid-in capital | 12,356 | 12,346 | |||||||||
| Treasury stock | (901) | (928) | |||||||||
| Earnings reinvested | 3,143 | 2,835 | |||||||||
| Accumulated other comprehensive loss | (193) | (184) | |||||||||
| Total Equity | 14,413 | 14,077 | |||||||||
| Total Liabilities and Equity | $ | 43,939 | $ | 41,069 |
(a)1,560,000 shares authorized, 770,798 shares issued and 739,545 shares outstanding at September 30, 2025. 1,560,000 shares authorized, 770,215 shares issued and 738,033 shares outstanding at December 31, 2024.
The accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
PPL Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)
| Common stock shares outstanding (a) | Common stock | Additional paid-in capital | Treasury stock | Earnings reinvested | Accumulated other comprehensive loss | Total | ||||||||||||||||||||
| June 30, 2025 | 739,306 | $ | 8 | $ | 12,343 | $ | (902) | $ | 3,027 | $ | (190) | $ | 14,286 | |||||||||||||
| Common stock issued | 197 | — | ||||||||||||||||||||||||
| Treasury stock issued | 42 | 6 | 1 | 7 | ||||||||||||||||||||||
| Stock-based compensation | 7 | 7 | ||||||||||||||||||||||||
| Net income | 318 | 318 | ||||||||||||||||||||||||
| Dividends and dividend equivalents (b) | (202) | (202) | ||||||||||||||||||||||||
| Other comprehensive income (loss) | (3) | (3) | ||||||||||||||||||||||||
| September 30, 2025 | 739,545 | $ | 8 | $ | 12,356 | $ | (901) | $ | 3,143 | $ | (193) | $ | 14,413 | |||||||||||||
| December 31, 2024 | 738,033 | $ | 8 | $ | 12,346 | $ | (928) | $ | 2,835 | $ | (184) | $ | 14,077 | |||||||||||||
| Common stock issued | 583 | — | ||||||||||||||||||||||||
| Treasury stock issued | 929 | 13 | 27 | 40 | ||||||||||||||||||||||
| Stock-based compensation | (3) | (3) | ||||||||||||||||||||||||
| Net income | 915 | 915 | ||||||||||||||||||||||||
| Dividends and dividend equivalents (b) | (607) | (607) | ||||||||||||||||||||||||
| Other comprehensive income (loss) | (9) | (9) | ||||||||||||||||||||||||
| September 30, 2025 | 739,545 | $ | 8 | $ | 12,356 | $ | (901) | $ | 3,143 | $ | (193) | $ | 14,413 | |||||||||||||
| June 30, 2024 | 737,762 | $ | 8 | $ | 12,321 | $ | (930) | $ | 2,826 | $ | (160) | $ | 14,065 | |||||||||||||
| Common stock issued | 2 | — | ||||||||||||||||||||||||
| Treasury stock issued | 14 | 1 | 1 | |||||||||||||||||||||||
| Stock-based compensation | 7 | 7 | ||||||||||||||||||||||||
| Net income | 214 | 214 | ||||||||||||||||||||||||
| Dividends and dividend equivalents (b) | (192) | (192) | ||||||||||||||||||||||||
| Other comprehensive income (loss) | (3) | (3) | ||||||||||||||||||||||||
| September 30, 2024 | 737,778 | $ | 8 | $ | 12,328 | $ | (929) | $ | 2,848 | $ | (163) | $ | 14,092 | |||||||||||||
| December 31, 2023 | 737,130 | $ | 8 | $ | 12,326 | $ | (948) | $ | 2,710 | $ | (163) | $ | 13,933 | |||||||||||||
| Common stock issued | 2 | — | ||||||||||||||||||||||||
| Treasury stock issued | 646 | 19 | 19 | |||||||||||||||||||||||
| Stock-based compensation | 2 | 2 | ||||||||||||||||||||||||
| Net income | 711 | 711 | ||||||||||||||||||||||||
| Dividends and dividend equivalents (b) | (573) | (573) | ||||||||||||||||||||||||
| September 30, 2024 | 737,778 | $ | 8 | $ | 12,328 | $ | (929) | $ | 2,848 | $ | (163) | $ | 14,092 | |||||||||||||
(a)Shares in thousands. Each share entitles the holder to one vote on any question presented at any shareowners' meeting.
(b)Dividends declared per share of common stock were $0.2725 and $0.8175 for the three and nine months ended September 30, 2025 and $0.2575 and $0.7725 for the three and nine months ended September 30, 2024.
The accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.
| THIS PAGE INTENTIONALLY LEFT BLANK. |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
PPL Electric Utilities Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Operating Revenues | $ | 786 | $ | 716 | $ | 2,298 | $ | 2,159 | |||||||||||||||
| Operating Expenses | |||||||||||||||||||||||
| Operation | |||||||||||||||||||||||
| Energy purchases | 224 | 177 | 622 | 544 | |||||||||||||||||||
| Other operation and maintenance | 160 | 176 | 481 | 511 | |||||||||||||||||||
| Depreciation | 105 | 101 | 307 | 300 | |||||||||||||||||||
| Taxes, other than income | 38 | 32 | 111 | 98 | |||||||||||||||||||
| Total Operating Expenses | 527 | 486 | 1,521 | 1,453 | |||||||||||||||||||
| Operating Income | 259 | 230 | 777 | 706 | |||||||||||||||||||
| Other Income (Expense) - net (Note 12) | 14 | 13 | 36 | 33 | |||||||||||||||||||
| Interest Income from Affiliate | 2 | 7 | 4 | 27 | |||||||||||||||||||
| Interest Expense | 67 | 61 | 189 | 184 | |||||||||||||||||||
| Income Before Income Taxes | 208 | 189 | 628 | 582 | |||||||||||||||||||
| Income Taxes | 49 | 47 | 146 | 141 | |||||||||||||||||||
| Net Income (a) | $ | 159 | $ | 142 | $ | 482 | $ | 441 |
(a)Net income equals comprehensive income.
The accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
PPL Electric Utilities Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)
| Nine Months Ended September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Cash Flows from Operating Activities | |||||||||||
| Net income | $ | 482 | $ | 441 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities | |||||||||||
| Depreciation | 307 | 300 | |||||||||
| Amortization | 34 | 35 | |||||||||
| Defined benefit plans - income | (21) | (30) | |||||||||
| Deferred income taxes and investment tax credits | 63 | 91 | |||||||||
| Other | (20) | (9) | |||||||||
| Change in current assets and current liabilities | |||||||||||
| Accounts receivable | (108) | 67 | |||||||||
| Accounts payable | (71) | (63) | |||||||||
| Unbilled revenues | 43 | 50 | |||||||||
| Materials and supplies | (24) | (16) | |||||||||
| Prepayments | 5 | (64) | |||||||||
| Regulatory assets and liabilities, net | 57 | (77) | |||||||||
| Taxes payable | (1) | (36) | |||||||||
| Accrued interest | 23 | 32 | |||||||||
| Other | (2) | (4) | |||||||||
| Other operating activities | |||||||||||
| Defined benefit plans - funding | — | (2) | |||||||||
| Other assets | (51) | (24) | |||||||||
| Other liabilities | 3 | (2) | |||||||||
| Net cash provided by operating activities | 719 | 689 | |||||||||
| Cash Flows from Investing Activities | |||||||||||
| Expenditures for property, plant and equipment | (1,082) | (820) | |||||||||
| Expenditures for intangible assets | (7) | (6) | |||||||||
| Notes receivable from affiliates | (287) | (418) | |||||||||
| Other investing activities | 14 | 4 | |||||||||
| Net cash used in investing activities | (1,362) | (1,240) | |||||||||
| Cash Flows from Financing Activities | |||||||||||
| Issuance of long-term debt | 496 | 649 | |||||||||
| Contributions from parent | 540 | 685 | |||||||||
| Return of capital to parent | (100) | — | |||||||||
| Payment of common stock dividends to parent | (298) | (283) | |||||||||
| Net increase (decrease) in short-term debt | — | (509) | |||||||||
| Debt issuance costs | (6) | (7) | |||||||||
| Net cash provided by financing activities | 632 | 535 | |||||||||
| Net Decrease in Cash, Cash Equivalents and Restricted Cash | (11) | (16) | |||||||||
| Cash, Cash Equivalents and Restricted Cash at Beginning of Period | 24 | 51 | |||||||||
| Cash, Cash Equivalents and Restricted Cash at End of Period | $ | 13 | $ | 35 | |||||||
| Supplemental Disclosure of Cash Flow Information | |||||||||||
| Significant non-cash transactions: | |||||||||||
| Accrued expenditures for property, plant and equipment at September 30, | $ | 237 | $ | 168 |
The accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.
CONDENSED CONSOLIDATED BALANCE SHEETS
PPL Electric Utilities Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars, shares in thousands)
| September 30, 2025 | December 31, 2024 | ||||||||||
| Assets | |||||||||||
| Current Assets | |||||||||||
| Cash and cash equivalents | $ | 13 | $ | 24 | |||||||
| Accounts receivable (less reserve: 2025, $34; 2024, $37) | |||||||||||
| Customer | 418 | 353 | |||||||||
| Other | 45 | 8 | |||||||||
| Accounts receivable from affiliates | 6 | 10 | |||||||||
| Notes receivable from affiliate | 509 | 222 | |||||||||
| Unbilled revenues (less reserve: 2025, $2; 2024, $3) | 116 | 159 | |||||||||
| Materials and supplies | 132 | 104 | |||||||||
| Prepayments | 69 | 74 | |||||||||
| Regulatory assets | 90 | 133 | |||||||||
| Other current assets | 40 | 30 | |||||||||
| Total Current Assets | 1,438 | 1,117 | |||||||||
| Property, Plant and Equipment | |||||||||||
| Regulated utility plant | 17,100 | 16,469 | |||||||||
| Less: accumulated depreciation - regulated utility plant | 4,106 | 4,052 | |||||||||
| Regulated utility plant, net | 12,994 | 12,417 | |||||||||
| Construction work in progress | 1,184 | 898 | |||||||||
| Property, Plant and Equipment, net | 14,178 | 13,315 | |||||||||
| Other Noncurrent Assets | |||||||||||
| Regulatory assets | 703 | 673 | |||||||||
| Intangibles | 277 | 274 | |||||||||
| Other noncurrent assets (less reserve for accounts receivable: 2025, $2; 2024, $1) | 106 | 96 | |||||||||
| Total Other Noncurrent Assets | 1,086 | 1,043 | |||||||||
| Total Assets | $ | 16,702 | $ | 15,475 |
The accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.
CONDENSED CONSOLIDATED BALANCE SHEETS
PPL Electric Utilities Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars, shares in thousands)
| September 30, 2025 | December 31, 2024 | ||||||||||
| Liabilities and Equity | |||||||||||
| Current Liabilities | |||||||||||
| Accounts payable | $ | 529 | $ | 565 | |||||||
| Accounts payable to affiliates | 69 | 44 | |||||||||
| Interest | 78 | 55 | |||||||||
| Regulatory liabilities | 71 | 57 | |||||||||
| Customer deposits | 63 | 25 | |||||||||
| Other current liabilities | 62 | 60 | |||||||||
| Total Current Liabilities | 872 | 806 | |||||||||
| Long-term Debt | 5,707 | 5,214 | |||||||||
| Deferred Credits and Other Noncurrent Liabilities | |||||||||||
| Deferred income taxes | 1,815 | 1,726 | |||||||||
| Regulatory liabilities | 827 | 839 | |||||||||
| Other deferred credits and noncurrent liabilities | 127 | 160 | |||||||||
| Total Deferred Credits and Other Noncurrent Liabilities | 2,769 | 2,725 | |||||||||
| Commitments and Contingent Liabilities (Notes 6 and 10) | |||||||||||
| Equity | |||||||||||
| Common stock - no par value (a) | 364 | 364 | |||||||||
| Additional paid-in capital | 5,108 | 4,668 | |||||||||
| Earnings reinvested | 1,882 | 1,698 | |||||||||
| Total Equity | 7,354 | 6,730 | |||||||||
| Total Liabilities and Equity | $ | 16,702 | $ | 15,475 |
(a)170,000 shares authorized; 66,368 shares issued and outstanding at September 30, 2025 and December 31, 2024.
The accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
PPL Electric Utilities Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)
| Common stock shares outstanding (a) | Common stock | Additional paid-in capital | Earnings reinvested | Total | |||||||||||||||||||||||||
| June 30, 2025 | 66,368 | $ | 364 | $ | 4,568 | $ | 1,814 | $ | 6,746 | ||||||||||||||||||||
| Net income | 159 | 159 | |||||||||||||||||||||||||||
| Capital contributions from parent | 540 | 540 | |||||||||||||||||||||||||||
| Dividends declared | (91) | (91) | |||||||||||||||||||||||||||
| September 30, 2025 | 66,368 | $ | 364 | $ | 5,108 | $ | 1,882 | $ | 7,354 | ||||||||||||||||||||
| December 31, 2024 | 66,368 | $ | 364 | $ | 4,668 | $ | 1,698 | $ | 6,730 | ||||||||||||||||||||
| Net income | 482 | 482 | |||||||||||||||||||||||||||
| Capital contributions from parent | 540 | 540 | |||||||||||||||||||||||||||
| Return of capital to parent | (100) | (100) | |||||||||||||||||||||||||||
| Dividends declared | (298) | (298) | |||||||||||||||||||||||||||
| September 30, 2025 | 66,368 | $ | 364 | $ | 5,108 | $ | 1,882 | $ | 7,354 | ||||||||||||||||||||
| June 30, 2024 | 66,368 | $ | 364 | $ | 4,720 | $ | 1,614 | $ | 6,698 | ||||||||||||||||||||
| Net income | 142 | 142 | |||||||||||||||||||||||||||
| Capital contributions from parent | 5 | 5 | |||||||||||||||||||||||||||
| Dividends declared | (99) | (99) | |||||||||||||||||||||||||||
| September 30, 2024 | 66,368 | $ | 364 | $ | 4,725 | $ | 1,657 | $ | 6,746 | ||||||||||||||||||||
| December 31, 2023 | 66,368 | $ | 364 | $ | 4,040 | $ | 1,499 | $ | 5,903 | ||||||||||||||||||||
| Net income | 441 | 441 | |||||||||||||||||||||||||||
| Capital contributions from parent | 685 | 685 | |||||||||||||||||||||||||||
| Dividends declared | (283) | (283) | |||||||||||||||||||||||||||
| September 30, 2024 | 66,368 | $ | 364 | $ | 4,725 | $ | 1,657 | $ | 6,746 |
(a)Shares in thousands. All common shares of PPL Electric stock are owned by PPL Energy Holdings.
The accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.
| THIS PAGE INTENTIONALLY LEFT BLANK. |
CONDENSED STATEMENTS OF INCOME
Louisville Gas and Electric Company
(Unaudited)
(Millions of Dollars)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Operating Revenues | |||||||||||||||||||||||
| Retail and wholesale | $ | 420 | $ | 396 | $ | 1,293 | $ | 1,219 | |||||||||||||||
| Electric revenue from affiliate | 7 | 1 | 17 | 20 | |||||||||||||||||||
| Total Operating Revenues | 427 | 397 | 1,310 | 1,239 | |||||||||||||||||||
| Operating Expenses | |||||||||||||||||||||||
| Operation | |||||||||||||||||||||||
| Fuel | 97 | 75 | 254 | 228 | |||||||||||||||||||
| Energy purchases | 17 | 19 | 128 | 105 | |||||||||||||||||||
| Energy purchases from affiliate | 6 | 11 | 18 | 19 | |||||||||||||||||||
| Other operation and maintenance | 91 | 84 | 271 | 259 | |||||||||||||||||||
| Depreciation | 77 | 76 | 228 | 229 | |||||||||||||||||||
| Taxes, other than income | 13 | 13 | 39 | 38 | |||||||||||||||||||
| Total Operating Expenses | 301 | 278 | 938 | 878 | |||||||||||||||||||
| Operating Income | 126 | 119 | 372 | 361 | |||||||||||||||||||
| Other Income (Expense) - net (Note 12) | 8 | 3 | 16 | 9 | |||||||||||||||||||
| Interest Income from Affiliate | — | 1 | — | 1 | |||||||||||||||||||
| Interest Expense | 30 | 26 | 83 | 78 | |||||||||||||||||||
| Income Before Income Taxes | 104 | 97 | 305 | 293 | |||||||||||||||||||
| Income Taxes | 21 | 20 | 61 | 61 | |||||||||||||||||||
| Net Income (a) | $ | 83 | $ | 77 | $ | 244 | $ | 232 |
(a)Net income equals comprehensive income.
The accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.
CONDENSED STATEMENTS OF CASH FLOWS
Louisville Gas and Electric Company
(Unaudited)
(Millions of Dollars)
| Nine Months Ended September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Cash Flows from Operating Activities | |||||||||||
| Net income | $ | 244 | $ | 232 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities | |||||||||||
| Depreciation | 228 | 229 | |||||||||
| Amortization | 17 | 10 | |||||||||
| Deferred income taxes and investment tax credits | 1 | 3 | |||||||||
| Other | (5) | (3) | |||||||||
| Change in current assets and current liabilities | |||||||||||
| Accounts receivable | 16 | (13) | |||||||||
| Accounts receivable from affiliates | 9 | — | |||||||||
| Accounts payable | 18 | — | |||||||||
| Accounts payable to affiliates | 6 | (3) | |||||||||
| Unbilled revenues | 17 | 21 | |||||||||
| Fuel, materials and supplies | 15 | (2) | |||||||||
| Regulatory assets and liabilities, net | (16) | 4 | |||||||||
| Accrued interest | 28 | 22 | |||||||||
| Other | (19) | (21) | |||||||||
| Other operating activities | |||||||||||
| Expenditures for asset retirement obligations | (8) | (8) | |||||||||
| Other assets | (21) | (12) | |||||||||
| Other liabilities | 8 | (3) | |||||||||
| Net cash provided by operating activities | 538 | 456 | |||||||||
| Cash Flows from Investing Activities | |||||||||||
| Expenditures for property, plant and equipment | (561) | (327) | |||||||||
| Net cash used in investing activities | (561) | (327) | |||||||||
| Cash Flows from Financing Activities | |||||||||||
| Net increase (decrease) in notes payable to affiliates | (43) | 34 | |||||||||
| Issuance of long-term debt | 700 | — | |||||||||
| Net increase (decrease) in short-term debt | (25) | — | |||||||||
| Payment of common stock dividends to parent | (148) | (138) | |||||||||
| Contributions from parent | 101 | 37 | |||||||||
| Return of capital to parent | (55) | (76) | |||||||||
| Debt issuance costs | (8) | — | |||||||||
| Net cash provided by (used in) financing activities | 522 | (143) | |||||||||
| Net Increase (Decrease) in Cash and Cash Equivalents | 499 | (14) | |||||||||
| Cash, Cash Equivalents, and Restricted Cash at Beginning of Period | 24 | 44 | |||||||||
| Cash, Cash Equivalents, and Restricted Cash at End of Period | $ | 523 | $ | 30 | |||||||
| Supplemental Disclosure of Cash Flow Information | |||||||||||
| Significant non-cash transactions: | |||||||||||
| Accrued expenditures for property, plant and equipment at September 30, | $ | 68 | $ | 43 |
The accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.
CONDENSED BALANCE SHEETS
Louisville Gas and Electric Company
(Unaudited)
(Millions of Dollars, shares in thousands)
| September 30, 2025 | December 31, 2024 | ||||||||||
| Assets | |||||||||||
| Current Assets | |||||||||||
| Cash and cash equivalents | $ | 515 | $ | 8 | |||||||
| Accounts receivable (less reserve: 2025, $6; 2024, $3) | |||||||||||
| Customer | 124 | 134 | |||||||||
| Other | 28 | 23 | |||||||||
| Unbilled revenues (less reserve: 2025, $0; 2024, $0) | 70 | 87 | |||||||||
| Accounts receivable from affiliates | 31 | 40 | |||||||||
| Fuel, materials and supplies | 142 | 157 | |||||||||
| Prepayments | 12 | 9 | |||||||||
| Regulatory assets | 24 | 8 | |||||||||
| Other current assets | 9 | 2 | |||||||||
| Total Current Assets | 955 | 468 | |||||||||
| Property, Plant and Equipment | |||||||||||
| Regulated utility plant | 7,950 | 7,748 | |||||||||
| Less: accumulated depreciation - regulated utility plant | 1,805 | 1,643 | |||||||||
| Regulated utility plant, net | 6,145 | 6,105 | |||||||||
| Construction work in progress | 713 | 443 | |||||||||
| Property, Plant and Equipment, net | 6,858 | 6,548 | |||||||||
| Other Noncurrent Assets | |||||||||||
| Regulatory assets | 485 | 491 | |||||||||
| Goodwill | 389 | 389 | |||||||||
| Other intangibles | 8 | 12 | |||||||||
| Other noncurrent assets | 153 | 84 | |||||||||
| Total Other Noncurrent Assets | 1,035 | 976 | |||||||||
| Total Assets | $ | 8,848 | $ | 7,992 |
The accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.
CONDENSED BALANCE SHEETS
Louisville Gas and Electric Company
(Unaudited)
(Millions of Dollars, shares in thousands)
| September 30, 2025 | December 31, 2024 | ||||||||||
| Liabilities and Equity | |||||||||||
| Current Liabilities | |||||||||||
| Short-term debt | $ | — | $ | 25 | |||||||
| Long-term debt due within one year | 390 | 300 | |||||||||
| Notes payable to affiliates | — | 43 | |||||||||
| Accounts payable | 189 | 158 | |||||||||
| Accounts payable to affiliates | 70 | 64 | |||||||||
| Customer deposits | 36 | 36 | |||||||||
| Taxes | 41 | 40 | |||||||||
| Regulatory liabilities | 14 | 14 | |||||||||
| Interest | 49 | 21 | |||||||||
| Asset retirement obligations | 4 | 11 | |||||||||
| Other current liabilities | 46 | 50 | |||||||||
| Total Current Liabilities | 839 | 762 | |||||||||
| Long-term Debt | 2,775 | 2,171 | |||||||||
| Deferred Credits and Other Noncurrent Liabilities | |||||||||||
| Deferred income taxes | 822 | 803 | |||||||||
| Investment tax credits | 29 | 30 | |||||||||
| Price risk management liabilities | 5 | 3 | |||||||||
| Asset retirement obligations | 75 | 73 | |||||||||
| Regulatory liabilities | 812 | 815 | |||||||||
| Other deferred credits and noncurrent liabilities | 78 | 64 | |||||||||
| Total Deferred Credits and Other Noncurrent Liabilities | 1,821 | 1,788 | |||||||||
| Commitments and Contingent Liabilities (Notes 6 and 10) | |||||||||||
| Stockholder's Equity | |||||||||||
| Common stock - no par value (a) | 424 | 424 | |||||||||
| Additional paid-in capital | 2,028 | 1,982 | |||||||||
| Earnings reinvested | 961 | 865 | |||||||||
| Total Equity | 3,413 | 3,271 | |||||||||
| Total Liabilities and Equity | $ | 8,848 | $ | 7,992 |
(a)75,000 shares authorized; 21,294 shares issued and outstanding at September 30, 2025 and December 31, 2024.
The accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.
CONDENSED STATEMENTS OF EQUITY
Louisville Gas and Electric Company
(Unaudited)
(Millions of Dollars)
| Common stock shares outstanding (a) | Common stock | Additional paid-in capital | Earnings reinvested | Total | |||||||||||||||||||||||||
| June 30, 2025 | 21,294 | $ | 424 | $ | 2,028 | $ | 915 | $ | 3,367 | ||||||||||||||||||||
| Net income | 83 | 83 | |||||||||||||||||||||||||||
| Dividends declared | (37) | (37) | |||||||||||||||||||||||||||
| September 30, 2025 | 21,294 | $ | 424 | $ | 2,028 | $ | 961 | $ | 3,413 | ||||||||||||||||||||
| December 31, 2024 | 21,294 | $ | 424 | $ | 1,982 | $ | 865 | $ | 3,271 | ||||||||||||||||||||
| Net income | 244 | 244 | |||||||||||||||||||||||||||
| Capital contributions from parent | 101 | 101 | |||||||||||||||||||||||||||
| Return of capital to parent | (55) | (55) | |||||||||||||||||||||||||||
| Dividends declared | (148) | (148) | |||||||||||||||||||||||||||
| September 30, 2025 | 21,294 | $ | 424 | $ | 2,028 | $ | 961 | $ | 3,413 | ||||||||||||||||||||
| June 30, 2024 | 21,294 | $ | 424 | $ | 1,979 | $ | 813 | $ | 3,216 | ||||||||||||||||||||
| Net income | 77 | 77 | |||||||||||||||||||||||||||
| Return of capital to parent | (25) | (25) | |||||||||||||||||||||||||||
| Dividends declared | (41) | (41) | |||||||||||||||||||||||||||
| September 30, 2024 | 21,294 | $ | 424 | $ | 1,954 | $ | 849 | $ | 3,227 | ||||||||||||||||||||
| December 31, 2023 | 21,294 | $ | 424 | $ | 1,993 | $ | 755 | $ | 3,172 | ||||||||||||||||||||
| Net income | 232 | 232 | |||||||||||||||||||||||||||
| Capital contributions from parent | 37 | 37 | |||||||||||||||||||||||||||
| Return of capital to parent | (76) | (76) | |||||||||||||||||||||||||||
| Dividends declared | (138) | (138) | |||||||||||||||||||||||||||
| September 30, 2024 | 21,294 | $ | 424 | $ | 1,954 | $ | 849 | $ | 3,227 |
(a)Shares in thousands. All common shares of LG&E stock are owned by LKE.
The accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.
| THIS PAGE INTENTIONALLY LEFT BLANK. |
CONDENSED STATEMENTS OF INCOME
Kentucky Utilities Company
(Unaudited)
(Millions of Dollars)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Operating Revenues | |||||||||||||||||||||||
| Retail and wholesale | $ | 524 | $ | 498 | $ | 1,548 | $ | 1,479 | |||||||||||||||
| Electric revenue from affiliate | 6 | 11 | 18 | 19 | |||||||||||||||||||
| Total Operating Revenues | 530 | 509 | 1,566 | 1,498 | |||||||||||||||||||
| Operating Expenses | |||||||||||||||||||||||
| Operation | |||||||||||||||||||||||
| Fuel | 135 | 131 | 404 | 369 | |||||||||||||||||||
| Energy purchases | 6 | 7 | 20 | 19 | |||||||||||||||||||
| Energy purchases from affiliate | 7 | 1 | 17 | 20 | |||||||||||||||||||
| Other operation and maintenance | 101 | 103 | 303 | 306 | |||||||||||||||||||
| Depreciation | 102 | 102 | 305 | 302 | |||||||||||||||||||
| Taxes, other than income | 13 | 12 | 38 | 36 | |||||||||||||||||||
| Total Operating Expenses | 364 | 356 | 1,087 | 1,052 | |||||||||||||||||||
| Operating Income | 166 | 153 | 479 | 446 | |||||||||||||||||||
| Other Income (Expense) - net (Note 12) | 9 | 4 | 19 | 10 | |||||||||||||||||||
| Interest Expense | 38 | 35 | 108 | 102 | |||||||||||||||||||
| Interest Expense with Affiliate | — | — | — | 1 | |||||||||||||||||||
| Income Before Income Taxes | 137 | 122 | 390 | 353 | |||||||||||||||||||
| Income Taxes | 28 | 24 | 78 | 70 | |||||||||||||||||||
| Net Income (a) | $ | 109 | $ | 98 | $ | 312 | $ | 283 |
(a)Net income equals comprehensive income.
The accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.
CONDENSED STATEMENTS OF CASH FLOWS
Kentucky Utilities Company
(Unaudited)
(Millions of Dollars)
| Nine Months Ended September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Cash Flows from Operating Activities | |||||||||||
| Net income | $ | 312 | $ | 283 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities | |||||||||||
| Depreciation | 305 | 302 | |||||||||
| Amortization | 13 | 14 | |||||||||
| Defined benefit plans - income | (2) | (8) | |||||||||
| Deferred income taxes and investment tax credits | 11 | (12) | |||||||||
| Other | (6) | (2) | |||||||||
| Change in current assets and current liabilities | |||||||||||
| Accounts receivable | 3 | (25) | |||||||||
| Accounts payable | (4) | (3) | |||||||||
| Accounts payable to affiliates | 19 | 7 | |||||||||
| Unbilled revenues | 12 | 9 | |||||||||
| Fuel, materials and supplies | (3) | 19 | |||||||||
| Regulatory assets and liabilities, net | 3 | 27 | |||||||||
| Taxes payable | 3 | 7 | |||||||||
| Accrued interest | 37 | 31 | |||||||||
| Other | (19) | (8) | |||||||||
| Other operating activities | |||||||||||
| Expenditures for asset retirement obligations | (7) | (7) | |||||||||
| Other assets | (28) | (6) | |||||||||
| Other liabilities | (2) | (16) | |||||||||
| Net cash provided by operating activities | 647 | 612 | |||||||||
| Cash Flows from Investing Activities | |||||||||||
| Expenditures for property, plant and equipment | (681) | (463) | |||||||||
| Net cash used in investing activities | (681) | (463) | |||||||||
| Cash Flows from Financing Activities | |||||||||||
| Net increase (decrease) in notes payable to affiliates | (73) | 128 | |||||||||
| Issuance of long-term debt | 700 | — | |||||||||
| Net decrease in short-term debt | (140) | (93) | |||||||||
| Payment of common stock dividends to parent | (179) | (167) | |||||||||
| Contributions from parent | 91 | 84 | |||||||||
| Return of capital to parent | (37) | (103) | |||||||||
| Debt issuance costs | (8) | — | |||||||||
| Net cash provided by (used in) financing activities | 354 | (151) | |||||||||
| Net Increase (Decrease) in Cash and Cash Equivalents | 320 | (2) | |||||||||
| Cash, Cash Equivalents, and Restricted Cash at Beginning of Period | 29 | 38 | |||||||||
| Cash, Cash Equivalents, and Restricted Cash at End of Period | $ | 349 | $ | 36 | |||||||
| Supplemental Disclosure of Cash Flow Information | |||||||||||
| Significant non-cash transactions: | |||||||||||
| Accrued expenditures for property, plant and equipment at September 30, | $ | 84 | $ | 54 |
The accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.
CONDENSED BALANCE SHEETS
Kentucky Utilities Company
(Unaudited)
(Millions of Dollars, shares in thousands)
| September 30, 2025 | December 31, 2024 | ||||||||||
| Assets | |||||||||||
| Current Assets | |||||||||||
| Cash and cash equivalents | $ | 341 | $ | 13 | |||||||
| Accounts receivable (less reserve: 2025, $3; 2024, $2) | |||||||||||
| Customer | 155 | 160 | |||||||||
| Other | 31 | 22 | |||||||||
| Unbilled revenues (less reserve: 2025, $0; 2024, $0) | 90 | 102 | |||||||||
| Fuel, materials and supplies | 177 | 173 | |||||||||
| Prepayments | 14 | 11 | |||||||||
| Other current assets | 19 | 10 | |||||||||
| Total Current Assets | 827 | 491 | |||||||||
| Property, Plant and Equipment | |||||||||||
| Regulated utility plant | 10,614 | 10,419 | |||||||||
| Less: accumulated depreciation - regulated utility plant | 2,873 | 2,652 | |||||||||
| Regulated utility plant, net | 7,741 | 7,767 | |||||||||
| Construction work in progress | 1,004 | 567 | |||||||||
| Property, Plant and Equipment, net | 8,745 | 8,334 | |||||||||
| Other Noncurrent Assets | |||||||||||
| Regulatory assets | 458 | 458 | |||||||||
| Goodwill | 607 | 607 | |||||||||
| Other intangibles | 26 | 28 | |||||||||
| Other noncurrent assets | 170 | 155 | |||||||||
| Total Other Noncurrent Assets | 1,261 | 1,248 | |||||||||
| Total Assets | $ | 10,833 | $ | 10,073 |
The accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.
CONDENSED BALANCE SHEETS
Kentucky Utilities Company
(Unaudited)
(Millions of Dollars, shares in thousands)
| September 30, 2025 | December 31, 2024 | ||||||||||
| Liabilities and Equity | |||||||||||
| Current Liabilities | |||||||||||
| Short-term debt | $ | — | $ | 140 | |||||||
| Long-term debt due within one year | 414 | 250 | |||||||||
| Notes payable to affiliates | — | 73 | |||||||||
| Accounts payable | 108 | 96 | |||||||||
| Accounts payable to affiliates | 118 | 100 | |||||||||
| Customer deposits | 40 | 39 | |||||||||
| Taxes | 40 | 37 | |||||||||
| Regulatory liabilities | 24 | 22 | |||||||||
| Interest | 61 | 24 | |||||||||
| Asset retirement obligations | 4 | 10 | |||||||||
| Other current liabilities | 53 | 58 | |||||||||
| Total Current Liabilities | 862 | 849 | |||||||||
| Long-term Debt | 3,346 | 2,816 | |||||||||
| Deferred Credits and Other Noncurrent Liabilities | |||||||||||
| Deferred income taxes | 958 | 924 | |||||||||
| Investment tax credits | 80 | 81 | |||||||||
| Asset retirement obligations | 58 | 54 | |||||||||
| Regulatory liabilities | 999 | 1,009 | |||||||||
| Other deferred credits and noncurrent liabilities | 44 | 41 | |||||||||
| Total Deferred Credits and Other Noncurrent Liabilities | 2,139 | 2,109 | |||||||||
| Commitments and Contingent Liabilities (Notes 6 and 10) | |||||||||||
| Stockholder's Equity | |||||||||||
| Common stock - no par value (a) | 308 | 308 | |||||||||
| Additional paid-in capital | 3,110 | 3,056 | |||||||||
| Earnings reinvested | 1,068 | 935 | |||||||||
| Total Equity | 4,486 | 4,299 | |||||||||
| Total Liabilities and Equity | $ | 10,833 | $ | 10,073 |
(a)80,000 shares authorized; 37,818 shares issued and outstanding at September 30, 2025 and December 31, 2024.
The accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.
CONDENSED STATEMENTS OF EQUITY
Kentucky Utilities Company
(Unaudited)
(Millions of Dollars)
| Common stock shares outstanding (a) | Common stock | Additional paid-in capital | Earnings reinvested | Total | |||||||||||||||||||||||||||||||
| June 30, 2025 | 37,818 | $ | 308 | $ | 3,110 | $ | 1,010 | $ | 4,428 | ||||||||||||||||||||||||||
| Net income | 109 | 109 | |||||||||||||||||||||||||||||||||
| Dividends declared | (51) | (51) | |||||||||||||||||||||||||||||||||
| September 30, 2025 | 37,818 | $ | 308 | $ | 3,110 | $ | 1,068 | $ | 4,486 | ||||||||||||||||||||||||||
| December 31, 2024 | 37,818 | $ | 308 | $ | 3,056 | $ | 935 | $ | 4,299 | ||||||||||||||||||||||||||
| Net income | 312 | 312 | |||||||||||||||||||||||||||||||||
| Capital contributions from parent | 91 | 91 | |||||||||||||||||||||||||||||||||
| Return of capital to parent | (37) | (37) | |||||||||||||||||||||||||||||||||
| Dividends declared | (179) | (179) | |||||||||||||||||||||||||||||||||
| September 30, 2025 | 37,818 | $ | 308 | $ | 3,110 | $ | 1,068 | $ | 4,486 | ||||||||||||||||||||||||||
| June 30, 2024 | 37,818 | $ | 308 | $ | 3,067 | $ | 879 | $ | 4,254 | ||||||||||||||||||||||||||
| Net income | 98 | 98 | |||||||||||||||||||||||||||||||||
| Return of capital to parent | (53) | (53) | |||||||||||||||||||||||||||||||||
| Dividends declared | (50) | (50) | |||||||||||||||||||||||||||||||||
| September 30, 2024 | 37,818 | $ | 308 | $ | 3,014 | $ | 927 | $ | 4,249 | ||||||||||||||||||||||||||
| December 31, 2023 | 37,818 | $ | 308 | $ | 3,033 | $ | 811 | $ | 4,152 | ||||||||||||||||||||||||||
| Net income | 283 | 283 | |||||||||||||||||||||||||||||||||
| Capital contributions from parent | 84 | 84 | |||||||||||||||||||||||||||||||||
| Return of capital to parent | (103) | (103) | |||||||||||||||||||||||||||||||||
| Dividends declared | (167) | (167) | |||||||||||||||||||||||||||||||||
| September 30, 2024 | 37,818 | $ | 308 | $ | 3,014 | $ | 927 | $ | 4,249 |
(a)Shares in thousands. All common shares of KU stock are owned by LKE.
The accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.
Combined Notes to Condensed Financial Statements (Unaudited)
Index to Combined Notes to Condensed Financial Statements
The notes to the condensed financial statements that follow are a combined presentation. The following list indicates the Registrants to which the notes apply:
| Registrant | ||||||||||||||||||||||||||
| PPL | PPL Electric | LG&E | KU | |||||||||||||||||||||||
| 1. Interim Financial Statements | x | x | x | x | ||||||||||||||||||||||
| 2. Segment and Related Information | x | x | x | x | ||||||||||||||||||||||
| 3. Revenue from Contracts with Customers | x | x | x | x | ||||||||||||||||||||||
| 4. Earnings Per Share | x | |||||||||||||||||||||||||
| 5. Income Taxes | x | x | x | x | ||||||||||||||||||||||
| 6. Utility Rate Regulation | x | x | x | x | ||||||||||||||||||||||
| 7. Financing Activities | x | x | x | x | ||||||||||||||||||||||
| 8. Acquisitions, Development and Divestitures | x | |||||||||||||||||||||||||
| 9. Defined Benefits | x | x | x | x | ||||||||||||||||||||||
| 10. Commitments and Contingencies | x | x | x | x | ||||||||||||||||||||||
| 11. Related Party Transactions | x | x | x | |||||||||||||||||||||||
| 12. Other Income (Expense) - net | x | x | x | x | ||||||||||||||||||||||
| 13. Fair Value Measurements | x | x | x | x | ||||||||||||||||||||||
| 14. Derivative Instruments and Hedging Activities | x | x | x | x | ||||||||||||||||||||||
| 15. Asset Retirement Obligations | x | x | x | |||||||||||||||||||||||
| 16. Accumulated Other Comprehensive Income (Loss) | x | |||||||||||||||||||||||||
| 17. New Accounting Guidance Pending Adoption | x | x | x | x |
1. Interim Financial Statements
(All Registrants)
Capitalized terms and abbreviations appearing in the unaudited combined notes to condensed financial statements are defined in the glossary. Dollars are in millions, except per share data, unless otherwise noted. 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 any Registrant when significant.
The accompanying unaudited condensed financial statements have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X and, therefore, do not include all of the information and footnote disclosures required by GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation in accordance with GAAP are reflected in the condensed financial statements. All adjustments are of a normal recurring nature, except as otherwise disclosed. Each Registrant's Balance Sheet at December 31, 2024 is derived from that Registrant's 2024 audited Balance Sheet. The financial statements and notes thereto should be read in conjunction with the financial statements and notes contained in each Registrant's 2024 Form 10-K. The results of operations for the three and nine months ended September 30, 2025 are not necessarily indicative of the results to be expected for the full year ending December 31, 2025 or other future periods, because results for interim periods can be disproportionately influenced by various factors, developments and seasonal variations.
2. Segment and Related Information
(PPL)
PPL is organized into three segments, broken down by geographic location: Kentucky Regulated, Pennsylvania Regulated and Rhode Island Regulated.
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.
The Pennsylvania Regulated segment consists of the regulated electricity transmission and distribution operations of PPL Electric.
The Rhode Island Regulated segment consists of the regulated electricity transmission and distribution and natural gas distribution operations of RIE.
"Corporate and Other" primarily consists of corporate level financing costs, certain unallocated costs and certain non-recoverable costs incurred in conjunction with the acquisition of RIE. "Corporate and Other" is presented to reconcile segment information to PPL's consolidated results and is not a reportable segment.
The table below provides information about PPL’s segments and includes the reconciliation to consolidated net income for the three months ended September 30, 2025:
| Kentucky Regulated | Pennsylvania Regulated | Rhode Island Regulated | Total | ||||||||||||||||||||
| Operating Revenues from external customers (a) | $ | 944 | $ | 786 | $ | 509 | $ | 2,239 | |||||||||||||||
| Reconciliation of revenue | |||||||||||||||||||||||
| Corporate and Other revenues | — | ||||||||||||||||||||||
| Total consolidated revenues | $ | 2,239 | |||||||||||||||||||||
| Less: | |||||||||||||||||||||||
| Fuel | 231 | — | — | 231 | |||||||||||||||||||
| Energy purchases | 23 | 224 | 173 | 420 | |||||||||||||||||||
| Other operation and maintenance | 201 | 160 | 196 | 557 | |||||||||||||||||||
| Depreciation | 180 | 105 | 45 | 330 | |||||||||||||||||||
| Taxes, other than income | 26 | 38 | 38 | 102 | |||||||||||||||||||
| Other (income) expense - net | (17) | (14) | (2) | (33) | |||||||||||||||||||
| Interest (income) from affiliate | — | (2) | — | (2) | |||||||||||||||||||
| Interest expense | 68 | 67 | 28 | 163 | |||||||||||||||||||
| Income taxes | 47 | 49 | 4 | 100 | |||||||||||||||||||
| Segment net income | $ | 185 | $ | 159 | $ | 27 | $ | 371 | |||||||||||||||
| Reconciliation of segment profit or loss to consolidated net income | |||||||||||||||||||||||
| Corporate and Other net loss | (53) | ||||||||||||||||||||||
| Net Income | $ | 318 |
(a)See Note 3 for additional information on Operating Revenues.
The table below provides information about PPL’s segments and includes the reconciliation to consolidated net income for the nine months ended September 30, 2025:
| Kentucky Regulated | Pennsylvania Regulated | Rhode Island Regulated | Total | ||||||||||||||||||||
| Operating Revenues from external customers (a) | $ | 2,841 | $ | 2,298 | $ | 1,629 | $ | 6,768 | |||||||||||||||
| Reconciliation of revenue | |||||||||||||||||||||||
| Corporate and Other revenues | — | ||||||||||||||||||||||
| Total consolidated revenues | $ | 6,768 | |||||||||||||||||||||
| Less: | |||||||||||||||||||||||
| Fuel | 657 | — | — | 657 | |||||||||||||||||||
| Energy purchases | 149 | 622 | 598 | 1,369 | |||||||||||||||||||
| Other operation and maintenance | 601 | 481 | 610 | 1,692 | |||||||||||||||||||
| Depreciation | 535 | 307 | 131 | 973 | |||||||||||||||||||
| Taxes, other than income | 77 | 111 | 127 | 315 | |||||||||||||||||||
| Other (income) expense - net | (35) | (36) | (5) | (76) | |||||||||||||||||||
| Interest (income) from affiliate | — | (4) | (3) | (7) | |||||||||||||||||||
| Interest expense | 191 | 189 | 78 | 458 | |||||||||||||||||||
| Income taxes | 132 | 146 | 13 | 291 | |||||||||||||||||||
| Segment net income | $ | 534 | $ | 482 | $ | 80 | $ | 1,096 | |||||||||||||||
| Reconciliation of segment profit or loss to consolidated net income | |||||||||||||||||||||||
| Corporate and Other net loss | (181) | ||||||||||||||||||||||
| Net Income | $ | 915 |
(a)See Note 3 for additional information on Operating Revenues.
Other information for the segments and reconciliation to PPL's Consolidated results for the nine months ended September 30, 2025 are as follows:
| Kentucky Regulated | Pennsylvania Regulated | Rhode Island Regulated | Total Segments | Corporate and Other | Consolidated Total | ||||||||||||||||||||||||||||||
| Other Segment Disclosures | |||||||||||||||||||||||||||||||||||
| Amortization (a) | $ | 28 | $ | 34 | $ | 1 | $ | 63 | $ | 10 | $ | 73 | |||||||||||||||||||||||
| Deferred income taxes and investment tax credits (b) | 21 | 63 | 38 | 122 | 55 | 177 | |||||||||||||||||||||||||||||
| Expenditures for long lived assets | 1,243 | 1,082 | 539 | 2,864 | 4 | 2,868 |
(a)Represents non-cash expense items that include amortization of operating lease right-of-use assets, regulatory assets and liabilities, debt discounts and premiums and debt issuance costs.
(b)Represents a non-cash expense item that is also included in "Income Taxes."
The table below provides information about PPL’s segments and includes the reconciliation to consolidated net income for the three months ended September 30, 2024:
| Kentucky Regulated | Pennsylvania Regulated | Rhode Island Regulated | Total | ||||||||||||||||||||
| Operating Revenues from external customers (a) | $ | 895 | $ | 716 | $ | 455 | $ | 2,066 | |||||||||||||||
| Reconciliation of revenue | |||||||||||||||||||||||
| Corporate and Other revenues | — | ||||||||||||||||||||||
| Total consolidated revenues | $ | 2,066 | |||||||||||||||||||||
| Less: | |||||||||||||||||||||||
| Fuel | 207 | — | — | 207 | |||||||||||||||||||
| Energy purchases | 25 | 177 | 135 | 337 | |||||||||||||||||||
| Other operation and maintenance | 196 | 176 | 211 | 583 | |||||||||||||||||||
| Depreciation | 178 | 101 | 42 | 321 | |||||||||||||||||||
| Taxes, other than income | 25 | 32 | 33 | 90 | |||||||||||||||||||
| Other (income) expense - net | (8) | (13) | (7) | (28) | |||||||||||||||||||
| Interest (income) from affiliate | — | (7) | — | (7) | |||||||||||||||||||
| Interest expense | 60 | 61 | 25 | 146 | |||||||||||||||||||
| Income taxes | 43 | 47 | 2 | 92 | |||||||||||||||||||
| Segment net income | $ | 169 | $ | 142 | $ | 14 | $ | 325 | |||||||||||||||
| Reconciliation of segment profit or loss to consolidated net income | |||||||||||||||||||||||
| Corporate and Other net loss | (111) | ||||||||||||||||||||||
| Net Income | $ | 214 |
(a)See Note 3 for additional information on Operating Revenues.
The table below provides information about PPL’s segments and includes the reconciliation to consolidated net income for the nine months ended September 30, 2024:
| Kentucky Regulated | Pennsylvania Regulated | Rhode Island Regulated | Total | ||||||||||||||||||||
| Operating Revenues from external customers (a) | $ | 2,698 | $ | 2,159 | $ | 1,393 | $ | 6,250 | |||||||||||||||
| Reconciliation of revenue | |||||||||||||||||||||||
| Corporate and Other revenues | 1 | ||||||||||||||||||||||
| Total consolidated revenues | $ | 6,251 | |||||||||||||||||||||
| Less: | |||||||||||||||||||||||
| Fuel | 597 | — | — | 597 | |||||||||||||||||||
| Energy purchases | 124 | 544 | 464 | 1,132 | |||||||||||||||||||
| Other operation and maintenance | 593 | 511 | 547 | 1,651 | |||||||||||||||||||
| Depreciation | 531 | 300 | 123 | 954 | |||||||||||||||||||
| Taxes, other than income | 74 | 98 | 99 | 271 | |||||||||||||||||||
| Other (income) expense - net | (20) | (33) | (20) | (73) | |||||||||||||||||||
| Interest (income) from affiliate | — | (27) | — | (27) | |||||||||||||||||||
| Interest expense | 181 | 184 | 72 | 437 | |||||||||||||||||||
| Income taxes | 125 | 141 | 18 | 284 | |||||||||||||||||||
| Segment net income | $ | 493 | $ | 441 | $ | 90 | $ | 1,024 | |||||||||||||||
| Reconciliation of segment profit or loss to consolidated net income | |||||||||||||||||||||||
| Corporate and Other net loss | (313) | ||||||||||||||||||||||
| Net Income | $ | 711 |
(a)See Note 3 for additional information on Operating Revenues.
Other information for the segments and reconciliation to PPL's Consolidated results for the nine months ended September 30, 2024 are as follows:
| Kentucky Regulated | Pennsylvania Regulated | Rhode Island Regulated | Total Segments | Corporate and Other | Consolidated Total | ||||||||||||||||||||||||||||||
| Other Segment Disclosures | |||||||||||||||||||||||||||||||||||
| Amortization (a) | $ | 18 | $ | 35 | $ | 1 | $ | 54 | $ | 7 | $ | 61 | |||||||||||||||||||||||
| Deferred income taxes and investment tax credits (b) | (1) | 91 | 38 | 128 | 19 | 147 | |||||||||||||||||||||||||||||
| Expenditures for long lived assets | 792 | 820 | 342 | 1,954 | (9) | 1,945 |
(a)Represents non-cash expense items that include amortization of operating lease right-of-use assets, regulatory assets and liabilities, debt discounts and premiums and debt issuance costs.
(b)Represents a non-cash expense item that is also included in "Income Taxes."
The following provides Balance Sheet data for the segments and reconciliation to PPL's consolidated Balance Sheets as of:
| September 30, 2025 | December 31, 2024 | ||||||||||
| Total Assets | |||||||||||
| Kentucky Regulated | $ | 19,234 | $ | 17,626 | |||||||
| Pennsylvania Regulated | 16,702 | 15,475 | |||||||||
| Rhode Island Regulated | 7,247 | 7,055 | |||||||||
| Corporate and Other (a) | 756 | 913 | |||||||||
| Total | $ | 43,939 | $ | 41,069 |
(a)Primarily consists of unallocated items, including cash, PP&E, goodwill and the elimination of inter-segment transactions.
(PPL Electric)
PPL Electric has two operating segments, distribution and transmission, which are aggregated into a single reportable segment.
The measure of segment assets is reported on PPL Electric's Balance Sheets as total consolidated assets. The measures of significant segment expenses are reported on PPL Electric's Statements of Income. The measures of significant non-cash segment expenses as well as expenditures for long lived assets are reported on PPL Electric's Statements of Cash Flows.
(LG&E and KU)
Each of LG&E and KU operates as a single operating and reportable segment.
The measures of segment assets are reported on the Balance Sheets of LG&E and KU as total assets. The measures of significant segment expenses are reported on the Statements of Income of LG&E and KU. The measures of significant non-cash segment expenses as well as expenditures for long lived assets are reported on the Statements of Cash Flows of LG&E and KU.
3. Revenue from Contracts with Customers
(All Registrants)
See Note 3 in the Registrants' 2024 Form 10-K for a discussion of the principal activities from which PPL Electric, LG&E and KU and PPL’s Pennsylvania Regulated, Rhode Island Regulated, and Kentucky Regulated segments generate their revenues. The following tables reconcile "Operating Revenues" included in each Registrant's Statement of Income with revenues generated from contracts with customers for the periods ended September 30.
| 2025 Three Months | |||||||||||||||||||||||
| PPL | PPL Electric | LG&E | KU | ||||||||||||||||||||
| Operating Revenues (a)(b) | $ | 2,239 | $ | 786 | $ | 427 | $ | 530 | |||||||||||||||
| Revenues derived from: | |||||||||||||||||||||||
| Alternative revenue programs (c) | 6 | — | (2) | 2 | |||||||||||||||||||
| Other (d) | (8) | (4) | (1) | (1) | |||||||||||||||||||
| Revenues from Contracts with Customers | $ | 2,237 | $ | 782 | $ | 424 | $ | 531 | |||||||||||||||
| 2024 Three Months | |||||||||||||||||||||||
| PPL | PPL Electric | LG&E | KU | ||||||||||||||||||||
| Operating Revenues (a)(b) | $ | 2,066 | $ | 716 | $ | 397 | $ | 509 | |||||||||||||||
| Revenues derived from: | |||||||||||||||||||||||
| Alternative revenue programs (c) | 17 | (3) | 11 | 7 | |||||||||||||||||||
| Other (d) | (6) | (4) | (1) | (1) | |||||||||||||||||||
| Revenues from Contracts with Customers | $ | 2,077 | $ | 709 | $ | 407 | $ | 515 | |||||||||||||||
| 2025 Nine Months | |||||||||||||||||||||||
| PPL | PPL Electric | LG&E | KU | ||||||||||||||||||||
| Operating Revenues (a)(b) | $ | 6,768 | $ | 2,298 | $ | 1,310 | $ | 1,566 | |||||||||||||||
| Revenues derived from: | |||||||||||||||||||||||
| Alternative revenue programs (c) | 75 | 9 | (1) | 3 | |||||||||||||||||||
| Other (d) | (20) | (13) | (3) | (3) | |||||||||||||||||||
| Revenues from Contracts with Customers | $ | 6,823 | $ | 2,294 | $ | 1,306 | $ | 1,566 | |||||||||||||||
| 2024 Nine Months | |||||||||||||||||||||||
| PPL | PPL Electric | LG&E | KU | ||||||||||||||||||||
| Operating Revenues (a)(b) | $ | 6,251 | $ | 2,159 | $ | 1,239 | $ | 1,498 | |||||||||||||||
| Revenues derived from: | |||||||||||||||||||||||
| Alternative revenue programs (c) | 21 | (14) | 15 | 13 | |||||||||||||||||||
| Other (d) | (18) | (12) | (3) | (3) | |||||||||||||||||||
| Revenues from Contracts with Customers | $ | 6,254 | $ | 2,133 | $ | 1,251 | $ | 1,508 |
(a)PPL includes $509 million and $1,629 million for the three and nine months ended September 30, 2025 and $455 million and $1,393 million for the three and nine months ended September 30, 2024 of revenues from external customers reported by the Rhode Island Regulated segment. PPL Electric represents revenues from external customers reported by the Pennsylvania Regulated segment and LG&E and KU, net of intercompany power sales and transmission revenues, represent revenues from external customers reported by the Kentucky Regulated segment. See Note 2 for additional information.
(b)PPL's transition services agreement associated with the RIE acquisition ended in the third quarter of 2024. In conjunction with the completion of the agreement, PPL conformed the presentation of RIE's and the Rhode Island Regulated segment’s net metering charges with the presentation of the other segments, resulting in an increase in Operating Revenues and a corresponding increase in Energy purchases beginning in the fourth quarter of 2024. For the three and nine months ended September 30, 2025, net metering of $34 million and $130 million was included in Energy purchases on PPL's Statement of Income. For the three and nine months ended September 30, 2024, $25 million and $110 million of net metering was presented as a reduction of Operating Revenues on PPL's Statement of Income.
(c)This line item shows the over/under collection of rate mechanisms deemed alternative revenue programs with over-collections of revenue shown as positive amounts in the table above and under-collections shown as negative amounts.
(d)Represents additional revenues outside the scope of revenues from contracts with customers, such as lease and other miscellaneous revenues.
The following tables show revenues from contracts with customers disaggregated by customer class for the periods ended September 30.
| Three Months | |||||||||||||||||||||||||||||||||||||||||||||||
| Residential | Commercial | Industrial | Other (a) | Wholesale - municipality | Wholesale - other (b) | Transmission | Revenues from Contracts with Customers | ||||||||||||||||||||||||||||||||||||||||
| PPL | |||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | |||||||||||||||||||||||||||||||||||||||||||||||
| PA Regulated | $ | 403 | $ | 119 | $ | 16 | $ | 15 | $ | — | $ | — | $ | 229 | $ | 782 | |||||||||||||||||||||||||||||||
| KY Regulated | 394 | 278 | 162 | 74 | 7 | 26 | — | 941 | |||||||||||||||||||||||||||||||||||||||
| RI Regulated (c) | 258 | 158 | 23 | 9 | — | — | 66 | 514 | |||||||||||||||||||||||||||||||||||||||
| Total PPL | $ | 1,055 | $ | 555 | $ | 201 | $ | 98 | $ | 7 | $ | 26 | $ | 295 | $ | 2,237 | |||||||||||||||||||||||||||||||
| 2024 | |||||||||||||||||||||||||||||||||||||||||||||||
| PA Regulated | $ | 367 | $ | 111 | $ | 12 | $ | 15 | $ | — | $ | — | $ | 204 | $ | 709 | |||||||||||||||||||||||||||||||
| KY Regulated | 378 | 268 | 161 | 76 | 7 | 20 | — | 910 | |||||||||||||||||||||||||||||||||||||||
| RI Regulated (c) | 112 | 38 | 5 | 251 | — | — | 52 | 458 | |||||||||||||||||||||||||||||||||||||||
| Total PPL | $ | 857 | $ | 417 | $ | 178 | $ | 342 | $ | 7 | $ | 20 | $ | 256 | $ | 2,077 | |||||||||||||||||||||||||||||||
| PPL Electric | |||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | $ | 403 | $ | 119 | $ | 16 | $ | 15 | $ | — | $ | — | $ | 229 | $ | 782 | |||||||||||||||||||||||||||||||
| 2024 | $ | 367 | $ | 111 | $ | 12 | $ | 15 | $ | — | $ | — | $ | 204 | $ | 709 | |||||||||||||||||||||||||||||||
| LG&E | |||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | $ | 195 | $ | 137 | $ | 49 | $ | 29 | $ | — | $ | 14 | $ | — | $ | 424 | |||||||||||||||||||||||||||||||
| 2024 | $ | 190 | $ | 132 | $ | 48 | $ | 31 | $ | — | $ | 6 | $ | — | $ | 407 | |||||||||||||||||||||||||||||||
| KU | |||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | $ | 199 | $ | 141 | $ | 113 | $ | 46 | $ | 7 | $ | 25 | $ | — | $ | 531 | |||||||||||||||||||||||||||||||
| 2024 | $ | 188 | $ | 136 | $ | 113 | $ | 45 | $ | 7 | $ | 26 | $ | — | $ | 515 | |||||||||||||||||||||||||||||||
| Nine Months | |||||||||||||||||||||||||||||||||||||||||||||||
| Residential | Commercial | Industrial | Other (a) | Wholesale - municipality | Wholesale - other (b) | Transmission | Revenues from Contracts with Customers | ||||||||||||||||||||||||||||||||||||||||
| PPL | |||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | |||||||||||||||||||||||||||||||||||||||||||||||
| PA Regulated | $ | 1,205 | $ | 331 | $ | 42 | $ | 41 | $ | — | $ | — | $ | 675 | $ | 2,294 | |||||||||||||||||||||||||||||||
| KY Regulated | 1,209 | 805 | 474 | 241 | 19 | 88 | — | 2,836 | |||||||||||||||||||||||||||||||||||||||
| RI Regulated (c) | 913 | 516 | 61 | 37 | — | — | 166 | 1,693 | |||||||||||||||||||||||||||||||||||||||
| Total PPL | $ | 3,327 | $ | 1,652 | $ | 577 | $ | 319 | $ | 19 | $ | 88 | $ | 841 | $ | 6,823 | |||||||||||||||||||||||||||||||
| 2024 | |||||||||||||||||||||||||||||||||||||||||||||||
| PA Regulated | $ | 1,125 | $ | 318 | $ | 34 | $ | 43 | $ | — | $ | — | $ | 613 | $ | 2,133 | |||||||||||||||||||||||||||||||
| KY Regulated | 1,147 | 780 | 479 | 248 | 18 | 48 | — | 2,720 | |||||||||||||||||||||||||||||||||||||||
| RI Regulated (c) | 480 | 182 | 17 | 593 | — | — | 128 | 1,400 | |||||||||||||||||||||||||||||||||||||||
| Corp and Other | — | — | — | 1 | — | — | — | 1 | |||||||||||||||||||||||||||||||||||||||
| Total PPL | $ | 2,752 | $ | 1,280 | $ | 530 | $ | 885 | $ | 18 | $ | 48 | $ | 741 | $ | 6,254 | |||||||||||||||||||||||||||||||
| PPL Electric | |||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | $ | 1,205 | $ | 331 | $ | 42 | $ | 41 | $ | — | $ | — | $ | 675 | $ | 2,294 | |||||||||||||||||||||||||||||||
| 2024 | $ | 1,125 | $ | 318 | $ | 34 | $ | 43 | $ | — | $ | — | $ | 613 | $ | 2,133 | |||||||||||||||||||||||||||||||
| LG&E | |||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | $ | 601 | $ | 406 | $ | 143 | $ | 111 | $ | — | $ | 45 | $ | — | $ | 1,306 | |||||||||||||||||||||||||||||||
| 2024 | $ | 571 | $ | 391 | $ | 141 | $ | 114 | $ | — | $ | 34 | $ | — | $ | 1,251 | |||||||||||||||||||||||||||||||
| KU | |||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | $ | 608 | $ | 399 | $ | 331 | $ | 131 | $ | 19 | $ | 78 | $ | — | $ | 1,566 | |||||||||||||||||||||||||||||||
| 2024 | $ | 576 | $ | 389 | $ | 338 | $ | 134 | $ | 18 | $ | 53 | $ | — | $ | 1,508 |
(a)Primarily includes revenues from pole attachments, street lighting, other public authorities and other non-core businesses, and for the Rhode Island Regulated Segment certain regulatory deferral mechanisms which could result in a reduction in revenues from over collections. For the periods ended September 30, 2024, the Rhode Island Regulated segment primarily includes open access tariff revenues, which are calculated on combined customer classes.
(b)Includes wholesale power and transmission revenues. LG&E and KU amounts include intercompany power sales and transmission revenues, which are eliminated upon consolidation at the Kentucky Regulated segment.
(c)PPL's transition services agreement associated with the RIE acquisition ended in the third quarter of 2024. In conjunction with the completion of the agreement, PPL disaggregated the 2024 revenues of the Rhode Island Regulated segment in a manner consistent with that of its other segments. This resulted in certain customer revenues for the Rhode Island Regulated segment, which were previously presented in the "Other" category, being presented in the "Residential", "Commercial" or "Industrial" customer classes beginning in the fourth quarter of 2024. Applying the previous methodology to 2025 revenues would result in $153 million of Residential, $122 million of Commercial and $23 million of Industrial for the three months ended September 30, 2025 and $421 million of Residential, $315 million of Commercial and $61 million of Industrial for the nine months ended September 30, 2025 for the Rhode Island Regulated segment being presented as "Other".
As discussed in Note 2, PPL segments its business by geographic location. Revenues from external customers for each segment are reconciled to revenues from contracts with customers in the footnotes to the tables above.
Contract receivables from customers are primarily included in "Accounts receivable - Customer", "Unbilled revenues", and "Other noncurrent assets" on the Balance Sheets.
The following table shows the accounts receivable and unbilled revenues balances that were impaired for the periods ended September 30.
| Three Months | Nine Months | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| PPL (a) | $ | 30 | $ | 28 | $ | 72 | $ | 72 | |||||||||||||||
| PPL Electric (a) | 11 | 13 | 20 | 37 | |||||||||||||||||||
| LG&E | 1 | 1 | 3 | 2 | |||||||||||||||||||
| KU | 2 | 2 | 4 | 3 |
(a)2024 includes amounts impaired related to PPL Electric's billing issues. See Note 7 in PPL's 2024 Form 10-K for additional information.
Contract liabilities result from recording contractual billings in advance for customer attachments to the Registrants' infrastructure and payments received in excess of revenues earned to date. Advanced billings for customer attachments are generally recognized as revenue ratably over the quarterly billing period. Payments received in excess of revenues earned to date are recognized as revenue as services are delivered in subsequent periods. The Registrants' contract liabilities are not material at September 30, 2025 and 2024.
4. Earnings Per Share
(PPL)
Basic EPS is computed by dividing income available to PPL common shareowners by the weighted-average number of common shares outstanding during the applicable period. Diluted EPS is computed by dividing income available to PPL common shareowners by the weighted-average number of common shares outstanding, increased by the number of incremental shares that would be outstanding if potentially dilutive share-based payment awards were converted to common shares as calculated using the Two-Class Method or Treasury Stock Method. The If-Converted Method is applied to the Exchangeable Senior Notes due 2028 (Exchangeable Notes) issued in February 2023.
Incremental non-participating securities that have a dilutive impact are detailed in the table below. In 2025, these securities include forward sales of PPL common stock issued through an ATM Program and the number of shares needed to settle the conversion premium on the Exchangeable Notes. The forward sale agreements are dilutive under the Treasury Stock Method to the extent the average stock price of PPL's common shares exceeds the forward sale price prescribed in the agreements. See Note 7 for additional information on the ATM Program and Note 8 in PPL's Annual Report on Form 10-K for the year ended December 31, 2023 for additional information on the Exchangeable Notes.
Reconciliations of the amounts of income and shares of PPL common stock (in thousands) for the periods ended September 30 used in the EPS calculation are:
| Three Months | Nine Months | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Income (Numerator) | |||||||||||||||||||||||
| Net income attributable to PPL | $ | 318 | $ | 214 | $ | 915 | $ | 711 | |||||||||||||||
| Less amounts allocated to participating securities | — | 1 | 2 | 2 | |||||||||||||||||||
| Net income available to PPL common shareowners - Basic and Diluted | $ | 318 | $ | 213 | $ | 913 | $ | 709 | |||||||||||||||
| Shares of Common Stock (Denominator) | |||||||||||||||||||||||
| Weighted-average shares - Basic EPS | 739,525 | 737,773 | 739,167 | 737,678 | |||||||||||||||||||
| Add: Dilutive share-based payment awards (a) | 2,840 | 2,192 | 2,684 | 1,772 | |||||||||||||||||||
| Add: Forward sale agreements | 263 | — | 95 | — | |||||||||||||||||||
| Add: Exchangeable Notes | 1,662 | — | 801 | — | |||||||||||||||||||
| Weighted-average shares - Diluted EPS | 744,290 | 739,965 | 742,747 | 739,450 | |||||||||||||||||||
| Basic EPS | |||||||||||||||||||||||
| Net Income available to PPL common shareowners | $ | 0.43 | $ | 0.29 | $ | 1.24 | $ | 0.96 | |||||||||||||||
| Diluted EPS | |||||||||||||||||||||||
| Net Income available to PPL common shareowners | $ | 0.43 | $ | 0.29 | $ | 1.23 | $ | 0.96 |
(a) The Treasury Stock Method was applied to non-participating share-based payment awards.
For the periods ended September 30, PPL issued common stock related to the DRIP as follows (in thousands):
| Three Months | Nine Months | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| DRIP | 197 | 2 | 583 | 2 |
For the periods ended September 30, the following shares (in thousands) were excluded from the computations of diluted EPS because the effect would have been antidilutive.
| Three Months | Nine Months | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Stock-based compensation awards | 53 | — | 142 | — | |||||||||||||||||||
| Forward sale agreements | 29,946 | — | 12,542 | — |
5. Income Taxes
Reconciliations of income tax expense (benefit) for the periods ended September 30 are as follows.
| (PPL) | |||||||||||||||||||||||
| Three Months | Nine Months | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Federal income tax on Income Before Income Taxes at statutory tax rate - 21% | $ | 84 | $ | 57 | $ | 240 | $ | 189 | |||||||||||||||
| Increase (decrease) due to: | |||||||||||||||||||||||
| State income taxes, net of federal income tax benefit | 20 | 20 | 48 | 48 | |||||||||||||||||||
| Income tax credits | (4) | (2) | (9) | (4) | |||||||||||||||||||
| Utility rate-making tax adjustments (a) | (6) | (4) | (20) | (14) | |||||||||||||||||||
| Amortization of excess deferred federal and state income taxes | (13) | (13) | (34) | (33) | |||||||||||||||||||
| Other | (1) | — | 4 | 3 | |||||||||||||||||||
| Total increase (decrease) | (4) | 1 | (11) | — | |||||||||||||||||||
| Total income tax expense (benefit) | $ | 80 | $ | 58 | $ | 229 | $ | 189 |
(a) Primarily consists of tax impacts of AFUDC equity and related depreciation across PPL's regulated utility subsidiaries and flow through tax impacts of utility ratemaking. Flow through occurs when the regulator excludes deferred tax expense or benefit from recoverable costs when determining income tax expense.
| (PPL Electric) | |||||||||||||||||||||||
| Three Months | Nine Months | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Federal income tax on Income Before Income Taxes at statutory tax rate - 21% | $ | 44 | $ | 40 | $ | 132 | $ | 122 | |||||||||||||||
| Increase (decrease) due to: | |||||||||||||||||||||||
| State income taxes, net of federal income tax benefit | 13 | 13 | 40 | 39 | |||||||||||||||||||
| Utility rate-making tax adjustments (a) | (5) | (2) | (17) | (12) | |||||||||||||||||||
| Amortization of excess deferred federal and state income taxes | (2) | (3) | (7) | (8) | |||||||||||||||||||
| Other | (1) | (1) | (2) | — | |||||||||||||||||||
| Total increase (decrease) | 5 | 7 | 14 | 19 | |||||||||||||||||||
| Total income tax expense (benefit) | $ | 49 | $ | 47 | $ | 146 | $ | 141 |
(a) Primarily consists of tax impacts of AFUDC equity and related depreciation and flow through tax impacts of Pennsylvania utility ratemaking. Flow through occurs when the regulator excludes deferred tax expense or benefit from recoverable costs when determining income tax expense.
| (LG&E) | |||||||||||||||||||||||
| Three Months | Nine Months | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Federal income tax on Income Before Income Taxes at statutory tax rate - 21% | $ | 22 | $ | 20 | $ | 64 | $ | 62 | |||||||||||||||
| Increase (decrease) due to: | |||||||||||||||||||||||
| State income taxes, net of federal income tax benefit | 4 | 4 | 12 | 11 | |||||||||||||||||||
| Amortization of excess deferred federal and state income taxes | (3) | (3) | (10) | (9) | |||||||||||||||||||
| Utility rate-making tax adjustments (a) | (1) | (1) | (3) | (1) | |||||||||||||||||||
| Other | (1) | — | (2) | (2) | |||||||||||||||||||
| Total increase (decrease) | (1) | — | (3) | (1) | |||||||||||||||||||
| Total income tax expense (benefit) | $ | 21 | $ | 20 | $ | 61 | $ | 61 | |||||||||||||||
(a) Primarily consists of tax impacts of AFUDC equity and related depreciation and flow through tax impacts of Kentucky utility ratemaking. Flow through occurs when the regulator excludes deferred tax expense or benefit from recoverable costs when determining income tax expense.
| (KU) | |||||||||||||||||||||||
| Three Months | Nine Months | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Federal income tax on Income Before Income Taxes at statutory tax rate - 21% | $ | 29 | $ | 26 | $ | 82 | $ | 74 | |||||||||||||||
| Increase (decrease) due to: | |||||||||||||||||||||||
| State income taxes, net of federal income tax benefit | 5 | 4 | 15 | 13 | |||||||||||||||||||
| Amortization of excess deferred federal and state income taxes | (4) | (4) | (13) | (13) | |||||||||||||||||||
| Utility rate-making tax adjustments (a) | (1) | (1) | (3) | (1) | |||||||||||||||||||
| Other | (1) | (1) | (3) | (3) | |||||||||||||||||||
| Total increase (decrease) | (1) | (2) | (4) | (4) | |||||||||||||||||||
| Total income tax expense (benefit) | $ | 28 | $ | 24 | $ | 78 | $ | 70 |
(a) Primarily consists of tax impacts of AFUDC equity and related depreciation and flow through tax impacts of Kentucky utility ratemaking. Flow through occurs when the regulator excludes deferred tax expense or benefit from recoverable costs when determining income tax expense.
Other
One Big Beautiful Bill Act (All Registrants)
On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act. The Registrants are continuing to review the law to assess any material impacts to the financial statements.
Additionally, on July 7, 2025, President Trump issued an Executive Order directing the Treasury to take action to strictly enforce the termination of clean electricity tax credits under IRC Sections 45Y and 48E for wind and solar. On August 15, 2025, the IRS issued Notice 2025-42, primarily tightening the rules regarding when a solar project is considered to have commenced construction. As of September 30, 2025, PPL is not expected to be significantly impacted by this or anticipated future guidance.
6. Utility Rate Regulation
(All Registrants)
The following table provides information about the regulatory assets and liabilities of cost-based rate-regulated utility operations.
| PPL | PPL Electric | LG&E | KU | ||||||||||||||||||||||||||||||||||||||||||||
| September 30, 2025 | December 31, 2024 | September 30, 2025 | December 31, 2024 | September 30, 2025 | December 31, 2024 | September 30, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||
| Current Regulatory Assets: | |||||||||||||||||||||||||||||||||||||||||||||||
| Rate adjustment mechanisms | $ | 100 | $ | 95 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||||||||||||||
| Renewable energy certificates | 27 | 14 | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Storm damage expense rider | 35 | 68 | 35 | 68 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Gas supply clause | 15 | 3 | — | — | 15 | 3 | — | — | |||||||||||||||||||||||||||||||||||||||
| Transmission service charge | 63 | 44 | — | 27 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| DSIC | 9 | 8 | 9 | 8 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| TCJA customer refund and recovery | 38 | 21 | 38 | 21 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| ISR deferral | 7 | 22 | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Other | 18 | 45 | 8 | 9 | 9 | 5 | — | 1 | |||||||||||||||||||||||||||||||||||||||
| Total current regulatory assets | $ | 312 | $ | 320 | $ | 90 | $ | 133 | $ | 24 | $ | 8 | $ | — | $ | 1 | |||||||||||||||||||||||||||||||
| Noncurrent Regulatory Assets: | |||||||||||||||||||||||||||||||||||||||||||||||
| Defined benefit plans | $ | 964 | $ | 967 | $ | 479 | $ | 473 | $ | 216 | $ | 226 | $ | 148 | $ | 149 | |||||||||||||||||||||||||||||||
| Plant outage costs | 24 | 30 | — | — | 5 | 7 | 19 | 23 | |||||||||||||||||||||||||||||||||||||||
| Net metering | 160 | 147 | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Environmental cost recovery | 96 | 96 | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Storm costs | 111 | 113 | 41 | 22 | 24 | 20 | 38 | 29 | |||||||||||||||||||||||||||||||||||||||
| Unamortized loss on debt | 19 | 20 | 3 | 3 | 8 | 9 | 6 | 6 | |||||||||||||||||||||||||||||||||||||||
| Terminated interest rate swaps | 48 | 53 | — | — | 28 | 31 | 20 | 22 | |||||||||||||||||||||||||||||||||||||||
| Accumulated cost of removal of utility plant | 168 | 173 | 168 | 173 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| AROs | 272 | 280 | — | — | 76 | 75 | 196 | 205 | |||||||||||||||||||||||||||||||||||||||
| RAR | 78 | 83 | — | — | 78 | 83 | — | — | |||||||||||||||||||||||||||||||||||||||
| Gas line inspections | 24 | 24 | — | — | 22 | 22 | 2 | 2 | |||||||||||||||||||||||||||||||||||||||
| Advanced metering infrastructure | 37 | 28 | — | — | 19 | 14 | 18 | 14 | |||||||||||||||||||||||||||||||||||||||
| Other | 57 | 46 | 12 | 2 | 9 | 4 | 11 | 8 | |||||||||||||||||||||||||||||||||||||||
| Total noncurrent regulatory assets | $ | 2,058 | $ | 2,060 | $ | 703 | $ | 673 | $ | 485 | $ | 491 | $ | 458 | $ | 458 | |||||||||||||||||||||||||||||||
| PPL | PPL Electric | LG&E | KU | ||||||||||||||||||||||||||||||||||||||||||||
| September 30, 2025 | December 31, 2024 | September 30, 2025 | December 31, 2024 | September 30, 2025 | December 31, 2024 | September 30, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||
| Current Regulatory Liabilities: | |||||||||||||||||||||||||||||||||||||||||||||||
| Generation supply charge | $ | 45 | $ | 52 | $ | 45 | $ | 52 | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||||||||||||||
| ECR | 7 | 12 | — | — | 4 | 6 | 3 | 6 | |||||||||||||||||||||||||||||||||||||||
| Transmission formula rate | 30 | 1 | 9 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Rate adjustment mechanisms | 71 | 71 | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Energy efficiency | 25 | 25 | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| DSM | 24 | 17 | — | — | 9 | 7 | 15 | 10 | |||||||||||||||||||||||||||||||||||||||
| Revenue decoupling mechanism | 40 | 10 | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Other | 49 | 35 | 17 | 5 | 1 | 1 | 6 | 6 | |||||||||||||||||||||||||||||||||||||||
| Total current regulatory liabilities | $ | 291 | $ | 223 | $ | 71 | $ | 57 | $ | 14 | $ | 14 | $ | 24 | $ | 22 | |||||||||||||||||||||||||||||||
| Noncurrent Regulatory Liabilities: | |||||||||||||||||||||||||||||||||||||||||||||||
| Accumulated cost of removal of utility plant | $ | 1,037 | $ | 1,022 | $ | — | $ | — | $ | 328 | $ | 314 | $ | 411 | $ | 408 | |||||||||||||||||||||||||||||||
| Net deferred taxes | 1,825 | 1,899 | 713 | 739 | 422 | 439 | 476 | 498 | |||||||||||||||||||||||||||||||||||||||
| Defined benefit plans | 310 | 294 | 114 | 100 | 24 | 24 | 67 | 65 | |||||||||||||||||||||||||||||||||||||||
| Terminated interest rate swaps | 52 | 54 | — | — | 26 | 27 | 26 | 27 | |||||||||||||||||||||||||||||||||||||||
| Energy efficiency | 29 | 16 | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Other | 69 | 50 | — | — | 12 | 11 | 19 | 11 | |||||||||||||||||||||||||||||||||||||||
| Total noncurrent regulatory liabilities | $ | 3,322 | $ | 3,335 | $ | 827 | $ | 839 | $ | 812 | $ | 815 | $ | 999 | $ | 1,009 |
Regulatory Matters
Rhode Island Activities (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 is 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.
Hold Harmless Implementation Agreement
As a condition to the Acquisition (as defined in Note 8 to the Financial Statements) of RIE in May 2022, PPL made a commitment to the Rhode Island Division of Public Utilities and Carriers to hold harmless Rhode Island customers from the impact of future rate increases resulting from changes in Accumulated Deferred Income Taxes as a result of the Acquisition (the Hold Harmless Commitment). On June 13, 2025, an agreement was entered into by and among RIE, PPL, PPL Rhode Island Holdings and the Rhode Island Division of Public Utilities and Carriers Advocacy Section to satisfy RIE's obligations under the Hold Harmless Commitment of approximately $155 million, and proposes to resolve that amount through bill credits issued to customers, with approximately $74 million to be issued throughout the first quarter of 2026 and approximately $81 million to be issued throughout the first quarter of 2027. The bill credits would be recorded as a reduction to revenue in the periods in which the credits are applied to customers' bills. On September 10, 2025, the Rhode Island Division of Public Utilities and Carriers approved the agreement. Also on September 10, 2025, the RIPUC opened a docket to evaluate RIE’s bill credit proposal, including the underlying rate accounting supporting the proposal, and required RIE to file a tariff advice with the RIPUC, which RIE filed on October 2, 2025. Discovery in this proceeding is ongoing and an evidentiary hearing is scheduled for November 18, 2025. PPL cannot predict the outcome of the RIPUC inquiry.
Kentucky Activities
(PPL, LG&E and KU)
Rate Case Proceedings
On May 30, 2025, LG&E and KU filed requests with the KPSC for an increase in annual electricity and gas revenues of approximately $391 million ($105 million and $226 million in electricity revenues at LG&E and KU and $60 million in gas revenues at LG&E) and approval of certain regulatory and accounting treatments. The revenue increases would be an increase of 8.3% and 11.5% in electricity revenues at LG&E and KU, and an increase of 14.0% in gas revenues at LG&E.
The applications are based on a forecasted test year of January 1, 2026 through December 31, 2026 and request an authorized ROE of 10.95%. Subject to KPSC approval, new rates are expected to become effective on January 1, 2026. Certain counterparties have intervened in the proceedings.
On October 20, 2025, LG&E and KU filed with the KPSC a stipulation and recommendation (the agreement) regarding a proposed resolution of issues with a majority of the intervenors in the proceedings.
Under the agreement, the parties propose that the KPSC should issue orders granting a revised aggregate increase in annual electricity and gas revenues of approximately $235 million, comprising increases of $58 million and $132 million in electricity revenues at LG&E and KU, respectively, and $45 million in gas revenues at LG&E. The agreement proposes a revised authorized ROE of 9.90%.
The agreement proposes a "stay out" commitment from LG&E and KU to refrain from effective base rate increases before August 1, 2028, subject to certain exceptions. In connection with the stay out period, the agreement also proposes the establishment of two new rate tracker mechanisms, a Generation Cost Recovery Adjustment Clause (GCR) and a Sharing Mechanism Adjustment Clause (SM).
The proposed GCR mechanism would provide LG&E and KU recovery and return on investment of covered costs (excluding fuel amounts, which LG&E and KU can recover via an existing rate mechanism) of relevant new generation and energy storage assets authorized in the 2022 and 2025 CPCN proceedings (excluding the Mill Creek Unit 6 NGCC in 2031, see "2025 CPCN" for more information regarding the Mill Creek Unit 6 NGCC) as they are placed in service.
The proposed SM mechanism would address any base rate revenue deficiency or surplus during the final thirteen months of the stay out period, July 2027 through July 2028, below or above a suggested ROE band of 9.40% to 10.15%. Any such base rate revenue deficiency or surplus would be collected from or returned to customers over a thirteen-month billing period beginning November 2028.
Following issuance of the 2025 CPCN Order, LG&E and KU filed supplemental testimony with the KPSC in the rate case proceedings seeking recovery of the Mill Creek Unit 2 stay open costs through a proposed additional rate adjustment clause mechanism.
The agreement further authorizes LG&E and KU to use regulatory deferral accounting for actual expenses above or below base rate levels for certain expenses including: pension and post-retirement benefits, storm restoration, vegetation management, transmission waivers and credits, and gas line or well activities, with recovery of such deferred asset or liability amounts to be addressed in future rate cases.
A KPSC hearing in the underlying proceedings commenced on November 3, 2025. The agreement, as well as matters raised by non-agreeing intervenors, are subject to KPSC review and action, including approval, denial or modification. LG&E and KU anticipate a ruling from the KPSC during the fourth quarter of 2025, although the KPSC has until March 31, 2026 to issue its final order. PPL, LG&E and KU cannot predict the outcome of these proceedings.
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 did 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. The application includes proposals to build:
-
a 645 MW NGCC generation unit at KU's E.W. Brown station (Brown Unit 12),
-
a 645 MW NGCC generation unit at LG&E's Mill Creek station (Mill Creek Unit 6),
-
a four-hour 400 MW (1,600 MWh total) battery energy storage system (BESS) at LG&E's Cane Run station, and
-
a selective catalytic reduction (SCR) environmental facility at KU's Ghent station Unit 2 (Ghent 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 Unit 6 NGCC is in addition to a new NGCC unit currently under construction at that location (Mill Creek Unit 5).
The filing also notes projected in service dates for the projects, including the Brown Unit 12 NGCC in 2030, the Mill Creek Unit 6 NGCC in 2031, the Cane Run BESS in 2028 and the Ghent Unit 2 SCR in 2028.
On July 29, 2025, LG&E and KU filed with the KPSC a stipulation and recommendation regarding a proposed resolution of issues with several of the intervenors in the CPCN proceeding (stipulation). The stipulation recommends to the KPSC the approval of the large majority of LG&E's and KU's requested generation-related projects and associated accounting matters, subject to certain changes. Under the stipulation, the parties agree the KPSC should issue an order granting a CPCN for the proposed: (a) Brown Unit 12 NGCC; (b) Mill Creek Unit 6 NGCC; and (c) Ghent Unit 2 SCR. In addition, the proposal to build the $775 million Cane Run BESS would be withdrawn without prejudice, the relevant costs regarding the proposed $1.4 billion Mill Creek Unit 6 NGCC would be recovered through a new rate tracker mechanism, and the retirement date for the existing Mill Creek Unit 2 coal plant would be extended from 2027 to the operational date of the proposed Mill Creek Unit 6 NGCC or afterwards, subject to relevant future economic analysis, regulatory or environmental authorizations. The stipulation also contains provisions relating to regulatory asset accounting, proposed data center tariffs, future renewable power requests-for-proposals and other matters. LG&E and KU would retain the right to seek approval of the potentially withdrawn Cane Run BESS or similar substitute project in future regulatory proceedings.
On October 28, 2025, the KPSC issued an order approving much of LG&E's and KU's July 2025 stipulation, with certain modifications. The order granted the requested CPCNs and site-related permits to construct the proposed Brown Unit 12 NGCC, Mill Creek Unit 6 NGCC, and Ghent Unit 2 SCR. The order authorized inclusion of relevant costs of the Ghent Unit 2 SCR in KU's existing environmental cost recovery rate mechanism. The order established a separate monitoring case to receive and consider information during the construction of Mill Creek Unit 6 NGCC.
The order approved requests regarding regulatory asset deferral accounting treatment for certain AFUDC related amounts and noted the KPSC's expectation that the stipulating parties would follow through with their commitments regarding tariffs and power supply contracts related to potential future data center or high load customers in LG&E's and KU's pending rate proceedings. The order also approved other elements of the stipulation or the originally-filed application, with minor modifications.
The KPSC decided not to approve LG&E's and KU's proposed new rate adjustment cost recovery mechanisms for certain costs associated with Mill Creek Unit 6 NGCC and costs associated with operating the Mill Creek Unit 2 coal plant beyond its original retirement date in 2027. However, the denials were without prejudice to resubmission and the KPSC encouraged the parties to provide additional evidence on such matters in separate proceedings. LG&E and KU are providing such evidence addressing recovery of the Mill Creek Unit 2 stay open costs in their pending rate case proceedings. Recovery of Mill Creek Unit 6 costs will be addressed in a future proceeding. The KPSC declined to rule on the matter related to the retirement date of Mill Creek Unit 2 coal plant.
In light of the conditional withdrawal in the stipulation, the order did not include a CPCN for the Cane Run BESS. LG&E and KU retain the right to seek approval of the Cane Run BESS project or similar substitute projects at any time in future regulatory proceedings.
The KPSC's order is subject to certain rights to request rehearing or appeal by LG&E and KU and all intervenors. LG&E and KU continue to evaluate the order and related matters and cannot predict the outcome should they or other parties decide to appeal or request a rehearing of these matters.
Kentucky January 2025 Storm
In January 2025, LG&E and KU experienced snow, ice, sleet and freezing rain in their service territories, resulting in substantial damage to certain of LG&E's and KU's assets. On January 31, 2025, LG&E and KU submitted a filing with the KPSC requesting regulatory asset treatment of the extraordinary operations and maintenance (O&M) expenses portion of the costs incurred related to the storm. On March 19, 2025, the KPSC issued an order authorizing LG&E and KU to establish, for accounting purposes only, regulatory assets based on the jurisdictional incremental costs of extraordinary O&M expense incurred by LG&E and KU as a result of the 2025 winter storm, with recovery amounts and amortization thereof to be determined in subsequent base rate proceedings. LG&E and KU cannot predict the outcome of these matters. As of September 30, 2025, LG&E and KU had recorded regulatory assets related to the storm of $2 million and $7 million.
Mill Creek Unit 1 and Unit 2 RAR Application (PPL and LG&E)
In 2023, the KPSC issued an order approving, among other items, the requested retirement of Mill Creek Units 1 and 2.
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. LG&E expects these costs to be approximately $125 million and proposed to begin application of the RAR with bills issued in May 2025. On February 24, 2025, the KPSC issued an order approving LG&E’s cost recovery for Mill Creek Unit 1 under the RAR and related amounts were included in bills beginning in May 2025.
LG&E anticipates the recovery of associated costs, including the remaining net book value, for Mill Creek Unit 2 through the RAR. The remaining net book value of Mill Creek Unit 2 was approximately $203 million at September 30, 2025 and LG&E is continuing to depreciate using the current approved rates through its retirement date. LG&E expects to reclassify the net book value remaining at retirement to a regulatory asset to be amortized over a period of ten years in accordance with the RAR. There can be no assurance that these costs will be recovered in the amounts or over the time periods that LG&E expects. See the "2025 CPCN" discussion above for information regarding potential changes in the retirement date of Mill Creek Unit 2.
Pennsylvania Activities
(PPL and PPL Electric)
Rate Case Proceedings
On September 30, 2025, PPL Electric filed a request with the PAPUC for an increase in distribution base rates of approximately $356 million, more than $50 million of which is already included in customer bills through rate recovery mechanisms, and approval of certain regulatory and accounting treatments. The proposed increase in distribution base rates would increase PPL Electric's total annual revenue by approximately 8.6%. The application is based on a fully projected future test year of July 1, 2026 through June 30, 2027 and requested an authorized ROE of 11.3%. Subject to PAPUC approval, new rates are expected to become effective on July 1, 2026. A ruling from the PAPUC is anticipated during the second quarter of 2026. PPL and PPL Electric cannot predict the outcome of the proceeding.
DSIC Petition
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%.
Federal Matters
FERC Transmission Rate Filing (PPL, LG&E and KU)
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. The FERC issued the substantive order on rehearing on March 21, 2024, reaffirming its prior decision. On August 8, 2025, the D.C. Circuit Court of Appeals issued a procedural ruling vacating the FERC’s prior orders and remanded the matter back to the FERC for further proceedings. 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 existing base rate levels. Additionally, LG&E’s and KU’s current Kentucky rate proceedings include requests regarding elements of regulatory liabilities or assets associated with potential future decreases or increases in the transmission waivers and credits that are the subject of these FERC proceedings.
Recovery of Transmission Costs (PPL)
Until December 2022, RIE's transmission facilities were operated in combination with the transmission facilities of National Grid USA's New England affiliates, Massachusetts Electric Company (MECO) and New England Power (NEP), a National Grid USA affiliate, as a single integrated system with NEP designated as the combined operator. As of January 1, 2023, RIE operates its own transmission facilities. NE-ISO allocates RIE's costs among transmission customers in New England, in accordance with the ISO Open Access Transmission Tariff (ISO-NE OATT). According to the FERC orders, RIE is compensated for its actual monthly transmission costs, with its authorized maximum ROE of 11.74% on its transmission assets.
The ROE for transmission rates under the ISO-NE OATT is the subject of four complaints that are pending before the FERC. On October 16, 2014, the FERC issued an order on the first complaint, Opinion No. 531-A, resetting the base ROE applicable to transmission assets under the ISO-NE OATT from 11.14% to 10.57% effective as of October 16, 2014 and establishing a maximum ROE of 11.74%. On April 14, 2017, this order was vacated and remanded by the D. C. Circuit Court of Appeals (Court of Appeals). After the remand, the FERC issued an order on October 16, 2018 applicable to all four pending cases where it proposed a new base ROE methodology that, with subsequent input and support from the New England Transmission Owners (NETO), yielded a base ROE of 10.41%. Subsequent to the FERC's October 2018 order in the New England Transmission Owners cases, the FERC further refined its ROE methodology in another proceeding and has applied that refined methodology to transmission owners’ ROEs in other jurisdictions, and the NETOs filed further information in the New England matters to distinguish their case. Those determinations in other jurisdictions have been vacated and remanded back to the FERC for further proceedings by the D.C. Circuit Court of Appeals. The proceeding and the final base rate ROE determination in the New England matters remain open, pending a final order from the FERC. PPL cannot predict the outcome of this matter, and an estimate of the impact cannot be determined.
Other
Purchase of Receivables Programs
(PPL and PPL Electric)
In accordance with RIPUC-approved and PAPUC-approved purchase of accounts receivable programs, RIE and PPL Electric purchase certain accounts receivable from alternative electricity suppliers at a discount, which reflects a provision for uncollectible accounts. The alternative electricity suppliers have no continuing involvement or interest in the purchased accounts receivable. Accounts receivable that are acquired are initially recorded at fair value on the date of acquisition.
During the three and nine months ended September 30, 2025, RIE purchased $90 million and $245 million of accounts receivable from alternative suppliers. During the three and nine months ended September 30, 2024, RIE purchased $80 million and $234 million of accounts receivable from alternative suppliers.
During the three and nine months ended September 30, 2025, PPL Electric purchased $439 million and $1.3 billion of accounts receivable from alternative suppliers. During the three and nine months ended September 30, 2024, PPL Electric purchased $404 million and $1.2 billion of accounts receivable from alternative suppliers.
7. Financing Activities
Credit Arrangements and Short-term Debt
(All Registrants)
The Registrants maintain credit facilities to enhance liquidity, provide credit support and provide a backstop to commercial paper programs. For reporting purposes, on a consolidated basis, the credit facilities and commercial paper programs of PPL Electric, LG&E and KU are attributable to PPL. The amounts listed in the borrowed column below are recorded as "Short-term debt" on the Balance Sheets. The following credit facilities were in place at:
| September 30, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||
| Expiration Date | Capacity | Borrowed | Letters of Credit and Commercial Paper Issued (c) | Unused Capacity | Borrowed | Letters of Credit and Commercial Paper Issued (c) | |||||||||||||||||||||||||||||||||||
| PPL | |||||||||||||||||||||||||||||||||||||||||
| PPL Capital Funding (a) | |||||||||||||||||||||||||||||||||||||||||
| Syndicated Credit Facility (b) | Dec. 2029 | $ | 1,500 | $ | — | $ | 596 | $ | 904 | $ | — | $ | 138 | ||||||||||||||||||||||||||||
| Bilateral Credit Facility | Feb. 2026 | 100 | — | — | 100 | — | — | ||||||||||||||||||||||||||||||||||
| Bilateral Credit Facility | Feb. 2026 | 100 | — | 28 | 72 | — | 15 | ||||||||||||||||||||||||||||||||||
| Total PPL Capital Funding Credit Facilities | $ | 1,700 | $ | — | $ | 624 | $ | 1,076 | $ | — | $ | 153 | |||||||||||||||||||||||||||||
| PPL Electric | |||||||||||||||||||||||||||||||||||||||||
| Syndicated Credit Facility | Dec. 2029 | $ | 750 | $ | — | $ | 1 | $ | 749 | $ | — | $ | 1 | ||||||||||||||||||||||||||||
| Total PPL Electric Credit Facilities | $ | 750 | $ | — | $ | 1 | $ | 749 | $ | — | $ | 1 | |||||||||||||||||||||||||||||
| LG&E | |||||||||||||||||||||||||||||||||||||||||
| Syndicated Credit Facility | Dec. 2029 | $ | 600 | $ | — | $ | — | $ | 600 | $ | — | $ | 25 | ||||||||||||||||||||||||||||
| Total LG&E Credit Facilities | $ | 600 | $ | — | $ | — | $ | 600 | $ | — | $ | 25 | |||||||||||||||||||||||||||||
| KU | |||||||||||||||||||||||||||||||||||||||||
| Syndicated Credit Facility | Dec. 2029 | $ | 600 | $ | — | $ | — | $ | 600 | $ | — | $ | 140 | ||||||||||||||||||||||||||||
| Total KU Credit Facilities | $ | 600 | $ | — | $ | — | $ | 600 | $ | — | $ | 140 |
(a)PPL Capital Funding's obligations are fully and unconditionally guaranteed by PPL.
(b)In January 2025, PPL Capital Funding increased the borrowing capacity of this facility from $1.25 billion to $1.50 billion. At September 30, 2025, the facility included a $250 million borrowing sublimit for RIE and a $1.25 billion sublimit for PPL Capital Funding. At December 31, 2024, the facility included a $250 million borrowing sublimit for RIE and a $1 billion borrowing sublimit for PPL Capital Funding. RIE’s borrowing sublimit is adjustable, at the borrowers’ option, from $0 to $600 million, with the remaining balance available under the facility allocated to PPL Capital Funding. At September 30, 2025, PPL Capital Funding had $445 million of commercial paper outstanding and RIE had $151 million of commercial paper outstanding. At December 31, 2024, PPL Capital Funding had $138 million of commercial paper outstanding and RIE had no commercial paper outstanding. RIE's obligations under the facility are not guaranteed by PPL.
(c)Commercial paper issued reflects the undiscounted face value of the issuance.
(PPL)
In January 2025, PPL Capital Funding amended its existing $1.25 billion syndicated credit facility to extend the termination date from December 6, 2028 to December 6, 2029 and to increase the borrowing capacity under the facility to $1.50 billion.
(PPL and PPL Electric)
In January 2025, PPL Electric amended its existing $650 million syndicated credit facility to extend the termination date from December 6, 2028 to December 6, 2029 and to increase the borrowing capacity under the facility to $750 million.
(PPL and LG&E)
In January 2025, LG&E amended its existing $500 million syndicated credit facility to extend the termination date from December 6, 2028 to December 6, 2029 and to increase the borrowing capacity under the facility to $600 million.
(PPL and KU)
In January 2025, KU amended its existing $400 million syndicated credit facility to extend the termination date from December 6, 2028 to December 6, 2029 and to increase the borrowing capacity under the facility to $600 million.
(All Registrants)
The Registrants maintain commercial paper programs to provide an additional financing source to fund short-term liquidity needs. Commercial paper issuances, included in "Short-term debt" on the Balance Sheets, are supported by the respective Registrant's credit facilities. The following commercial paper programs were in place at:
| September 30, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||||||||
| Weighted - Average Interest Rate | Capacity | Commercial Paper Issuances (c) | Unused Capacity | Weighted - Average Interest Rate | Commercial Paper Issuances (d) | ||||||||||||||||||||||||||||||
| PPL Capital Funding (a)(b) | 4.29% | $ | 1,600 | $ | 445 | $ | 1,155 | 4.76% | $ | 138 | |||||||||||||||||||||||||
| RIE (b) | 4.24% | 400 | 151 | 249 | — | ||||||||||||||||||||||||||||||
| PPL Electric | 750 | — | 750 | — | |||||||||||||||||||||||||||||||
| LG&E | 600 | — | 600 | 4.72% | 25 | ||||||||||||||||||||||||||||||
| KU | 600 | — | 600 | 4.71% | 140 | ||||||||||||||||||||||||||||||
| Total | $ | 3,950 | $ | 596 | $ | 3,354 | $ | 303 |
(a)PPL Capital Funding's obligations are fully and unconditionally guaranteed by PPL.
(b)Issuances under the PPL Capital Funding and RIE commercial paper programs are supported by the PPL Capital Funding syndicated credit facility. At September 30, 2025, the borrowing sublimits were $250 million for RIE and $1.25 billion for PPL Capital Funding. At December 31, 2024, the borrowing sublimits were $250 million for RIE and $1 billion for PPL Capital Funding. PPL Capital Funding’s commercial paper program is also backed by a separate bilateral credit facility for $100 million.
(c)Commercial paper issued reflects the undiscounted face value of the issuance.
(PPL Electric, LG&E, and KU)
See Note 11 for discussion of intercompany borrowings.
Long-term Debt
(PPL and PPL Electric)
In August 2025, PPL Electric issued $500 million of 5.55% First Mortgage Bonds due 2055. PPL Electric received proceeds of $491 million, net of discounts and underwriting fees, to be used to repay short-term debt and for other general corporate purposes.
(PPL and LG&E)
In August 2025, LG&E issued $700 million of 5.85% First Mortgage Bonds due 2055. LG&E received proceeds of $694 million, net of discounts and underwriting fees, to be used to repay short-term debt, including the current portion of certain long-term debt, and for other general corporate purposes.
(PPL and KU)
In August 2025, KU issued $700 million of 5.85% First Mortgage Bonds due 2055. KU received proceeds of $694 million, net of discounts and underwriting fees, to be used to repay short-term debt, including the current portion of certain long-term debt, and for other general corporate purposes.
(PPL)
Equity Securities
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, which may utilize 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 nine months ended September 30, 2025, PPL entered into forward contracts to sell approximately 38.7 million shares of its common stock at a blended initial forward price of approximately $35.50 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. Each outstanding forward contract must be settled on or before dates ranging from December 30, 2025 to August 11, 2027. PPL may elect, at its discretion, to physically settle, net share settle or net cash settle the forward contracts. At September 30, 2025, PPL could have settled the forward sale contracts with physical delivery of approximately 38.7 million shares of common stock for proceeds of approximately $1.4 billion. The forward contracts under the ATM program are classified as equity transactions.
Dividends
In August 2025, PPL declared a quarterly cash dividend on its common stock, payable October 1, 2025, of 27.25 cents per share (equivalent to $1.09 per annum).
8. Acquisitions, Developments and Divestitures
Acquisitions (PPL)
Acquisition of Narragansett Electric
On May 25, 2022, PPL Rhode Island Holdings acquired 100% of the outstanding shares of common stock of Narragansett Electric from National Grid USA, a subsidiary of National Grid plc (the Acquisition). Following the closing of the Acquisition, Narragansett Electric provides services doing business under the name Rhode Island Energy (RIE). Please see Note 9 to the Financial Statements in PPL's 2024 Form 10-K for additional information concerning the Acquisition.
In connection with the Acquisition, National Grid USA Service Company, Inc., 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, as agreed upon in the Narragansett share purchase agreement. 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.
As a condition to the Acquisition, PPL made certain commitments to the Rhode Island Division of Public Utilities and Carriers and the Attorney General of the State of Rhode Island. See Note 9 to the Financial Statements in PPL's 2024 Form 10-K for a complete listing of those commitments. The following represents an update to the remaining commitments:
-
RIE will hold harmless Rhode Island customers from any changes to Accumulated Deferred Income Taxes (ADIT) as a result of the Acquisition. RIE reserves the right to seek rate adjustments based on future changes to ADIT that are not related to the Acquisition. See Note 6 to the Financial Statements for additional details on RIE's obligation to hold harmless Rhode Island customers.
-
RIE will forgo potential recovery of any and all transition costs, which includes (1) the installation of certain information technology systems; (2) modification and enhancements to physical facilities in Rhode Island; and (3) costs related to severance payments, communications and branding changes, and other transition related costs. These costs, which are being expensed as incurred, were $18 million and $52 million for the three and nine months ended September 30, 2025 and $85 million and $250 million for the three and nine months ended September 30, 2024.
9. Defined Benefits
(PPL)
Certain net periodic defined benefit costs are applied to accounts that are further distributed among capital, expense, regulatory assets and regulatory liabilities, including certain costs allocated to applicable subsidiaries for plans sponsored by PPL Services and LKE. Following are the net periodic defined benefit costs (credits) of the plans sponsored by PPL and its subsidiaries for the periods ended September 30:
| Pension Benefits | |||||||||||||||||||||||
| Three Months | Nine Months | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| PPL | |||||||||||||||||||||||
| Service cost | $ | 8 | $ | 9 | $ | 23 | $ | 26 | |||||||||||||||
| Interest cost | 46 | 45 | 138 | 137 | |||||||||||||||||||
| Expected return on plan assets | (72) | (74) | (215) | (224) | |||||||||||||||||||
| Amortization of: | |||||||||||||||||||||||
| Prior service cost | — | 1 | — | 2 | |||||||||||||||||||
| Actuarial loss | 4 | 3 | 13 | 8 | |||||||||||||||||||
| Net periodic defined benefit costs (credits) | $ | (14) | $ | (16) | $ | (41) | $ | (51) |
| Other Postretirement Benefits | |||||||||||||||||||||||
| Three Months | Nine Months | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| PPL | |||||||||||||||||||||||
| Service cost | $ | 2 | $ | 2 | $ | 5 | $ | 5 | |||||||||||||||
| Interest cost | 8 | 8 | 23 | 22 | |||||||||||||||||||
| Expected return on plan assets | (7) | (8) | (22) | (23) | |||||||||||||||||||
| Amortization of: | |||||||||||||||||||||||
| Prior service cost | — | — | 1 | 1 | |||||||||||||||||||
| Actuarial loss | (1) | (1) | (3) | (4) | |||||||||||||||||||
| Net periodic defined benefit costs (credits) | $ | 2 | $ | 1 | $ | 4 | $ | 1 | |||||||||||||||
(All Registrants)
The non-service cost components of net periodic defined benefit costs (credits) (interest cost, expected return on plan assets, amortization of prior service cost and amortization of actuarial gain and loss) are presented in "Other Income (Expense) - net" on the Statements of Income. See Note 12 for additional information.
10. Commitments and Contingencies
Legal Matters
(All Registrants)
PPL and its subsidiaries are involved in legal proceedings, claims and litigation in the ordinary course of business. PPL and its subsidiaries cannot predict the outcome of such matters, or whether such matters may result in material liabilities, unless otherwise noted.
Narragansett Electric Litigation (PPL)
Energy Efficiency Programs Investigation
Narragansett Electric, while under the ownership of National Grid, performed an internal investigation into conduct associated with its energy efficiency programs. On June 27, 2022, the RIPUC opened a new docket (RIPUC Docket No. 22-05-EE) to investigate RIE’s actions and the actions of employees of National Grid USA and affiliates during the time RIE was a National Grid USA affiliate being provided services by National Grid USA Service Company, Inc. relating to the manipulation of the reporting of invoices affecting the calculation of past energy efficiency shareholder incentives and the resulting impact on customers. The Rhode Island Attorney General and National Grid USA intervened in the docket and the Rhode Island Division of Public Utilities and Carriers (the Division) is an automatic party in the docket.
On February 21, 2025, the Division filed testimony confirming its initial testimony that $12 million is the appropriate amount to be refunded to the energy efficiency program. On March 4, 2025, a Settlement Agreement between RIE, the Division, and the Rhode Island Attorney General was filed with the RIPUC requiring refunds of $10 million. Of this amount, $2 million has already been refunded through the energy efficiency mechanism with the remaining $8 million to reduce the storm cost regulatory asset recorded on PPL's balance sheet. The settlement also included reimbursement of minor consulting fees and various other compliance actions. On March 5, 2025, the RIPUC approved the Settlement Agreement.
E.W. Brown Environmental Assessment *(*PPL and KU)
KU is undertaking extensive remedial measures at the E.W. Brown plant including closure of the former ash pond, implementation of a groundwater remedial action plan and performance of a corrective action plan including aquatic study of adjacent surface waters and risk assessment. The aquatic study and risk assessment are being undertaken pursuant to a 2017 Agreed Order with the Kentucky Energy and Environment Cabinet (KEEC). KU conducted sampling of Herrington Lake in 2017 and 2018. In June 2019, KU submitted to the KEEC the required aquatic study and risk assessment, conducted by an independent third-party consultant, finding that discharges from the E.W. Brown plant have not had any significant impact on Herrington Lake and that the water in the lake is safe for recreational use and meets safe drinking water standards. On May 31, 2021, the KEEC approved the report and released a response to public comments. On August 6, 2021, KU submitted a Supplemental Remedial Alternatives Analysis report to the KEEC that outlines proposed additional fish, water, and sediment testing. On February 18, 2022, the KEEC provided approval to KU to proceed with the proposed sampling, which commenced in the spring of 2022. On November 17, 2022, KU submitted a Supplemental Performance Monitoring Report to the KEEC finding that there are no significant unaddressed risks to human health or the environment at the plant. KU revised the Supplemental Performance Monitoring Report on June 8, 2023, in response to KEEC comments from April 24, 2023. On September 1, 2023, the KEEC requested KU to propose additional monitoring or remedial measures. KU submitted a revised Supplemental Performance Monitoring and Corrective Action Completion on December 28, 2023. In August 2024, KU submitted a proposed environmental covenant to the KEEC specifying certain site restrictions. Discussions between KU and the KEEC are ongoing, but KU cannot predict the outcome of this matter.
(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 are closely monitoring the ongoing EPA initiative and any related litigation for the impact to our business including planned capital expenditures to comply with the EPA rules.
Water/Waste
ELGs
In 2015, the EPA finalized ELGs for wastewater discharge permits for new and existing steam electricity generating facilities. These guidelines require deployment of additional control technologies providing physical, chemical and biological treatment and mandate operational changes including "zero discharge" requirements for certain wastewaters. The implementation date for individual generating stations was to be determined by the states on a case-by-case basis according to criteria provided by the EPA. In September 2017, the EPA issued a rule to postpone the compliance date for certain requirements. In October 2020, the EPA issued revisions to its best available technology standards for certain wastewaters and potential extensions to compliance dates (the Reconsideration Rule). On May 9, 2024, the EPA issued a final rule modifying the 2020 ELG revisions. The rule increases the stringency of previous control technology and zero discharge requirements, revises certain exemptions for generating units planned for retirement, and requires case-by-case limitations for legacy wastewaters based on the best professional judgment of the state regulators. Legal challenges to the final rule have been consolidated before the U.S. Court of Appeals for the Eighth Circuit. The final rule could potentially result in significant operational changes and additional controls for LG&E and KU plants, but in March 2025 the EPA announced its plan to reconsider the rule. The ELGs are expected to be implemented by the states or applicable permitting authorities in the course of their normal permitting activities. Certain costs are included in the Registrants' capital plans and expected to be recovered from customers through rate recovery mechanisms, but additional costs and recovery will depend on further regulatory developments at the state level. On October 2, 2025, the EPA issued a direct final rule extending the retirement exemption category application deadline an additional six years, from December 2025 to December 2031. Also, in a separate action, the EPA proposed several changes to the 2024 ELG. Key to the planning for electric generating units is a five-year extension to the zero liquid discharge deadlines, from December 2029 to December 2034.
CCRs
In 2015, the EPA issued a final rule governing management of CCRs, which include fly ash, bottom ash and sulfur dioxide scrubber wastes (2015 CCR Rule). The 2015 CCR Rule imposed extensive new requirements for certain CCR impoundments and landfills, including public notifications, location restrictions, design and operating standards, groundwater monitoring and corrective action requirements, and closure and post-closure care requirements, and specifies restrictions relating to the beneficial use of CCRs. In January 2022, the EPA issued several proposed regulatory determinations, facility notifications, and public announcements which indicate increased scrutiny by the EPA to determine the adequacy of measures taken by facility owners and operators to achieve closure of CCR surface impoundments and landfills. In particular, the agency indicated that it will focus on certain practices which it views as posing a threat of continuing groundwater contamination. On May 8, 2024, the EPA issued a final rule (2024 CCR Rule) establishing regulatory requirements for inactive surface impoundments at inactive electricity generation facilities (legacy impoundments). The 2024 CCR Rule also establishes identification, groundwater monitoring, corrective action, closure, and post-closure care requirements for all CCR management units, as defined in the rule, at regulated CCR facilities regardless of how or when the CCR was placed. The rule also requires LG&E and KU to complete applicability determinations, implement site security measures, initiate weekly inspections and monthly monitoring of the impoundment, create a website, and complete hazard assessments and reports for its legacy impoundments. Additionally, the rule could potentially subject CCR management units that have previously completed remedial action and closure and certain beneficial use projects to additional federal regulatory requirements. Legal challenges to the rule have been filed in the D.C. Circuit Court. In March 2025, the EPA announced its plan to update the rule. On July 22, 2025, the EPA published a proposed rule to extend the deadline for select CCR management units for the Facility Evaluation Report Part 1 and Part 2 by one year to February 2027 and February 2028, respectively. The proposed rule would also extend the groundwater monitoring deadline to August 8, 2030, with the initial groundwater monitoring report extended to January 31, 2031.
In connection with the 2015 CCR Rule, LG&E and KU recorded adjustments to existing AROs beginning in 2015. In connection with the 2024 CCR Rule, in the second quarter of 2024, LG&E and KU recognized ARO obligations related to preliminary risk assessments, facility evaluations, feasibility studies and sampling. See Note 15 for additional information. The results of those evaluations, as well as future guidance, regulatory determinations, rulemakings, implementation determinations and other developments could potentially require revisions to current LG&E and KU compliance plans including additional monitoring and remediation at surface impoundments and landfills, the cost of which could be material. PPL, LG&E and KU are unable to predict the outcome of the ongoing litigation, rulemaking, and regulatory determinations or potential impacts on current LG&E and KU compliance plans. PPL, LG&E and KU are currently finalizing or revising closure plans and schedules in accordance with applicable regulations and further material changes to AROs, current capital plans or operating costs may be required as estimates are refined based on closure developments, groundwater monitoring results, and regulatory or legal proceedings. Costs relating to this rule are expected to be subject to rate recovery.
LG&E and KU received KPSC approval for a compliance plan associated with the 2015 CCR Rule providing for the closure of impoundments at the Mill Creek, Trimble County, E.W. Brown, and Ghent stations, and construction of process water management facilities at those plants. In addition to the foregoing measures required for compliance with the federal CCR Rule, KU also received KPSC approval for its plans to close impoundments at the retired Green River, Pineville and Tyrone plants to comply with applicable state law. LG&E and KU have completed planned closure measures at most of the subject impoundments and have commenced post closure groundwater monitoring as required at those facilities. LG&E and KU generally expect to complete all impoundment closures within five years of commencement, although a longer period may be required to complete closure of some facilities. Associated costs are expected to be subject to rate recovery.
Superfund and Other Remediation
(All Registrants)
The Registrants are potentially responsible for investigating and remediating contamination under the federal Superfund program and similar state programs. Actions are under way at certain sites including former manufactured gas plants in Pennsylvania, Rhode Island and Kentucky previously owned or operated by, or currently owned by predecessors or affiliates of, PPL subsidiaries.
Depending on the outcome of investigations at identified sites where investigations have not begun or been completed, or developments at sites for which information is incomplete, additional costs of remediation could be incurred. PPL, PPL Electric, LG&E and KU lack sufficient information about such additional sites to estimate any potential liability or range of reasonably possible losses, if any, related to these sites. Such costs, however, are not currently expected to be significant.
The EPA is evaluating the risks associated with polycyclic aromatic hydrocarbons and naphthalene, chemical by-products of manufactured gas plant operations. As a result, individual states may establish stricter standards for water quality and soil cleanup, that could require several PPL subsidiaries to take more extensive assessment and remedial actions at former manufactured gas plants. The Registrants cannot reasonably estimate a range of possible losses, if any, related to these matters.
(PPL and PPL Electric)
PPL Electric is a potentially responsible party for a share of clean-up costs at certain sites. Cleanup actions have been or are being undertaken at these sites as requested by governmental agencies, the costs of which have not been and are not expected to be significant to PPL Electric. As of September 30, 2025 and December 31, 2024, PPL Electric had a recorded liability of $8 million, representing its best estimate of the probable loss incurred to remediate these sites.
(PPL)
RIE is a potentially responsible party for a share of clean-up costs at certain sites including former manufactured gas plant facilities formerly owned by the Blackstone Valley Gas and Electric Company and the Rhode Island gas distribution assets of the New England Gas division of Southern Union Company and electric operations at certain RIE facilities. RIE is currently investigating and remediating, as necessary, those sites and certain other properties under agreements with governmental agencies, the costs of which have not been and are not expected to be significant to PPL.
As of September 30, 2025 and December 31, 2024, RIE had a recorded liability of $98 million, representing its best estimate of the remaining costs of RIE's environmental remediation activities. These undiscounted costs are expected to be incurred over approximately 30 years and generally to be subject to rate recovery. However, remediation costs for each site may be materially higher than estimated, depending on changing technologies and regulatory standards, selected end uses for each site, and actual environmental conditions encountered. RIE has recovered amounts from certain insurers and potentially responsible parties, and, where appropriate, may seek additional recovery from other insurers and potentially responsible parties, but it is uncertain whether, and to what extent, such efforts will be successful.
The RIPUC has approved two settlement agreements that provide for rate recovery of qualified remediation costs of certain contaminated sites located in Rhode Island and Massachusetts. Rate-recoverable contributions for electric operations of approximately $3 million are added annually to RIE's Environmental Response Fund, established with RIPUC approval in March 2000 to address such costs, along with interest and any recoveries from insurance carriers and other third parties. In addition, RIE recovers approximately $1 million annually for gas operations under a distribution adjustment charge in which the qualified remediation costs are amortized over 10 years. See Note 6 for additional information on RIE's recorded environmental regulatory assets and liabilities.
Regulatory Issues
(All Registrants)
See Note 6 for information on regulatory matters related to utility rate regulation.
Electricity - Reliability Standards
The NERC is responsible for establishing and enforcing mandatory reliability standards (Reliability Standards) regarding the bulk electric system in North America. The FERC oversees this process and independently enforces the Reliability Standards.
The Reliability Standards have the force and effect of law and apply to certain users of the bulk electric system, including electric utility companies, generators and marketers. Under the Federal Power Act, the FERC may assess civil penalties for certain violations.
PPL Electric, LG&E, KU and RIE monitor their compliance with the Reliability Standards and self-report or self-log potential violations of applicable reliability requirements whenever identified, and submit accompanying mitigation plans, as required. The resolution of a small number of potential violations is pending. Penalties incurred to date have not been significant. Any Regional Reliability Entity determination concerning the resolution of violations of the Reliability Standards remains subject to the approval of the NERC and the FERC.
In the course of implementing their programs to ensure compliance with the Reliability Standards by those PPL affiliates subject to the standards, certain other instances of potential non-compliance may be identified from time to time. The Registrants cannot predict the outcome of these matters, and an estimate or range of possible losses cannot be determined.
Gas - Security Directives (PPL and LG&E)
In May and July of 2021, the Department of Homeland Security’s (DHS) Transportation Security Administration released two security directives applicable to certain notified owners and operators of natural gas pipeline facilities (including local distribution companies) that the Transportation Security Administration has determined to be critical. The Transportation Security Administration has determined that LG&E is within the scope of the directive, while RIE has not been notified of this distinction. The first security directive required notified owners/operators to implement cybersecurity incident reporting to the DHS, designate a cybersecurity coordinator, and perform a gap assessment of current entity cybersecurity practices against certain voluntary Transportation Security Administration security guidelines and report relevant results and proposed mitigation to applicable DHS agencies. The second security directive, revised in July of 2024, requires refinement of the cybersecurity implementation plan and the cybersecurity assessment plan. LG&E does not believe the security directives have had or will have a significant impact on LG&E’s operations or financial condition.
Other
Guarantees and Other Assurances
(All Registrants)
In the normal course of business, the Registrants enter into agreements that provide financial performance assurance to third parties on behalf of certain subsidiaries. Examples of such agreements include: guarantees, stand-by letters of credit issued by financial institutions and surety bonds issued by insurance companies. These agreements are entered into primarily to support or enhance the creditworthiness attributed to a subsidiary on a stand-alone basis or to facilitate the commercial activities in which these subsidiaries engage.
(PPL)
PPL fully and unconditionally guarantees all of the debt securities and loan obligations of PPL Capital Funding.
(All Registrants)
The table below details guarantees provided as of September 30, 2025. "Exposure" represents the estimated maximum potential amount of future payments that could be required to be made under the guarantee. The Registrants believe the probability of expected payment/performance under each of these guarantees is remote, except for the guarantees and indemnifications related to the sale of Safari Holdings, which PPL believes are reasonably possible of occurring. For reporting purposes, on a consolidated basis, the guarantees of PPL include the guarantees of its subsidiary Registrants.
| Exposure at September 30, 2025 | Expiration Date | ||||||||||||||||
| PPL | |||||||||||||||||
| Indemnifications related to certain tax liabilities related to the sale of the U.K. utility business | £ | 50 | (a) | 2028 | |||||||||||||
| PPL guarantees related to certain sale/leaseback financing transactions related to the sale of Safari Holdings | $ | 81 | (b) | 2028 | |||||||||||||
| Indemnifications for losses suffered related to items not covered by Aspen Power's representation and warranty insurance associated with the sale of Safari Holdings | 140 | (c) | 2028 | ||||||||||||||
| LG&E and KU | |||||||||||||||||
| LG&E and KU obligation of shortfall related to OVEC | (d) |
(a)PPL WPD Limited entered into a Tax Deed dated June 9, 2021, in which it agreed to a tax indemnity regarding certain potential tax liabilities of the entities sold with respect to periods prior to the completion of the sale, subject to customary exclusions and limitations. Because National Grid Holdings One plc, the buyer, agreed to purchase indemnity insurance, the amount of the cap on the indemnity for these liabilities is £1, except with respect to certain surrenders of tax losses, for which the amount of the cap on the indemnity is £50 million. In June 2025, the indemnifications were novated to PPL Energy Holdings.
(b)PPL guaranteed the payment obligations of Safari under certain sale/leaseback financing transactions executed by Safari. These guarantees will remain in place until Safari exercises its option to buy-out the projects under the sale/leaseback financings by the year 2028. Safari will indemnify PPL for any payments made by PPL or claims against PPL under the sale/leaseback transaction guarantees up to $25 million.
Separately, PPL has agreed to fund incremental payment obligations under the buy-outs resulting from increases in the fair market value of the projects from the initial fair market value determined at the time of PPL’s sale of Safari Holdings to the time the buy-out options are exercised by Safari. As of September 30, 2025, PPL cannot reasonably estimate its payment obligations related to the remaining buy-out options.
(c)Aspen Power has obtained representation and warranty insurance, therefore, PPL generally has no liability for its representations and warranties under the agreement except for losses suffered related to items not covered. Expiration of these indemnifications range from 18 months to 6 years from the date of the closing of the transaction, and PPL’s aggregate liability for these claims will not exceed $140 million, subject to certain adjustments.
(d)Pursuant to the OVEC power purchase contract, LG&E and KU are obligated to pay for their share of OVEC's excess debt service, post-retirement, and decommissioning costs, as well as any shortfall from amounts included within a demand charge designed and expected to cover these costs over the term of the contract. PPL's proportionate share of OVEC's outstanding debt was $73 million at September 30, 2025, consisting of LG&E's share of $50 million and KU's share of $23 million. The maximum exposure and the expiration date of these potential obligations are not presently determinable. See "Energy Purchase Commitments" in Note 12 in PPL's, LG&E's and KU's 2024 Form 10-K for additional information on the OVEC power purchase contract.
The Registrants provide other miscellaneous guarantees through contracts entered into in the normal course of business. These guarantees are primarily in the form of indemnification or warranties related to services or equipment and vary in duration. The amounts of these guarantees often are not explicitly stated, and the overall maximum amount of the obligation under such guarantees cannot be reasonably estimated. Historically, no significant payments have been made with respect to these types of guarantees and the probability of payment/performance under these guarantees is generally remote.
PPL, on behalf of itself and certain of its subsidiaries, maintains insurance that covers liability assumed under contract for bodily injury and property damage. The insurance provides maximum aggregate coverage of $231 million for non-wildfire liability losses and maximum aggregate coverage of $181 million for wildfire liability losses. This insurance may be applicable to obligations under certain of these contractual arrangements.
11. Related Party Transactions
Support Costs (PPL Electric, LG&E and KU)
PPL Services and LKS provide the Registrants, their respective subsidiaries and each other with administrative, management and support services. For all services companies, the costs of directly assignable and attributable services are charged to the respective recipients as direct support costs. General costs that cannot be directly attributed to a specific entity are allocated and charged to the respective recipients as indirect support costs. PPL Services and LKS use a three-factor methodology that includes the applicable recipients' invested capital, operation and maintenance expenses and number of employees to allocate indirect costs. PPL Services and LKS charged the following amounts for the periods ended September 30, including amounts applied to accounts that are further distributed between capital and expense on the books of the recipients, based on methods that are believed to be reasonable.
| Three Months | Nine Months | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| PPL Electric from PPL Services | $ | 64 | $ | 53 | $ | 196 | $ | 159 | |||||||||||||||
| LG&E from LKS | 28 | 25 | 76 | 82 | |||||||||||||||||||
| LG&E from PPL Services | 49 | 15 | 112 | 46 | |||||||||||||||||||
| KU from LKS | 38 | 31 | 98 | 99 | |||||||||||||||||||
| KU from PPL Services | 48 | 15 | 109 | 45 |
In addition to the charges for services noted above, LKS makes payments on behalf of LG&E and KU for fuel purchases and other costs for products or services provided by third parties. LG&E and KU also provide services to each other and to LKS. Billings between LG&E and KU relate to labor and overheads associated with union and hourly employees performing work for the other company, charges related to jointly-owned generating units and other miscellaneous charges. Tax settlements between PPL and LG&E and KU are reimbursed through LKS.
Intercompany Borrowings
(PPL Electric)
CEP Reserves maintains an $800 million revolving line of credit with a PPL Electric subsidiary. At September 30, 2025, CEP Reserves had borrowings outstanding of $509 million. At December 31, 2024, CEP Reserves had borrowings outstanding of $222 million. The interest rates on borrowings are equal to an adjusted one-month SOFR plus a spread. Interest income is reflected in "Interest Income from Affiliate" on the PPL Electric Income Statements.
(LG&E and KU)
LG&E participates in an intercompany money pool agreement whereby LKE and/or KU make available to LG&E funds up to the difference between LG&E's FERC borrowing limit and LG&E'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. At September 30, 2025, LG&E's money pool unused capacity was $750 million. At September 30, 2025, LG&E had no borrowings outstanding from KU and/or LKE. At December 31, 2024, LG&E had borrowings outstanding of $43 million from KU and/or LKE. These balances are reflected in "Notes payable to affiliates" on the LG&E Balance Sheets.
KU participates in an intercompany money pool agreement whereby LKE and/or LG&E make available to KU funds up to the difference between KU's FERC borrowing limit 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. At September 30, 2025, KU's money pool unused capacity was $650 million. At September 30, 2025, KU had no borrowings outstanding from LG&E and/or LKE. At December 31, 2024, KU had borrowings outstanding of $73 million from LG&E and/or LKE. These balances are reflected in "Notes payable to affiliates" on the KU Balance Sheets.
VEBA Funds Receivable (PPL Electric)
In 2018, PPL received a favorable private letter ruling from the IRS permitting a transfer of excess funds from the PPL Bargaining Unit Retiree Health Plan VEBA to a new subaccount within the VEBA, to be used to pay medical claims of active bargaining unit employees. In 2024, additional excess funds were removed from the PPL Bargaining Unit Retiree Health Plan VEBA and deposited into the existing subaccount within the VEBA to be used to pay medical claims of active bargaining unit employees. Based on PPL Electric's participation in PPL’s Other Postretirement Benefit plan, PPL Electric was allocated a portion of the excess funds from PPL Services. These funds have been recorded as an intercompany receivable on PPL Electric's Balance Sheets. The receivable balance decreases as PPL Electric pays incurred medical claims and is reimbursed by PPL Services. There was no intercompany receivable balance associated with these funds at September 30, 2025. The intercompany receivable balance associated with these funds was $7 million at December 31, 2024, of which $4 million was reflected in "Accounts receivable from affiliates" and $3 million was reflected in "Other noncurrent assets" on PPL Electric's Balance Sheets.
12. Other Income (Expense) - net
(PPL)
The details of "Other Income (Expense) - net" for the periods ended September 30, were:
| Three Months | Nine Months | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Defined benefit plans - non-service credits (Note 9) | $ | 8 | $ | 9 | $ | 23 | $ | 32 | |||||||||||||||
| Interest income | 6 | 10 | 13 | 25 | |||||||||||||||||||
| AFUDC - equity component | 23 | 13 | 58 | 33 | |||||||||||||||||||
| Miscellaneous | 2 | — | (4) | (4) | |||||||||||||||||||
| Other Income (Expense) - net | $ | 39 | $ | 32 | $ | 90 | $ | 86 |
(PPL Electric)
The details of "Other Income (Expense) - net" for the periods ended September 30, were:
| Three Months | Nine Months | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Defined benefit plans - non-service credits (Note 9) | $ | 4 | $ | 4 | $ | 11 | $ | 13 | |||||||||||||||
| Interest income | 3 | 3 | 6 | 5 | |||||||||||||||||||
| AFUDC - equity component | 8 | 6 | 23 | 17 | |||||||||||||||||||
| Miscellaneous | (1) | — | (4) | (2) | |||||||||||||||||||
| Other Income (Expense) - net | $ | 14 | $ | 13 | $ | 36 | $ | 33 |
(LG&E)
The details of "Other Income (Expense) - net" for the periods ended September 30, were:
| Three Months | Nine Months | |||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||
| Defined benefit plans - non-service credits (Note 9) | $ | — | $ | — | $ | 1 | $ | 3 | ||||||||||||||||||
| AFUDC - equity component | 4 | 2 | 11 | 5 | ||||||||||||||||||||||
| Miscellaneous | 4 | 1 | 4 | 1 | ||||||||||||||||||||||
| Other Income (Expense) - net | $ | 8 | $ | 3 | $ | 16 | $ | 9 |
(KU)
The details of "Other Income (Expense) - net" for the periods ended September 30, were:
| Three Months | Nine Months | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Defined benefit plans - non-service credits (Note 9) | $ | 1 | $ | 2 | $ | 4 | $ | 6 | |||||||||||||||
| AFUDC - equity component | 6 | 3 | 14 | 6 | |||||||||||||||||||
| Miscellaneous | 2 | (1) | 1 | (2) | |||||||||||||||||||
| Other Income (Expense) - net | $ | 9 | $ | 4 | $ | 19 | $ | 10 |
13. Fair Value Measurements
(All Registrants)
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). A market approach (generally, data from market transactions), an income approach (generally, present value techniques and option pricing models) and/or a cost approach (generally, replacement cost) are used to measure the fair value of an asset or liability, as appropriate. These valuation approaches incorporate inputs such as observable, independent market data and/or unobservable data that management believes are predicated on the assumptions market participants would use to price an asset or liability. These inputs may incorporate, as applicable, certain risks such as nonperformance risk, which includes credit risk. The fair value of a group of financial assets and liabilities is measured on a net basis. See Note 1 in each Registrant's 2024 Form 10-K for information on the levels in the fair value hierarchy.
Recurring Fair Value Measurements
The assets and liabilities measured at fair value were:
| September 30, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||||||||||||||||||
| PPL | |||||||||||||||||||||||||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 1,102 | $ | 1,102 | $ | — | $ | — | $ | 306 | $ | 306 | $ | — | $ | — | |||||||||||||||||||||||||||||||
| Restricted cash and cash equivalents (a) | 17 | 17 | — | — | 33 | 33 | — | — | |||||||||||||||||||||||||||||||||||||||
| Total Cash, Cash Equivalents and Restricted Cash (b) | 1,119 | 1,119 | — | — | 339 | 339 | — | — | |||||||||||||||||||||||||||||||||||||||
| Special use funds (a): | |||||||||||||||||||||||||||||||||||||||||||||||
| Money market fund | 2 | 2 | — | — | 1 | 1 | — | — | |||||||||||||||||||||||||||||||||||||||
| Commingled debt fund measured at NAV (c) | 6 | — | — | — | 10 | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Commingled equity fund measured at NAV (c) | 5 | — | — | — | 8 | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Total special use funds | 13 | 2 | — | — | 19 | 1 | — | — | |||||||||||||||||||||||||||||||||||||||
| Price risk management assets (d): | |||||||||||||||||||||||||||||||||||||||||||||||
| Gas contracts | 4 | — | 4 | — | 9 | — | 4 | 5 | |||||||||||||||||||||||||||||||||||||||
| Total assets | $ | 1,136 | $ | 1,121 | $ | 4 | $ | — | $ | 367 | $ | 340 | $ | 4 | $ | 5 | |||||||||||||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||||||||||||||||||||||||||
| Price risk management liabilities (d): | |||||||||||||||||||||||||||||||||||||||||||||||
| Interest rate derivatives | $ | 5 | $ | — | $ | 5 | $ | — | $ | 3 | $ | — | $ | 3 | $ | — | |||||||||||||||||||||||||||||||
| Gas contracts | 11 | — | 7 | 4 | 13 | — | 10 | 3 | |||||||||||||||||||||||||||||||||||||||
| Total price risk management liabilities | $ | 16 | $ | — | $ | 12 | $ | 4 | $ | 16 | $ | — | $ | 13 | $ | 3 | |||||||||||||||||||||||||||||||
| PPL Electric | |||||||||||||||||||||||||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 13 | $ | 13 | $ | — | $ | — | $ | 24 | $ | 24 | $ | — | $ | — | |||||||||||||||||||||||||||||||
| Total assets | $ | 13 | $ | 13 | $ | — | $ | — | $ | 24 | $ | 24 | $ | — | $ | — | |||||||||||||||||||||||||||||||
| LG&E | |||||||||||||||||||||||||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 515 | $ | 515 | $ | — | $ | — | $ | 8 | $ | 8 | $ | — | $ | — | |||||||||||||||||||||||||||||||
| Restricted cash and cash equivalents (a) | 8 | 8 | — | — | 16 | 16 | — | — | |||||||||||||||||||||||||||||||||||||||
| Total Cash, Cash Equivalents and Restricted Cash (b) | 523 | 523 | — | — | 24 | 24 | — | — | |||||||||||||||||||||||||||||||||||||||
| Total assets | $ | 523 | $ | 523 | $ | — | $ | — | $ | 24 | $ | 24 | $ | — | $ | — | |||||||||||||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||||||||||||||||||||||||||
| Price risk management liabilities: | |||||||||||||||||||||||||||||||||||||||||||||||
| Interest rate derivatives | $ | 5 | $ | — | $ | 5 | $ | — | $ | 3 | $ | — | $ | 3 | $ | — | |||||||||||||||||||||||||||||||
| Total price risk management liabilities | $ | 5 | $ | — | $ | 5 | $ | — | $ | 3 | $ | — | $ | 3 | $ | — | |||||||||||||||||||||||||||||||
| KU | |||||||||||||||||||||||||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 341 | $ | 341 | $ | — | $ | — | $ | 13 | $ | 13 | $ | — | $ | — | |||||||||||||||||||||||||||||||
| Restricted cash and cash equivalents (a) | 8 | 8 | — | — | 16 | 16 | — | — | |||||||||||||||||||||||||||||||||||||||
| Total Cash, Cash Equivalents and Restricted Cash (b) | 349 | 349 | — | — | 29 | 29 | — | — | |||||||||||||||||||||||||||||||||||||||
| Total assets | $ | 349 | $ | 349 | $ | — | $ | — | $ | 29 | $ | 29 | $ | — | $ | — |
(a)Current portion is included in "Other current assets" and noncurrent portion is included in "Other noncurrent assets" on the Balance Sheets.
(b)Total Cash, Cash Equivalents and Restricted Cash provides a reconciliation of these items reported within the Balance Sheets to the sum shown on the Statements of Cash Flows.
(c)In accordance with accounting guidance, certain investments that are measured at fair value using net asset value per share (NAV), or its equivalent, have not been classified in the fair value hierarchy. The fair value amounts presented in the table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Balance Sheets.
(d)Current portion is included in "Other current assets" and "Other current liabilities" and noncurrent portion is included in "Other noncurrent assets" and "Other deferred credits and noncurrent liabilities" on the Balance Sheets.
A reconciliation of net assets (liabilities) classified as Level 3 for the nine months ended September 30 is as follows:
| Gas Contracts | |||||
| 2025 | |||||
| Balance at beginning of period | $ | 2 | |||
| Total unrealized gains (losses) recognized as Regulatory Assets/Regulatory Liabilities: | (6) | ||||
| Balance at end of period | $ | (4) |
Special Use Funds (PPL)
The special use funds are investments restricted for paying active union employee medical costs. In 2018, PPL received a favorable private letter ruling from the IRS permitting a transfer of excess funds from the PPL Bargaining Unit Retiree Health Plan VEBA to a new subaccount within the VEBA to be used to pay medical claims of active bargaining unit employees. In 2024, additional excess funds were removed from the PPL Bargaining Unit Retiree Health Plan VEBA and deposited in the existing subaccount within the VEBA to be used to pay medical claims of active bargaining unit employees. The funds are invested primarily in commingled debt and equity funds measured at NAV and are classified as investments in equity securities. Changes in the fair value of the funds are recorded to the Statements of Income.
Price Risk Management Assets/Liabilities
*Interest Rate Derivatives (*PPL, LG&E and KU)
To manage interest rate risk, PPL, LG&E and KU use interest rate derivatives such as treasury locks, forward-starting swaps, floating-to-fixed swaps and fixed-to-floating swaps. An income approach is used to measure the fair value of these derivatives, utilizing readily observable inputs, such as forward interest rates (e.g., SOFR and government security rates), as well as inputs that may not be observable, such as credit valuation adjustments. In certain cases, market information cannot practicably be obtained to value credit risk and therefore internal models are relied upon. These models use projected probabilities of default and estimated recovery rates based on historical observances. When the credit valuation adjustment is significant to the overall valuation, the contracts are classified as Level 3.
Gas Contracts (PPL)
To manage gas commodity price risk associated with natural gas purchases, RIE utilizes over-the-counter (OTC) gas swaps contracts with pricing inputs obtained from the New York Mercantile Exchange (NYMEX) and the Intercontinental Exchange (ICE), except in cases where the ICE publishes seasonal averages or where there were no transactions within the last seven days. RIE may utilize discounting based on quoted interest rate curves, including consideration of non-performance risk, and may include a liquidity reserve calculated based on bid/ask spread. Substantially all of these price curves are observable in the marketplace throughout at least 95% of the remaining contractual quantity, or they could be constructed from market observable curves with correlation coefficients of 95% or higher. These contracts are classified as Level 2.
RIE also utilizes gas option and purchase and capacity transactions, which are valued based on internally developed models. Industry-standard valuation techniques, such as the Black-Scholes pricing model, are used for valuing such instruments. For valuations that include both observable and unobservable inputs, if the unobservable input is determined to be significant to the overall inputs, the entire valuation is classified as Level 3. This includes derivative instruments valued using indicative price quotations whose contract tenure extends into unobservable periods. In instances where observable data is unavailable, consideration is given to the assumptions that market participants would use in valuing the asset or liability. This includes assumptions about market risks such as liquidity, volatility, and contract duration. Such instruments are classified as Level 3 as the model inputs generally are not observable. RIE considers non-performance risk and liquidity risk in the valuation of derivative instruments classified as Level 2 and Level 3.
The significant unobservable inputs used in the fair value measurement of the gas derivative instruments are implied volatility and gas forward curves. A relative change in commodity price at various locations underlying the open positions can result in significantly different fair value estimates.
Financial Instruments Not Recorded at Fair Value (All Registrants)
Long-term debt is classified as Level 2. The effect of third-party credit enhancements is not included in the fair value measurement. The carrying amounts of long-term debt on the Balance Sheets and their estimated fair values are set forth below.
| September 30, 2025 | December 31, 2024 | ||||||||||||||||||||||
| Carrying Amount (a) | Fair Value | Carrying Amount (a) | Fair Value | ||||||||||||||||||||
| PPL | $ | 18,391 | $ | 18,188 | $ | 16,503 | $ | 15,562 | |||||||||||||||
| PPL Electric | 5,707 | 5,559 | 5,214 | 4,862 | |||||||||||||||||||
| LG&E | 3,165 | 3,124 | 2,471 | 2,295 | |||||||||||||||||||
| KU | 3,760 | 3,611 | 3,066 | 2,750 |
(a)Amounts are net of debt issuance costs.
The carrying amounts of other current financial instruments (except for long-term debt due within one year) approximate their fair values because of their short-term nature.
14. Derivative Instruments and Hedging Activities
(All Registrants)
Risk Management Objectives
PPL has a risk management policy approved by the Board of Directors to manage market risk associated with commodities, interest rates on debt issuances (including price, liquidity and volumetric risk) and credit risk (including non-performance risk and payment default risk). The Risk Management Committee, comprised of senior management and chaired by the Vice President-Financial Strategy and Chief Risk Officer, oversees the risk management function. Key risk control activities designed to ensure compliance with the risk policy and detailed programs include, but are not limited to, credit review and approval, validation of transactions, verification of risk and transaction limits, value-at-risk analyses (VaR, a statistical model that attempts to estimate the value of potential loss over a given holding period under normal market conditions at a given confidence level) and the coordination and reporting of the Enterprise Risk Management program.
Market Risk
Market risk includes the potential loss that may be incurred as a result of price changes associated with a particular financial or commodity instrument as well as market liquidity and volumetric risks. Forward contracts, futures contracts, options, swaps and structured transactions are utilized as part of risk management strategies to minimize unanticipated fluctuations in earnings caused by changes in commodity prices and interest rates. Many of these contracts meet the definition of a derivative. All derivatives are recognized on the Balance Sheets at their fair value, unless NPNS is elected.
The following summarizes the market risks that affect PPL and its subsidiaries.
Interest Rate Risk
-
PPL and its subsidiaries are exposed to interest rate risk associated with forecasted fixed-rate and existing floating-rate debt issuances. PPL and LG&E utilize over-the-counter interest rate swaps to limit exposure to market fluctuations on floating-rate debt. PPL, LG&E and KU utilize hedging instruments to limit exposure to fluctuations in benchmark interest rates, when appropriate, in connection with future debt issuance.
-
PPL and its subsidiaries are exposed to interest rate risk associated with debt securities and derivatives held by defined benefit plans. This risk is significantly mitigated to the extent that the plans are sponsored at, or sponsored on behalf of, the regulated utilities due to the recovery methods in place.
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 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 mainly 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.
Equity Securities Price Risk
-
PPL and its subsidiaries are exposed to equity securities price risk associated with the fair value of the defined benefit plans' assets. This risk is significantly mitigated due to the recovery methods in place.
-
PPL is exposed to equity securities price risk from future stock sales and/or purchases.
Credit Risk
Credit risk is the potential loss that may be incurred due to a counterparty's non-performance.
PPL is exposed to credit risk from "in-the-money" transactions with counterparties as well as additional credit risk through certain of its subsidiaries, as discussed below.
In the event a supplier of PPL, PPL Electric, LG&E or KU defaults on its contractual obligation, those Registrants would be required to seek replacement power or replacement fuel in the market. In general, subject to regulatory review or other processes, appropriate incremental costs incurred by these entities would be recoverable from customers through applicable rate mechanisms, thereby mitigating the financial risk for these entities.
PPL and its subsidiaries have credit policies in place to manage credit risk, including the use of an established credit approval process, daily monitoring of counterparty positions and the use of master netting agreements or provisions. These agreements generally include credit mitigation provisions, such as margin, prepayment or collateral requirements. PPL and its subsidiaries may request additional credit assurance, in certain circumstances, if the counterparties' credit ratings fall below investment grade, their tangible net worth falls below specified percentages or their exposures exceed an established credit limit.
Master Netting Arrangements (PPL, LG&E and KU)
Net derivative positions on the balance sheets are not offset against the right to reclaim cash collateral (a receivable) or the obligation to return cash collateral (a payable) under master netting arrangements.
PPL, LG&E and KU had no obligation to return or post cash collateral under master netting arrangements at September 30, 2025 and December 31, 2024.
See "Offsetting Derivative Instruments" below for a summary of derivative positions presented in the balance sheets where a right of setoff exists under these arrangements.
Interest Rate Risk
(All Registrants)
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.
Cash Flow Hedges (PPL)
Interest rate risks include exposure to adverse interest rate movements for outstanding variable rate debt and for future anticipated financings. Financial interest rate derivatives that qualify as cash flow hedges may be entered into to hedge floating interest rate risk associated with both existing and anticipated debt issuances.
Cash flow hedges are discontinued if it is no longer probable that the original forecasted transaction will occur by the end of the originally specified time period and any amounts previously recorded in AOCI are reclassified into earnings once it is determined that the hedged transaction is not probable of occurring.
For the three and nine months ended September 30, 2025 and 2024, PPL had no cash flow hedges reclassified into earnings associated with discontinued cash flow hedges.
At September 30, 2025, the amount of accumulated net unrecognized after-tax gains (losses) on qualifying derivatives expected to be reclassified into earnings during the next 12 months is insignificant. Amounts are reclassified as the hedged interest expense is recorded.
Economic Activity (PPL and LG&E)
LG&E enters into interest rate swap contracts that economically hedge interest payments. Because realized gains and losses from the swaps, including terminated swap contracts, are recoverable through regulated rates, any subsequent changes in fair value of these derivatives are included in regulatory assets or liabilities until they are realized as interest expense. Realized gains and losses are recognized in "Interest Expense" on the Statements of Income at the time the underlying hedged interest expense is recorded. At September 30, 2025, LG&E held contracts with a notional amount of $64 million that mature in 2033.
Commodity Price Risk (PPL)
Economic Activity
RIE enters into derivative contracts that economically hedge natural gas purchases. Realized gains and losses from the derivatives are recoverable through regulated rates, therefore subsequent changes in fair value are included in regulatory assets or liabilities until they are realized as purchased gas. Realized gains and losses are recognized in "Energy Purchases" on the Statements of Income upon settlement of the contracts. At September 30, 2025, RIE held contracts with notional volumes of 52 Bcf that range in maturity from 2025 through 2029.
Accounting and Reporting
(All Registrants)
All derivative instruments are recorded at fair value on the Balance Sheet as an asset or liability unless the NPNS is elected. NPNS contracts include certain full requirement purchase contracts and other physical purchase contracts. Changes in the fair value of derivatives not designated as NPNS are recognized in earnings unless specific hedge accounting criteria are met and designated as such, except for the changes in fair values of LG&E's interest rate swaps that are recognized as regulatory assets or regulatory liabilities. See Note 6 for amounts recorded in regulatory assets and regulatory liabilities at September 30, 2025 and December 31, 2024.
See Note 1 in each Registrant's 2024 Form 10-K for additional information on accounting policies related to derivative instruments.
(PPL)
The following table presents the fair value and the location of derivatives not designated as hedging instruments on the Balance Sheets:
| September 30, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||
| Assets | Liabilities | Assets | Liabilities | ||||||||||||||||||||||||||||||||||||||||||||
| Current: | |||||||||||||||||||||||||||||||||||||||||||||||
| Price Risk Management Assets/Liabilities (a) | |||||||||||||||||||||||||||||||||||||||||||||||
| Gas contracts | $ | 3 | $ | 6 | $ | 7 | $ | 10 | |||||||||||||||||||||||||||||||||||||||
| Total current | 3 | 6 | 7 | 10 | |||||||||||||||||||||||||||||||||||||||||||
| Noncurrent: | |||||||||||||||||||||||||||||||||||||||||||||||
| Price Risk Management Assets/Liabilities (a) | |||||||||||||||||||||||||||||||||||||||||||||||
| Interest rate derivatives (b) | — | 5 | — | 3 | |||||||||||||||||||||||||||||||||||||||||||
| Gas contracts | 1 | 5 | 2 | 3 | |||||||||||||||||||||||||||||||||||||||||||
| Total noncurrent | 1 | 10 | 2 | 6 | |||||||||||||||||||||||||||||||||||||||||||
| Total derivatives | $ | 4 | $ | 16 | $ | 9 | $ | 16 |
(a)Current portion is included in "Other current assets" and "Other current liabilities" and noncurrent portion is included in "Other noncurrent assets" and "Other deferred credits and noncurrent liabilities" on the Balance Sheets. Excludes accrued interest, if applicable.
(b)Excludes accrued interest, if applicable.
The following tables present the pre-tax effect of derivative instruments recognized in income, OCI or regulatory assets and regulatory liabilities for the period ended September 30, 2025.
| Three Months | Nine Months | Three Months | Nine Months | |||||||||||||||||||||||||||||
| Derivative Relationships | Derivative Gain (Loss) Recognized in OCI | Derivative Gain (Loss) Recognized in OCI | Location of Gain (Loss) Recognized in Income on Derivative | Gain (Loss) Reclassified from AOCI into Income | Gain (Loss) Reclassified from AOCI into Income | |||||||||||||||||||||||||||
| Cash Flow Hedges: | ||||||||||||||||||||||||||||||||
| Interest rate derivatives | $ | — | $ | 1 | Interest Expense | $ | (1) | $ | (2) | |||||||||||||||||||||||
| Derivatives Not Designated as Hedging Instruments | Location of Gain (Loss) Recognized in Income on Derivative | Three Months | Nine Months | |||||||||||||||||
| Gas contracts | Energy purchases | $ | (2) | $ | (7) | |||||||||||||||
| Other income(expense) -net | — | (1) | ||||||||||||||||||
| Total | $ | (2) | $ | (8) | ||||||||||||||||
| Derivatives Not Designated as Hedging Instruments | Location of Gain (Loss) Recognized as Regulatory Liabilities/Assets | Three Months | Nine Months | |||||||||||||||||
| Interest rate derivatives | Regulatory assets - noncurrent | $ | — | $ | (2) | |||||||||||||||
| Gas Contracts | Regulatory assets - current | — | 3 | |||||||||||||||||
| Regulatory liabilities - current | (3) | — | ||||||||||||||||||
| Regulatory assets - noncurrent | (6) | (6) | ||||||||||||||||||
| Total | $ | (9) | $ | (5) |
The following tables present the pre-tax effect of derivative instruments recognized in income, OCI or regulatory assets and regulatory liabilities for the period ended September 30, 2024.
| Three Months | Nine Months | Three Months | Nine Months | |||||||||||||||||||||||||||||
| Derivative Relationships | Derivative Gain (Loss) Recognized in OCI | Derivative Gain (Loss) Recognized in OCI | Location of Gain (Loss) Recognized in Income on Derivative | Gain (Loss) Reclassified from AOCI into Income | Gain (Loss) Reclassified from AOCI into Income | |||||||||||||||||||||||||||
| Cash Flow Hedges: | ||||||||||||||||||||||||||||||||
| Interest rate derivatives | $ | — | $ | — | Interest Expense | $ | (1) | $ | (3) | |||||||||||||||||||||||
| Derivatives Not Designated as Hedging Instruments | Location of Gain (Loss) Recognized in Income on Derivative | Three Months | Nine Months | |||||||||||||||||
| Gas contracts | Energy purchases | $ | (6) | $ | (31) | |||||||||||||||
| Total | $ | (6) | $ | (31) | ||||||||||||||||
| Derivatives Not Designated as Hedging Instruments | Location of Gain (Loss) Recognized as Regulatory Liabilities/Assets | Three Months | Nine Months | |||||||||||||||||
| Interest rate derivatives | Regulatory assets - noncurrent | $ | (3) | $ | — | |||||||||||||||
| Gas contracts | Regulatory assets - current | (2) | 31 | |||||||||||||||||
| Regulatory assets - noncurrent | (3) | 3 | ||||||||||||||||||
| Total | $ | (8) | $ | 34 | ||||||||||||||||
The following table presents the effect of cash flow hedge activity on the Statement of Income for the period ended September 30, 2025.
| Location and Amount of Gain (Loss) Recognized in Income on Hedging Relationships | ||||||||||||||||||||||||||
| Three Months | Nine Months | |||||||||||||||||||||||||
| Interest Expense | Interest Expense | |||||||||||||||||||||||||
| Total income and expense line items presented in the income statement in which the effect of cash flow hedges are recorded | $ | 210 | $ | 599 | ||||||||||||||||||||||
| The effects of cash flow hedges: | ||||||||||||||||||||||||||
| Gain (Loss) on cash flow hedging relationships: | ||||||||||||||||||||||||||
| Interest rate derivatives: | ||||||||||||||||||||||||||
| Amount of gain (loss) reclassified from AOCI to income | (1) | (2) | ||||||||||||||||||||||||
The following table presents the effect of cash flow hedge activity on the Statement of Income for the period ended September 30, 2024.
| Location and Amount of Gain (Loss) Recognized in Income on Hedging Relationships | |||||||||||||||||||||||||||||
| Three Months | Nine Months | ||||||||||||||||||||||||||||
| Interest Expense | Interest Expense | ||||||||||||||||||||||||||||
| Total income and expense line items presented in the income statement in which the effect of cash flow hedges are recorded | $ | 188 | $ | 549 | |||||||||||||||||||||||||
| The effects of cash flow hedges: | |||||||||||||||||||||||||||||
| Gain (Loss) on cash flow hedging relationships: | |||||||||||||||||||||||||||||
| Interest rate derivatives: | |||||||||||||||||||||||||||||
| Amount of gain (loss) reclassified from AOCI to income | (1) | (3) | |||||||||||||||||||||||||||
(LG&E)
The following table presents the fair value and the location on the Balance Sheets of derivatives not designated as hedging instruments.
| September 30, 2025 | December 31, 2024 | ||||||||||||||||||||||
| Assets | Liabilities | Assets | Liabilities | ||||||||||||||||||||
| Noncurrent: | |||||||||||||||||||||||
| Price Risk Management Assets/Liabilities: | |||||||||||||||||||||||
| Interest rate derivatives | $ | — | $ | 5 | $ | — | $ | 3 | |||||||||||||||
| Total noncurrent | — | 5 | — | 3 | |||||||||||||||||||
| Total derivatives | $ | — | $ | 5 | $ | — | $ | 3 |
The following tables present the pre-tax effect of derivatives not designated as cash flow hedges that are recognized in income or regulatory assets for the period ended September 30, 2025.
| Location of Gain (Loss) Recognized in | ||||||||||||||||||||
| Derivative Instruments | Regulatory Assets | Three Months | Nine Months | |||||||||||||||||
| Interest rate derivatives | Regulatory assets - noncurrent | $ | — | $ | (2) |
The following tables present the pre-tax effect of derivatives not designated as cash flow hedges that are recognized in income or regulatory assets for the period ended September 30, 2024.
| Location of Gain (Loss) Recognized in | ||||||||||||||||||||
| Derivative Instruments | Regulatory Assets | Three Months | Nine Months | |||||||||||||||||
| Interest rate derivatives | Regulatory assets - noncurrent | $ | (3) | $ | — |
(PPL, LG&E and KU)
Offsetting Derivative Instruments
PPL, LG&E and KU or certain of their subsidiaries have master netting arrangements in place and also enter into agreements pursuant to which they purchase or sell certain energy and other products. Under the agreements, upon termination of the agreement as a result of a default or other termination event, the non-defaulting party typically would have a right to set off amounts owed under the agreement against any other obligations arising between the two parties (whether under the agreement or not), whether matured or contingent and irrespective of the currency, place of payment or place of booking of the obligation.
PPL, LG&E and KU have elected not to offset derivative assets and liabilities and not to offset net derivative positions against the right to reclaim cash collateral pledged (an asset) or the obligation to return cash collateral received (a liability) under derivatives agreements. The table below summarizes the derivative positions presented in the balance sheets where a right of setoff exists under these arrangements and related cash collateral received or pledged.
| Assets | Liabilities | ||||||||||||||||||||||||||||||||||||||||||||||
| Eligible for Offset | Eligible for Offset | ||||||||||||||||||||||||||||||||||||||||||||||
| Gross | Derivative Instruments | Cash Collateral Received | Net | Gross | Derivative Instruments | Cash Collateral Pledged | Net | ||||||||||||||||||||||||||||||||||||||||
| September 30, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||
| Derivatives | |||||||||||||||||||||||||||||||||||||||||||||||
| PPL | $ | 4 | $ | 3 | $ | — | $ | 1 | $ | 16 | $ | 3 | $ | — | $ | 13 | |||||||||||||||||||||||||||||||
| LG&E | — | — | — | — | 5 | — | — | 5 |
| Assets | Liabilities | ||||||||||||||||||||||||||||||||||||||||||||||
| Eligible for Offset | Eligible for Offset | ||||||||||||||||||||||||||||||||||||||||||||||
| Gross | Derivative Instruments | Cash Collateral Received | Net | Gross | Derivative Instruments | Cash Collateral Pledged | Net | ||||||||||||||||||||||||||||||||||||||||
| December 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||
| Derivatives | |||||||||||||||||||||||||||||||||||||||||||||||
| PPL | $ | 9 | $ | 5 | $ | — | $ | 4 | $ | 16 | $ | 5 | $ | — | $ | 11 | |||||||||||||||||||||||||||||||
| LG&E | — | — | — | — | 3 | — | — | 3 |
Credit Risk-Related Contingent Features
Certain derivative contracts contain credit risk-related contingent features which, when in a net liability position, would permit the counterparties to require the transfer of additional collateral upon a decrease in the credit ratings of PPL, LG&E and KU or certain of their subsidiaries. Most of these features would require the transfer of additional collateral or permit the counterparty to terminate the contract if the applicable credit rating were to fall below investment grade. Some of these features also would allow the counterparty to require additional collateral upon each downgrade in credit rating at levels that remain above investment grade. In either case, if the applicable credit rating were to fall below investment grade, and assuming no assignment to an investment grade affiliate were allowed, most of these credit contingent features require either immediate payment of the net liability as a termination payment or immediate and ongoing full collateralization on derivative instruments in net liability positions.
Additionally, certain derivative contracts contain credit risk-related contingent features that require adequate assurance of performance be provided if the other party has reasonable concerns regarding the performance of PPL's, LG&E's and KU's obligations under the contracts. A counterparty demanding adequate assurance could require a transfer of additional collateral or other security, including letters of credit, cash and guarantees from a creditworthy entity. This would typically involve negotiations among the parties. However, amounts disclosed below represent assumed immediate payment or immediate and ongoing full collateralization for derivative instruments in net liability positions with "adequate assurance" features.
(PPL)
At September 30, 2025, derivative contracts in a net liability position that contain credit risk-related contingent features were $3 million. The aggregate fair value of additional collateral requirements in the event of a credit downgrade below investment grade was $3 million.
15. Asset Retirement Obligations
(PPL, LG&E and KU)
PPL's, LG&E's and KU's ARO liabilities are primarily related to CCR closure costs. See Note 10 for information on the CCR rule. LG&E and RIE also have AROs related to natural gas mains and wells. LG&E's and KU's transmission and distribution lines largely operate under perpetual property easement agreements, which do not generally require restoration upon removal of the property. Therefore, no material AROs are recorded for transmission and distribution assets. For LG&E, KU and RIE, all ARO accretion and depreciation expenses are reclassified as a regulatory asset or regulatory liability. ARO regulatory assets associated with certain CCR projects are amortized to expense in accordance with regulatory approvals. For other AROs, deferred accretion and depreciation expense is recovered through cost of removal.
The changes in the carrying amounts of AROs were as follows.
| PPL | LG&E | KU | |||||||||||||||
| Balance at December 31, 2024 | $ | 157 | $ | 84 | $ | 64 | |||||||||||
| Accretion | 6 | 3 | 3 | ||||||||||||||
| Changes in estimated timing or cost | 3 | 1 | 2 | ||||||||||||||
| Obligations settled | (18) | (9) | (7) | ||||||||||||||
| Balance at September 30, 2025 | $ | 148 | $ | 79 | $ | 62 |
16. Accumulated Other Comprehensive Income (Loss)
(PPL)
The after-tax changes in AOCI by component for the periods ended September 30 were as follows.
| Unrealized gains (losses) on qualifying derivatives | Defined benefit plans | ||||||||||||||||||||||||||||||||||||||||||||||
| Equity investees' AOCI | Prior service costs | Actuarial gain (loss) | Total | ||||||||||||||||||||||||||||||||||||||||||||
| PPL | |||||||||||||||||||||||||||||||||||||||||||||||
| June 30, 2025 | $ | 11 | $ | 4 | $ | (3) | $ | (202) | $ | (190) | |||||||||||||||||||||||||||||||||||||
| Amounts arising during the period | — | — | — | (3) | (3) | ||||||||||||||||||||||||||||||||||||||||||
| Reclassifications from AOCI | 1 | — | — | (1) | — | ||||||||||||||||||||||||||||||||||||||||||
| Net OCI during the period | 1 | — | — | (4) | (3) | ||||||||||||||||||||||||||||||||||||||||||
| September 30, 2025 | $ | 12 | $ | 4 | $ | (3) | $ | (206) | $ | (193) | |||||||||||||||||||||||||||||||||||||
| December 31, 2024 | $ | 9 | $ | 4 | $ | (3) | $ | (194) | $ | (184) | |||||||||||||||||||||||||||||||||||||
| Amounts arising during the period | 1 | — | — | (11) | (10) | ||||||||||||||||||||||||||||||||||||||||||
| Reclassifications from AOCI | 2 | — | — | (1) | 1 | ||||||||||||||||||||||||||||||||||||||||||
| Net OCI during the period | 3 | — | — | (12) | (9) | ||||||||||||||||||||||||||||||||||||||||||
| September 30, 2025 | $ | 12 | $ | 4 | $ | (3) | $ | (206) | $ | (193) | |||||||||||||||||||||||||||||||||||||
| June 30, 2024 | $ | 7 | $ | 4 | $ | (4) | $ | (167) | $ | (160) | |||||||||||||||||||||||||||||||||||||
| Amounts arising during the period | — | — | — | (4) | (4) | ||||||||||||||||||||||||||||||||||||||||||
| Reclassifications from AOCI | 2 | — | — | (1) | 1 | ||||||||||||||||||||||||||||||||||||||||||
| Net OCI during the period | 2 | — | — | (5) | (3) | ||||||||||||||||||||||||||||||||||||||||||
| September 30, 2024 | $ | 9 | $ | 4 | $ | (4) | $ | (172) | $ | (163) | |||||||||||||||||||||||||||||||||||||
| December 31, 2023 | $ | 6 | $ | 3 | $ | (4) | $ | (168) | $ | (163) | |||||||||||||||||||||||||||||||||||||
| Amounts arising during the period | — | 1 | — | (2) | (1) | ||||||||||||||||||||||||||||||||||||||||||
| Reclassifications from AOCI | 3 | — | — | (2) | 1 | ||||||||||||||||||||||||||||||||||||||||||
| Net OCI during the period | 3 | 1 | — | (4) | — | ||||||||||||||||||||||||||||||||||||||||||
| September 30, 2024 | $ | 9 | $ | 4 | $ | (4) | $ | (172) | $ | (163) |
The following table presents PPL's gains (losses) and related income taxes for reclassifications from AOCI for the periods ended September 30.
| Three Months | Nine Months | Affected Line Item on the | ||||||||||||||||||||||||||||||
| Details about AOCI | 2025 | 2024 | 2025 | 2024 | Statements of Income | |||||||||||||||||||||||||||
| Qualifying derivatives | ||||||||||||||||||||||||||||||||
| Interest rate derivatives | $ | (1) | $ | (1) | $ | (2) | $ | (3) | Interest Expense | |||||||||||||||||||||||
| Total Pre-tax | (1) | (1) | (2) | (3) | ||||||||||||||||||||||||||||
| Income Taxes | — | (1) | — | — | ||||||||||||||||||||||||||||
| Total After-tax | (1) | (2) | (2) | (3) | ||||||||||||||||||||||||||||
| Defined benefit plans | ||||||||||||||||||||||||||||||||
| Net actuarial loss (a) | 1 | 1 | 1 | 3 | ||||||||||||||||||||||||||||
| Total Pre-tax | 1 | 1 | 1 | 3 | ||||||||||||||||||||||||||||
| Income Taxes | — | — | — | (1) | ||||||||||||||||||||||||||||
| Total After-tax | 1 | 1 | 1 | 2 | ||||||||||||||||||||||||||||
| Total reclassifications during the period | $ | — | $ | (1) | $ | (1) | $ | (1) |
(a) These AOCI components are included in the computation of net periodic defined benefit cost. See Note 9 for additional information.
17. New Accounting Guidance Pending Adoption
(All Registrants)
Improvements to Income Tax Disclosures
In December 2023, the FASB issued guidance which requires public business entities to provide additional income tax disclosures, including a disaggregated rate reconciliation as well as information on income taxes paid.
For public business entities, this guidance will be applied on a prospective basis. Retrospective application is permitted. This guidance will be effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance.
Adoption of this guidance will result in including additional required disclosures. The Registrants plan to adopt the standard retrospectively effective for the year ending December 31, 2025.
Disaggregation of Income Statement Expenses
In November 2024, the FASB issued guidance which requires public business entities to provide in the notes to financial statements specified information about certain costs and expenses. This includes the disclosure of amounts of (a) purchases of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, and (e) depreciation, depletion, and amortization recognized as part of oil and gas-producing activities included in each relevant income statement expense caption. A relevant expense caption is an expense caption included on the face of the income statement within continuing operations that contains any of the specified expense categories (a)-(e). A qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated must also be disclosed. Additionally, public business entities must disclose the total amount of selling expenses and, in annual reporting periods, the entity’s definition of selling expenses.
For public business entities, this guidance will be applied on a prospective basis. Retrospective application is permitted. This guidance will be effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Early adoption is permitted.
The Registrants are currently assessing the impact of adopting this guidance.
Accounting for Internal-Use Software
In September 2025, the FASB issued guidance to clarify and modernize the accounting for costs related to internal-use software. This includes 1) eliminating the traditional stage-based model and requiring entities to start capitalizing software costs when (a) management has authorized/committed to funding the software project and (b) it is probable that the project will be completed and the software will be used to perform the function intended (“probable-to-complete recognition threshold”), 2) requiring entities to consider whether there is significant uncertainty associated with the development activities of the software when evaluating the probable-to-complete recognition threshold, and 3) clarifying disclosure requirements.
For all subjected entities, this guidance can be applied on either a prospective, modified, or retrospective basis. This guidance will be effective for annual periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is permitted.
The Registrants are currently assessing the impact of adopting this guidance.
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