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

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

Results of Operations

(All Registrants)

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

The following should be read in conjunction with the Registrants' Condensed Consolidated Financial Statements and the accompanying Notes and with the Registrants' 2024 Form 10-K. Capitalized terms and abbreviations are defined in the glossary. Dollars are in millions, except per share data, unless otherwise noted.

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

"Overview" provides a description of each Registrant's business strategy and a discussion of important financial and operational developments.
"Results of Operations" for all Registrants includes a "Statement of Income Analysis," which discusses significant changes in principal line items on the Statements of Income, comparing the three and nine months ended September 30, 2025 with the same periods in 2024. The PPL "Results of Operations" also includes "Segment Earnings," which provides a detailed analysis of earnings by reportable segment. These discussions include the non-GAAP financial measure "Earnings from Ongoing Operations" and provide an explanation of the non-GAAP financial measure and a reconciliation of the measure to the most comparable GAAP measure.
"Financial Condition - Liquidity and Capital Resources" provides an analysis of the Registrants' liquidity positions and credit profiles. This section also includes a discussion of rating agency actions.
"Financial Condition - Risk Management" provides an explanation of the Registrants' risk management programs relating to market and credit risk.

Overview

Introduction

(PPL)

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

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


			PPL Corporation*

					PPL Capital Funding Provides financing for the operations of PPL and certain subsidiaries



PPL Electric* Engages in the regulated transmission and distribution of electricity in Pennsylvania			LKE A holding company that owns regulated utility operations through its subsidiaries, LG&E and KU		RIE Engages in the regulated transmission, distribution and sale of electricity and regulated distribution and sale of natural gas in Rhode Island


	LG&E* Engages in the regulated generation, transmission, distribution and sale of electricity and regulated distribution and sale of natural gas in Kentucky			KU* Engages in the regulated generation, transmission, distribution and sale of electricity, primarily in Kentucky


Pennsylvania Regulated Segment		Kentucky Regulated Segment			Rhode Island Regulated Segment

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

(PPL Electric)

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

(LG&E)

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

(KU)

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

Segment Information (PPL)

PPL is organized into three reportable segments as depicted in the chart above: Kentucky Regulated, which primarily represents the results of LG&E and KU, Pennsylvania Regulated, which primarily represents the results of PPL Electric, and Rhode Island Regulated, which primarily represents the results of RIE. "Corporate and Other" primarily consists of corporate level financing costs, certain unallocated costs and certain non-recoverable costs incurred in conjunction with the acquisition of RIE.

Business Strategy

(All Registrants)

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

PPL’s strategy, which is supported by the other Registrants and subsidiaries, is focused on creating the utilities of the future to drive greater value for our customers and shareowners. Key objectives in support of this strategy include:

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

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

Financial and Operational Developments

Joint Venture Agreement with Blackstone Infrastructure (PPL)

On July 15, 2025, at the Pennsylvania Energy and Innovation Summit, PPL and Blackstone Infrastructure announced the creation of a joint venture to build, own and operate new electricity generation stations to power data centers in Pennsylvania under long-term energy services agreements (ESAs) to address underlying resource adequacy concerns in PJM. Construction of new generation stations will require the successful execution of ESAs with hyperscalers. PPL will own 51% of the joint venture interest and Blackstone Infrastructure will own 49%. The joint venture is actively engaged with hyperscalers, landowners, natural gas pipeline companies and turbine manufacturers, and has secured multiple land parcels to enable this new generation buildout; however, no ESAs with hyperscalers have been signed as of November 5, 2025.

Regulatory Requirements

(All Registrants)

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

Rate Case Proceedings

(PPL and PPL Electric)

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.

(PPL, LG&E and KU)

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.

In addition, pursuant to prior orders of the KPSC, the LG&E and KU rate case application included an assessment of a potential legal merger of LG&E and KU and concluded a legal merger may be appropriate. LG&E and KU have requested the KPSC to determine whether LG&E and KU have requested a reasonable plan for merger. Ultimately, approval for a merger would be required from the KPSC, VSCC and FERC. There is no assurance that LG&E and KU would receive regulatory approval for a potential merger.

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.

(PPL, LG&E and KU)

Environmental Considerations for Coal-Fired Generation

The businesses of LG&E and KU are subject to extensive federal, state and local environmental laws, rules and regulations, including those pertaining to CCRs, GHG, and ELGs. See Notes 6, 10 and 15 to the Financial Statements for a discussion of these significant environmental matters. These and other environmental requirements led PPL, LG&E and KU to retire approximately 1,500 MW of coal-fired generating plants in Kentucky since 2010. As part of the long-term generation planning process, LG&E and KU evaluate a range of factors including the impact of potential stricter environmental regulations, fuel price scenarios, the cost of replacement generation, continued operations and major maintenance costs and the risk of major equipment failures in determining when to retire generation assets.

As a result of environmental requirements and aging infrastructure, LG&E has sought and obtained approval to retire two older coal-fired units at the Mill Creek Plant. Mill Creek Unit 1, with 300 MW of capacity, was retired in 2024. Mill Creek Unit 2, with 297 MW of capacity, was approved to be retired in 2027, subject to certain conditions. On October 28, 2025, in LG&E and KU's 2025 CPCN proceeding, the KPSC declined to rule on a request to extend the operation of Mill Creek Unit 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. 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. See Note 6 to the Financial Statements for additional information on the Mill Creek Unit 1 RAR.

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. Projected capital expenditures related to these proposals for the years 2025 through 2027 were included in PPL's, LG&E's and KU's projections in "Management Discussion and Analysis – Financial Condition - Liquidity and Capital Resources - Forecasted Uses of Cash – Capital Expenditures" in the 2024 Form 10-K. The application includes proposals to build:

a 645 MW 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.

FERC Transmission Rate Filing

In 2018, LG&E and KU applied to the FERC requesting elimination of certain on-going waivers and credits to a sub-set of transmission customers relating to the 1998 merger of LG&E's and KU's parent entities and the 2006 withdrawal of LG&E and KU from the Midcontinent Independent System Operator, Inc. (MISO), a regional transmission operator and energy market. The application sought termination of LG&E's and KU's commitment to provide certain Kentucky municipalities mitigation for certain horizontal market power concerns arising out of the 1998 LG&E and KU merger and 2006 MISO withdrawal. The amounts at issue are generally waivers or credits granted to a limited number of Kentucky municipalities for either certain LG&E and KU or MISO transmission charges incurred for transmission service received. In 2019, the FERC granted LG&E's and KU's request to remove the ongoing credits, conditioned upon the implementation by LG&E and KU of a transition mechanism for certain existing power supply arrangements, which was subsequently filed, modified, and approved by the FERC in 2020 and 2021. In 2020, LG&E and KU and other parties filed appeals with the U.S. Court of Appeals - D.C. Circuit (D.C. Circuit Court of Appeals) regarding the FERC's orders on the elimination of the mitigation and required transition mechanism. In August 2022, the D.C. Circuit Court of Appeals issued an order remanding the proceedings back to the FERC. On May 18, 2023, the FERC issued an order on remand reversing its 2019 decision and requiring LG&E and KU to refund credits previously withheld, including under such transition mechanism. LG&E and KU filed a petition for review of the FERC's May 18, 2023 order with the D.C. Circuit Court of Appeals and provided refunds in accordance with the FERC order on December 1, 2023. The FERC issued an order on LG&E's and KU's compliance filing on November 16, 2023, and LG&E and KU filed a petition for review of this November 16, 2023 order on February 14, 2024. 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.

(PPL)

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.

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.

DSIC Petition (PPL and PPL Electric)

On April 26, 2024, PPL Electric filed a Petition with the PAPUC requesting that the PAPUC waive PPL Electric's DSIC cap of 5% of billed revenues and increase the maximum allowable DSIC to 9% for bills rendered on or after January 1, 2025. On February 28, 2025, the PAPUC issued its written order permitting PPL Electric to increase its DSIC cap from 5% to 7.5% for bills rendered on or after March 13, 2025 until the effective date of rates established in PPL Electric’s next base rate case or the end of the PPL Electric’s 2023-2027 Long-term Infrastructure Improvement Plan, whichever occurs first, at which time it will return to 5%.

Results of Operations

(PPL)

The "Statement of Income Analysis" discussion below describes significant changes in principal line items on the Statements of Income, comparing the three and nine months ended September 30, 2025 with the same periods in 2024. The "Segment Earnings" discussion provides a review of results by reportable segment. These discussions include the non-GAAP financial measure "Earnings from Ongoing Operations" and provide an explanation of the non-GAAP financial measure and a reconciliation of the measure to the most comparable GAAP measure.

(PPL Electric, LG&E and KU)

A "Statement of Income Analysis" is presented separately for PPL Electric, LG&E and KU. The "Statement of Income Analysis" discussion below describes significant changes in principal line items on the Statements of Income, comparing the three and nine months ended September 30, 2025 with the same periods in 2024.

(All Registrants)

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

PPL: Statement of Income Analysis and Segment Earnings

Statement of Income Analysis

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


	Three Months						Nine Months
	2025		2024		$ Change		2025		2024		$ Change
Operating Revenues	$	2,239	$	2,066	$	173	$	6,768	$	6,251	$	517

Operating Expenses
Operation
Fuel	231		207		24		657		597		60
Energy purchases	422		338		84		1,369		1,133		236
Other operation and maintenance	586		681		(95)		1,798		1,930		(132)
Depreciation	331		322		9		977		957		20
Taxes, other than income	100		90		10		314		271		43
Total Operating Expenses	1,670		1,638		32		5,115		4,888		227
Operating Income	569		428		141		1,653		1,363		290
Other Income (Expense) - net	39		32		7		90		86		4
Interest Expense	210		188		22		599		549		50
Income Before Income Taxes	398		272		126		1,144		900		244
Income Taxes	80		58		22		229		189		40




Net Income	$	318	$	214	$	104	$	915	$	711	$	204

Operating Revenues

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


	Three Months		Nine Months

PPL Electric distribution volumes (a)	$	—	$	18
PPL Electric PLR (b)	52		88
PPL Electric transmission formula rate (c)	22		39


LG&E ECR	7		5
LG&E volumes (a)	2		8
LG&E fuel and other energy purchases (d)	12		49
LG&E off-system sales (e)	2		9


KU volumes (a)	5		22
KU fuel and other energy purchases (f)	13		23
KU off-system sales (e)	2		16






RIE energy purchases and other recoveries (g)	21		125
RIE net metering presentation (h)	25		110

RIE capital investments	(3)		12

Other	13		(7)








Total	$	173	$	517

(a)The increases for the nine months ended September 30, 2025 were primarily due to weather and other higher usage.

(b)The increases were primarily the result of more PLR customers, higher prices and higher customer volumes.

(c)The increases were primarily due to returns on additional transmission capital investments.

(d)The increase for the three months ended September 30, 2025 was primarily due to higher recoveries of fuel expenses. The increase for the nine months ended September 30, 2025 was primarily due to higher recoveries of fuel expenses and energy purchases.

(e)The increases for the nine months ended September 30, 2025 were primarily due to higher volumes.

(f)The increases were primarily due to higher recoveries of fuel expenses.

(g)The increase for the three months ended September 30, 2025 was primarily due to higher recoveries of transmission expenses and energy efficiency costs. The increase for the nine months ended September 30, 2025 was primarily due to higher recoveries of transmission expenses, gas maintenance expenses and gross earnings taxes.

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

Fuel

Fuel increased $24 million for the three months ended September 30, 2025 compared with 2024, primarily due to an increase in commodity costs.

Fuel increased $60 million for the nine months ended September 30, 2025 compared with 2024, primarily due to a $38 million increase in commodity costs and a $22 million increase in volumes due to weather.

Energy Purchases

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


	Three Months		Nine Months
PPL Electric PLR volumes	$	8	$	35
PPL Electric PLR prices	43		34

LG&E volumes	(3)		12
LG&E commodity costs	1		11

RIE net metering presentation (a)	25		110
RIE net metering	8		17

Other	2		17
Total	$	84	$	236

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

Other Operation and Maintenance

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


	Three Months		Nine Months
PPL Electric storm costs	$	(13)	$	(5)


PPL Electric bad debt expenses	(2)		(17)















RIE gas maintenance expenses	—		21
RIE integration related expenses (a)	(20)		(68)
RIE transmission expenses	8		50
RIE bad debt expenses	(15)		(3)
RIE customer service expenses	8		25
RIE storm expenses	(6)		(6)
IT costs (b)	18		70
Transition costs associated with RIE (c)	(67)		(198)
Other	(6)		(1)
Total	$	(95)	$	(132)

(a)Certain transition services agreement costs in 2024 for IT systems that will not be part of PPL's ongoing operations.

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

(c)See Note 8 to the Financial Statements for additional information.

Taxes, Other Than Income

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


	Three Months		Nine Months
State gross earnings and gross receipts tax (a)	$	7	$	41
Property tax expense	5		4
Other	(2)		(2)
Total	$	10	$	43

(a)The increase for the nine months ended September 30, 2025 was primarily due to the RIE Gross Earnings Tax Holiday Credit that took place in 2024.

Other Income (Expense) - net

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


	Three Months		Nine Months

Defined benefit plans - non-service credits (Note 9)	$	(1)	$	(9)
Interest income	(4)		(12)
AFUDC - equity component	10		25

Miscellaneous	2		—
Total	$	7	$	4

Interest Expense

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


	Three Months		Nine Months

Long-term debt (a)	$	17	$	41


Other	5		9
Total	$	22	$	50

(a) The increases were primarily due to increased borrowings.

Income Taxes

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


	Three Months		Nine Months
Change in pre-tax income	$	26	$	51








Income tax credits	(2)		(5)

Utility rate-making tax adjustments (a)	(2)		(6)




Total	$	22	$	40

(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.

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

Segment Earnings

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


	Three Months						Nine Months
	2025		2024		$ Change		2025		2024		$ Change

Kentucky Regulated	$	185	$	169	$	16	$	534	$	493	$	41
Pennsylvania Regulated	159		142		17		482		441		41
Rhode Island Regulated	27		14		13		80		90		(10)
Corporate and Other (a)	(53)		(111)		58		(181)		(313)		132

Net Income (Loss)	$	318	$	214	$	104	$	915	$	711	$	204

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

Earnings from Ongoing Operations

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

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

Gains and losses on sales of assets not in the ordinary course of business.
Impairment charges.
Significant workforce reduction and other restructuring effects.
Acquisition and divestiture-related adjustments.
Other charges or credits that are, in management's view, non-recurring or otherwise not reflective of the company's ongoing operations.

PPL's Earnings from Ongoing Operations by reportable segment for the periods ended September 30 were as follows:


	Three Months						Nine Months
	2025		2024		$ Change		2025		2024		$ Change
Kentucky Regulated	$	191	$	172	$	19	$	548	$	497	$	51
Pennsylvania Regulated	160		142		18		485		458		27
Rhode Island Regulated	38		32		6		118		138		(20)
Corporate and Other	(34)		(36)		2		(112)		(99)		(13)
Earnings from Ongoing Operations	$	355	$	310	$	45	$	1,039	$	994	$	45

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

Kentucky Regulated Segment

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

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


	Three Months						Nine Months
	2025		2024		$ Change		2025		2024		$ Change
Operating Revenues	$	944	$	895	$	49	$	2,841	$	2,698	$	143
Fuel	231		207		24		657		597		60
Energy purchases	23		25		(2)		149		124		25
Other operation and maintenance	201		196		5		601		593		8
Depreciation	180		178		2		535		531		4
Taxes, other than income	26		25		1		77		74		3
Total Operating Expenses	661		631		30		2,019		1,919		100
Other Income (Expense) - net	17		8		9		35		20		15
Interest Expense	68		60		8		191		181		10
Income Taxes	47		43		4		132		125		7
Net Income	185		169		16		534		493		41
Less: Special Items	(6)		(3)		(3)		(14)		(4)		(10)
Earnings from Ongoing Operations	$	191	$	172	$	19	$	548	$	497	$	51

The following after-tax gains (losses), which management considers special items, impacted the Kentucky Regulated segment's results and are excluded from Earnings from Ongoing Operations during the periods ended September 30.


	Income Statement Line Item		Three Months						Nine Months
		2025			2024			2025			2024
Strategic corporate initiatives, net of tax of $0 (a)	Other operation and maintenance		$	—		$	—		$	—		$	(1)
IT transformation, net of tax of $2, $4 (b)	Other operation and maintenance		(5)			—			(11)			—
Office relocation and related costs, net of tax of $1, $1 (c)	Other operation and maintenance		(1)			—			(3)			—
FERC transmission credit refund, net of tax of $0, $0 (d)	Operating Revenues		—			1			—			1
ECR beneficial reuse transition adjustment, net of tax of $2, $2 (e)	Operating Revenues		—			(4)			—			(4)

Total Special Items			$	(6)		$	(3)		$	(14)		$	(4)

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

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

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

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

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

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


	Three Months		Nine Months
Operating Revenues	$	45	$	139
Fuel	(24)		(60)
Energy purchases	2		(25)
Other operation and maintenance	3		10
Depreciation	(1)		(4)
Taxes, other than income	(1)		(3)
Other Income (Expense) - net	9		15
Interest Expense	(8)		(10)
Income Taxes	(6)		(11)
Earnings from Ongoing Operations	19		51
Special Items, after-tax	(3)		(10)
Net Income	$	16	$	41

Higher operating revenues for the three month period primarily due to a $25 million increase in recoveries of fuel and energy purchases, a $7 million increase in ECR revenues, a $6 million increase in sales volumes due to weather and a $5 million increase in off-system sales.
Higher operating revenues for the nine month period primarily due to a $72 million increase in recoveries of fuel and energy purchases, a $30 million increase in sales volumes due to weather and a $25 million increase in off-system sales.
Higher fuel expense for the three month period primarily due to an increase in commodity costs.
Higher fuel expense for the nine month period primarily due to a $38 million increase in commodity costs and a $22 million increase in volumes due to weather.

Pennsylvania Regulated Segment

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

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


	Three Months						Nine Months
	2025		2024		$ Change		2025		2024		$ Change
Operating Revenues	$	786	$	716	$	70	$	2,298	$	2,159	$	139

Energy purchases	224		177		47		622		544		78
Other operation and maintenance	160		176		(16)		481		511		(30)
Depreciation	105		101		4		307		300		7
Taxes, other than income	38		32		6		111		98		13
Total Operating Expenses	527		486		41		1,521		1,453		68
Other Income (Expense) - net	14		13		1		36		33		3
Interest Income from Affiliate	2		7		(5)		4		27		(23)
Interest Expense	67		61		6		189		184		5
Income Taxes	49		47		2		146		141		5
Net Income	159		142		17		482		441		41
Less: Special Items	(1)		—		(1)		(3)		(17)		14
Earnings from Ongoing Operations	$	160	$	142	$	18	$	485	$	458	$	27

The following after-tax gains (losses), which management considers special items, impacted the Pennsylvania Regulated segment's results and are excluded from Earnings from Ongoing Operations during the periods ended September 30.


	Income Statement Line Item		Three Months						Nine Months
		2025			2024			2025			2024
PPL Electric billing issue, net of tax of $5 (a)	Other operation and maintenance		$	—		$	—		$	—		$	(13)
Strategic corporate initiatives, net of tax of $2 (b)	Other operation and maintenance		—			—			—			(4)
Office relocation and related costs, net of tax of $1 (c)	Other operation and maintenance		—			—			(2)			—
IT transformation, net of tax of $0, $0 (d)	Other operation and maintenance		(1)			—			(1)			—
Total Special Items			$	(1)		$	—		$	(3)		$	(17)

(a)Certain expenses related to billing issues.

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

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

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

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


	Three Months		Nine Months
Operating Revenues	$	70	$	139
Energy purchases	(47)		(78)
Other operation and maintenance	17		11
Depreciation	(4)		(7)
Taxes, other than income	(6)		(13)
Other Income (Expense) - net	1		3
Interest Income from Affiliate	(5)		(23)
Interest Expense	(6)		(5)
Income Taxes	(2)		—
Earnings from Ongoing Operations	18		27
Special Items, after-tax	(1)		14
Net Income	$	17	$	41

Higher operating revenues for the three month period primarily due to a $52 million increase in PLR and a $22 million increase in transmission formula rate revenue.
Higher operating revenues for the nine month period primarily due to an $88 million increase in PLR, a $39 million increase in transmission formula rate revenue and a $18 million increase in distribution volumes.
Higher energy purchases for the three month period primarily due to higher PLR prices.
Higher energy purchases for the nine month period primarily due to higher PLR volumes of $35 million and higher PLR prices of $34 million.
Lower other operation and maintenance for the three month period primarily due to a decrease in storm costs.

Rhode Island Regulated Segment

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

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


	Three Months						Nine Months
	2025		2024		$ Change		2025		2024		$ Change
Operating Revenues	$	509	$	455	$	54	$	1,629	$	1,393	$	236

Energy purchases	173		135		38		598		464		134
Other operation and maintenance	196		211		(15)		610		547		63
Depreciation	45		42		3		131		123		8
Taxes, other than income	38		33		5		127		99		28
Total Operating Expenses	452		421		31		1,466		1,233		233
Other Income (Expense) - net	2		7		(5)		5		20		(15)
Interest Income from Affiliate	—		—		—		3		—		3
Interest Expense	28		25		3		78		72		6
Income Taxes	4		2		2		13		18		(5)
Net Income	27		14		13		80		90		(10)
Less: Special Items	(11)		(18)		7		(38)		(48)		10
Earnings from Ongoing Operations	$	38	$	32	$	6	$	118	$	138	$	(20)

The following after-tax gains (losses), which management considers special items, impacted the Rhode Island Regulated segment's results and are excluded from Earnings from Ongoing Operations during the periods ended September 30.


	Income Statement Line Item		Three Months						Nine Months
		2025			2024			2025			2024



Acquisition integration, net of tax of $0, $3, ($2), $12 (a)	Other operation and maintenance		$	(1)		$	(18)		$	6		$	(48)

IT transformation, net of tax of $0, $1 (b)	Other operation and maintenance		(1)			—			(5)			—
Energy efficiency programs settlement, net of tax of $2 (c)	Other Income (Expense) - net		—			—			(6)			—

Post TSA adjustments, net of tax of $4 (d)	Operating Revenues		—			—			(14)			—
Post TSA adjustments, net of tax of $1 (d)	Other operation and maintenance		—			—			(3)			—
Post TSA adjustments, net of tax of $2 (d)	Other Income (Expense) - net		—			—			(6)			—
Post TSA adjustments, net of tax of $0 (d)	Interest Expense		—			—			(1)			—
Customer system integration impacts, net of tax of $2, $2 (e)	Other operation and maintenance		(9)			—			(9)			—
Total Special Items			$	(11)		$	(18)		$	(38)		$	(48)

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

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

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

(d)Adjustments related to account reconciliations and process alignment subsequent to the end of the transition services agreement associated with the acquisition of RIE.

(e)Certain collection process costs incurred due to the timing and implementation of the customer system integration.

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


	Three Months		Nine Months
Operating Revenues	$	52	$	254
Energy purchases	(38)		(134)
Other operation and maintenance	6		(103)
Depreciation	(3)		(8)
Taxes, other than income	(5)		(28)
Other Income (Expense) - net	(2)		(5)
Interest Income from Affiliate	—		3
Interest Expense	(3)		(6)
Income Taxes	(1)		7
Earnings from Ongoing Operations	6		(20)
Special Items, after-tax	7		10
Net Income	$	13	$	(10)

Higher operating revenues for the three month period primarily due to a $25 million increase related to the effects of conforming the presentation of RIE's net metering charges to that of PPL's other operating utilities beginning in the fourth quarter of 2024 and a $21 million increase in recovery of energy purchases, transmission expenses, gross earnings taxes and gas maintenance expenses and $6 million of other items that were not individually significant.
Higher operating revenues for the nine month period primarily due to a $110 million increase related to the effects of conforming the presentation of RIE's net metering charges to that of PPL's other operating utilities beginning in the fourth quarter of 2024, a $125 million increase in recovery of energy purchases, transmission expenses, gross earnings taxes and gas maintenance expenses and a $12 million increase related to capital investments.
Higher energy purchases for the three month period primarily due to a $25 million increase related to the effects of conforming the presentation of RIE's net metering charges to that of PPL's other operating utilities beginning in the fourth quarter of 2024, an $8 million increase in net metering and $5 million of other items that were not individually significant.
Higher energy purchases for the nine month period primarily due to a $110 million increase related to the effects of conforming the presentation of RIE's net metering charges to that of PPL's other operating utilities beginning in the fourth quarter of 2024 and a $17 million increase in net metering.
Lower operation and maintenance expense for the three month period primarily due to a $26 million decrease in bad debt expenses, partially offset by an $8 million increase in transmission expenses, a $6 million increase in energy efficiency expenses and a $5 million increase in IT costs.
Higher operation and maintenance expense for the nine month period primarily due to a $50 million increase in transmission expenses, a $25 million increase in customer service costs, a $21 million increase for gas maintenance expenses and a $16 million increase in IT costs, partially offset by a $14 million decrease in bad debt expenses.
Higher depreciation for the three and nine month periods primarily due to an increase in PP&E additions, net of retirements.
Higher taxes, other than income for the three and nine month periods primarily due to an increase in gross earnings taxes.
Lower other income (expense) - net for the three month period primarily due to lower interest income.
Higher interest expense for the three month period primarily due to increased borrowings.

Reconciliation of Earnings from Ongoing Operations

The following tables contain after-tax gains (losses), in total, which management considers special items, that are excluded from Earnings from Ongoing Operations and a reconciliation to PPL's "Net Income" for the periods ended September 30.


	2025 Three Months
	KY Regulated		PA Regulated		RI Regulated		Corporate and Other		Total
Net Income (Loss)	$	185	$	159	$	27	$	(53)	$	318
Less: Special Items (expense) benefit:

Acquisition integration, net of tax of $0, $4 (a)	—		—		(1)		(14)		(15)
IT transformation, net of tax of $2, $0, $0, $3 (b)	(5)		(1)		(1)		(5)		(12)
Office relocation and related costs, net of tax of $1 (c)	(1)		—		—		—		(1)

Customer system integration impacts, net of tax of $2 (d)	—		—		(9)		—		(9)


Total Special Items	(6)		(1)		(11)		(19)		(37)
Earnings from Ongoing Operations	$	191	$	160	$	38	$	(34)	$	355

(a)Primarily includes integration and related costs associated with the acquisition of RIE.

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

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

(d)Certain collection process costs incurred due to the timing and implementation of the customer system integration.


	2024 Three Months
	KY Regulated		PA Regulated		RI Regulated		Corporate and Other		Total
Net Income (Loss)	$	169	$	142	$	14	$	(111)	$	214
Less: Special Items (expense) benefit:
Talen litigation costs, net of tax of $1 (a)	—		—		—		(2)		(2)
Strategic corporate initiatives, net of tax of $1 (b)	—		—		—		(2)		(2)
Acquisition integration, net of tax of $3, $19 (c)	—		—		(18)		(71)		(89)
FERC transmission credit refund, net of tax of $0 (d)	1		—		—		—		1
ECR beneficial reuse transition adjustment, net of tax of $2 (e)	(4)		—		—		—		(4)





Total Special Items	(3)		—		(18)		(75)		(96)
Earnings from Ongoing Operations	$	172	$	142	$	32	$	(36)	$	310

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

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

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

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

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


	2025 Nine Months
	KY Regulated		PA Regulated		RI Regulated		Corporate and Other		Total
Net Income (Loss)	$	534	$	482	$	80	$	(181)	$	915
Less: Special Items (expense) benefit:
Talen litigation costs, net of tax of ($1) (a)	—		—		—		3		3
Acquisition integration, net of tax of ($2), $11 (b)	—		—		6		(41)		(35)
IT transformation, net of tax of $4, $0, $1, $8 (c)	(11)		(1)		(5)		(31)		(48)
Energy efficiency programs settlement, net of tax of $2 (d)	—		—		(6)		—		(6)
Office relocation and related costs, net of tax of $1, $1 (e)	(3)		(2)		—		—		(5)
Post TSA adjustments, net of tax of $7 (f)	—		—		(24)		—		(24)
Customer system integration impacts, net of tax of $2 (g)	—		—		(9)		—		(9)


Total Special Items	(14)		(3)		(38)		(69)		(124)
Earnings from Ongoing Operations	$	548	$	485	$	118	$	(112)	$	1,039

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

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

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

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

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

(f)Adjustments related to account reconciliations and process alignment subsequent to the end of the transition services agreement associated with the acquisition of RIE.

(g)Certain collection process costs incurred due to the timing and implementation of the customer system integration.


	2024 Nine Months
	KY Regulated		PA Regulated		RI Regulated		Corporate and Other		Total
Net Income (Loss)	$	493	$	441	$	90	$	(313)	$	711
Less: Special Items (expense) benefit:
Talen litigation costs, net of tax of $1 (a)	—		—		—		(2)		(2)
Strategic corporate initiatives, net of tax of $0, $2, $2 (b)	(1)		(4)		—		(6)		(11)
Acquisition integration, net of tax of $12, $55 (c)	—		—		(48)		(206)		(254)
PPL Electric billing issue, net of tax of $5 (d)	—		(13)		—		—		(13)
FERC transmission credit refund, net of tax of $0 (e)	1		—		—		—		1
ECR beneficial reuse transition adjustment, net of tax of $2 (f)	(4)		—		—		—		(4)




Total Special Items	(4)		(17)		(48)		(214)		(283)
Earnings from Ongoing Operations	$	497	$	458	$	138	$	(99)	$	994

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

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

(d)Certain expenses related to billing issues.

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

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

PPL Electric: Statement of Income Analysis

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


	Three Months						Nine Months
	2025		2024		$ Change		2025		2024		$ Change
Operating Revenues	$	786	$	716	$	70	$	2,298	$	2,159	$	139
Operating Expenses
Operation
Energy purchases	224		177		47		622		544		78

Other operation and maintenance	160		176		(16)		481		511		(30)
Depreciation	105		101		4		307		300		7
Taxes, other than income	38		32		6		111		98		13
Total Operating Expenses	527		486		41		1,521		1,453		68
Operating Income	259		230		29		777		706		71
Other Income (Expense) - net	14		13		1		36		33		3
Interest Income from Affiliate	2		7		(5)		4		27		(23)
Interest Expense	67		61		6		189		184		5
Income Before Income Taxes	208		189		19		628		582		46
Income Taxes	49		47		2		146		141		5
Net Income	$	159	$	142	$	17	$	482	$	441	$	41

Operating Revenues

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


	Three Months		Nine Months
Distribution price	$	(3)	$	(5)
Distribution volume (a)	—		18
PLR (b)	52		88
Transmission formula rate (c)	22		39


Other	(1)		(1)
Total	$	70	$	139

(a)The increase for the nine months ended September 30, 2025 was primarily due to weather and other higher usage.

(b)The increases were primarily the result of more PLR customers, higher prices and higher customer volumes.

(c)The increases were primarily due to returns on additional transmission capital investments.

Energy Purchases

Energy purchases increased $47 million for the three months ended September 30, 2025 compared with 2024, primarily due to higher PLR prices.

Energy purchases increased $78 million for the nine months ended September 30, 2025 compared with 2024, primarily due to higher PLR volumes of $35 million and higher PLR prices of $34 million.

Other Operation and Maintenance

Other operation and maintenance decreased $16 million for the three months ended September 30, 2025 compared with 2024, primarily due to lower storm costs.

Other operation and maintenance decreased $30 million for the nine months ended September 30, 2025 compared with 2024, primarily due to lower bad debts.

LG&E: Statement of Income Analysis

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


	Three Months						Nine Months
	2025		2024		$ Change		2025		2024		$ Change
Operating Revenues
Retail and wholesale	$	420	$	396	$	24	$	1,293	$	1,219	$	74
Electric revenue from affiliate	7		1		6		17		20		(3)
Total Operating Revenues	427		397		30		1,310		1,239		71
Operating Expenses
Operation
Fuel	97		75		22		254		228		26
Energy purchases	17		19		(2)		128		105		23
Energy purchases from affiliate	6		11		(5)		18		19		(1)
Other operation and maintenance	91		84		7		271		259		12
Depreciation	77		76		1		228		229		(1)
Taxes, other than income	13		13		—		39		38		1
Total Operating Expenses	301		278		23		938		878		60
Operating Income	126		119		7		372		361		11
Other Income (Expense) - net	8		3		5		16		9		7
Interest Income from Affiliate	—		1		(1)		—		1		(1)
Interest Expense	30		26		4		83		78		5
Income Before Income Taxes	104		97		7		305		293		12
Income Taxes	21		20		1		61		61		—
Net Income	$	83	$	77	$	6	$	244	$	232	$	12

Operating Revenues

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


	Three Months		Nine Months



Fuel and other energy purchases (a)	$	16	$	40



Volumes (b)	2		8
Off-system sales (c)	3		13
ECR (d)	7		5
Other	2		5
Total	$	30	$	71

(a)The increase for the three months ended September 30, 2025 was primarily due to higher recoveries of fuel expenses. The increase for the nine months ended September 30, 2025 was primarily due to higher recoveries of fuel expenses and energy purchases.

(b)The increase for the nine months ended September 30, 2025 was primarily due to weather.

(c)The increase for the nine months ended September 30, 2025 was primarily due to higher volumes.

(d)The increase for the three months ended September 30, 2025 was primarily due to a 2024 adjustment related to the ECR mechanism revenues.

Fuel

Fuel expense increased $22 million for the three months ended September 30, 2025 compared with 2024, primarily due to a $12 million increase in volumes primarily due to weather and a $9 million increase in commodity costs.

Fuel expense increased $26 million for the nine months ended September 30, 2025 compared with 2024, primarily due to an increase in commodity costs.

Energy Purchases

Energy purchases increased $23 million for the nine months ended September 30, 2025 compared with 2024, primarily due to a $12 million increase in volumes primarily due to weather and an $11 million increase in commodity costs.

Energy Purchases from Affiliate

Energy purchases from affiliate decreased $5 million for the three months ended September 30, 2025 compared with 2024, primarily due to lower volumes.

Other Operation and Maintenance

Other operation and maintenance increased $7 million for the three months ended September 30, 2025 compared with 2024, primarily due to higher IT costs.

Other Income (Expense) - net

Other income (expense) increased $5 million for the three months ended September 30, 2025 compared with 2024, due to $3 million of higher miscellaneous other income and $2 million of higher AFUDC equity.

Interest Expense

Interest expense increased $4 million for the three months ended September 30, 2025 compared with 2024, primarily due to increased borrowings.

KU: Statement of Income Analysis

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


	Three Months						Nine Months
	2025		2024		$ Change		2025		2024		$ Change
Operating Revenues
Retail and wholesale	$	524	$	498	$	26	$	1,548	$	1,479	$	69
Electric revenue from affiliate	6		11		(5)		18		19		(1)
Total Operating Revenues	530		509		21		1,566		1,498		68
Operating Expenses
Operation
Fuel	135		131		4		404		369		35
Energy purchases	6		7		(1)		20		19		1
Energy purchases from affiliate	7		1		6		17		20		(3)
Other operation and maintenance	101		103		(2)		303		306		(3)
Depreciation	102		102		—		305		302		3
Taxes, other than income	13		12		1		38		36		2
Total Operating Expenses	364		356		8		1,087		1,052		35
Operating Income	166		153		13		479		446		33
Other Income (Expense) - net	9		4		5		19		10		9
Interest Expense	38		35		3		108		102		6
Interest Expense with Affiliate	—		—		—		—		1		(1)
Income Before Income Taxes	137		122		15		390		353		37
Income Taxes	28		24		4		78		70		8
Net Income	$	109	$	98	$	11	$	312	$	283	$	29

Operating Revenues

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


	Three Months		Nine Months



Fuel and other energy purchases (a)	$	8	$	21



Volumes (b)	5		22
Off-system sales (c)	2		16
ECR	5		1
Other	1		8
Total	$	21	$	68

(a)The increase for the three months ended September 30, 2025 was primarily due to higher recoveries of fuel expenses and energy purchases from affiliate. The increase for the nine months ended September 30, 2025 was primarily due to higher recoveries of fuel expenses.

(b)The increase for the nine months ended September 30, 2025 was primarily due to weather.

(c)The increase for the nine months ended September 30, 2025 was primarily due to higher volumes.

Fuel

Fuel expense increased $4 million for the three months ended September 30, 2025 compared with 2024, primarily due to a $10 million increase in commodity costs, partially offset by a $6 million decrease in volumes primarily due to weather.

Fuel expense increased $35 million for the nine months ended September 30, 2025 compared with 2024, primarily due to a $19 million increase in volumes primarily due to weather and a $16 million increase in commodity costs.

Energy Purchases from Affiliate

Energy purchases from affiliate increased $6 million for the three months ended September 30, 2025 compared with 2024, primarily due to an increase in volumes.

Financial Condition

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

Liquidity and Capital Resources

(All Registrants)

The Registrants had the following at:


	PPL		PPL Electric		LG&E		KU
September 30, 2025
Cash and cash equivalents	$	1,102	$	13	$	515	$	341

Short-term debt	595		—		—		—
Long-term debt due within one year	1,455		—		390		414
Notes payable to affiliates			—		—		—

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

(All Registrants)

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


	PPL		PPL Electric		LG&E		KU
2025
Operating activities	$	2,081	$	719	$	538	$	647
Investing activities	(2,860)		(1,362)		(561)		(681)
Financing activities	1,559		632		522		354
2024
Operating activities	$	1,829	$	689	$	456	$	612
Investing activities	(1,944)		(1,240)		(327)		(463)
Financing activities	316		535		(143)		(151)
Change - Cash Provided (Used)
Operating activities	$	252	$	30	$	82	$	35
Investing activities	(916)		(122)		(234)		(218)
Financing activities	1,243		97		665		505

Operating Activities

The components of the change in cash provided by (used in) operating activities for the nine months ended September 30, 2025 compared with 2024 were as follows.


	PPL		PPL Electric		LG&E		KU
Change - Cash Provided (Used)
Net income	$	204	$	41	$	12	$	29
Non-cash components	54		(24)		2		27
Working capital	32		33		66		(13)

Other operating activities	(38)		(20)		2		(8)
Total	$	252	$	30	$	82	$	35

(PPL)

PPL's cash provided by operating activities in 2025 increased $252 million compared with 2024.

Net income increased $204 million between the periods and included an increase in non-cash components of $54 million.
The $32 million increase in cash from changes in working capital was primarily due to a decrease in net regulatory assets (primarily due to the timing of rate recovery mechanisms), a decrease in prepayments (primarily due to the timing of payments), an increase in accounts payable (primarily due to the timing of payments) and an increase in taxes payable (primarily due to the timing of payments), partially offset by an increase in accounts receivable (primarily due to the timing of payments).
The $38 million decrease in cash provided by other operating activities was driven primarily by an increase in other assets (primarily related to long-term cloud prepayments).

(PPL Electric)

PPL Electric's cash provided by operating activities in 2025 increased $30 million compared with 2024.

Net income increased $41 million between the periods and included a decrease in non-cash components of $24 million. The decrease in non-cash components was primarily due to a decrease in deferred income taxes and investment tax credits (primarily due to book versus tax plant timing differences).
The $33 million increase in cash from changes in working capital was primarily due to increases in taxes payable (primarily due to timing of payments), a decrease in net regulatory assets (primarily due to the timing of rate recovery mechanisms) and a decrease in prepayments (primarily due to the timing of payments), partially offset by an increase in accounts receivable (primarily due to the timing of payments).
The $20 million decrease in cash provided by other operating activities was driven primarily by an increase in noncurrent regulatory assets (primarily related to an increase in storm costs).

(LG&E)

LG&E's cash provided by operating activities in 2025 increased $82 million compared with 2024.

Net income increased $12 million between the periods.
The $66 million increase in cash from changes in working capital was primarily due to a decrease in accounts receivable (primarily due to weather), an increase in accounts payable (primarily due to timing of payments) and a decrease in fuel, materials and supplies (primarily due to a decrease in coal volume), partially offset by a decrease in current regulatory assets (primarily due to the timing of rate recovery mechanisms).

(KU)

KU's cash provided by operating activities in 2025 increased $35 million compared with 2024.

Net income increased $29 million between the periods and included an increase in non-cash components of $27 million, primarily due to an increase in deferred income taxes and investment tax credits (primarily due to book versus tax plant timing differences).
The $13 million decrease in cash from changes in working capital was primarily due to a decrease in net regulatory liabilities (primarily due to timing of regulatory mechanisms) and an increase in fuel, materials and supplies (primarily due to an increase in coal volume), partially offset by a decrease in accounts receivable (primarily due to weather).

Investing Activities

(All Registrants)

The components of the change in cash provided by (used in) investing activities for the nine months ended September 30, 2025 compared with 2024 were as follows.


	PPL		PPL Electric		LG&E		KU
Change - Cash Provided (Used)
Expenditures for PP&E	$	(923)	$	(262)	$	(234)	$	(218)





Notes receivable from affiliate	—		131		—		—
Other investing activities	7		9		—		—
Total	$	(916)	$	(122)	$	(234)	$	(218)

For PPL, the increase in expenditures for PP&E was due to an increase in project expenditures at PPL Electric, RIE, LG&E and KU. The increase in expenditures at PPL Electric was primarily due to increases in transmission and distribution projects. The increase in expenditures at LG&E was primarily due to Mill Creek Unit 5, Calvary transmission pipeline installation and the E.W. Brown battery storage project. The increase in expenditures at KU was primarily due to Mill Creek Unit 5.

For PPL Electric, the change in "Notes receivable from affiliate" activity resulted from payments received of $131 million from an affiliate. See Note 11 to the Financial Statements for further discussion of intercompany borrowings.

Financing Activities

(All Registrants)

PPL regularly analyzes and evaluates its capital structure and may explore potential transactions, including debt or equity purchases and/or exchanges from time to time through redemptions, open market purchases, private transactions, or otherwise, or seek to raise additional debt or equity capital, depending on market conditions.

The components of the change in cash provided by (used in) financing activities for the nine months ended September 30, 2025 compared with 2024 were as follows.


	PPL		PPL Electric		LG&E		KU
Change - Cash Provided (Used)
Debt issuance/retirement, net	$	1	$	(153)	$	700	$	700




Dividends	(36)		(15)		(10)		(12)

Capital contributions/distributions, net	—		(245)		85		73


Change in short-term debt, net	1,284		509		(25)		(47)

Net increase (decrease) in notes payable with affiliate	—		—		(77)		(201)
Other financing activities	(6)		1		(8)		(8)
Total	$	1,243	$	97	$	665	$	505

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

Credit Facilities

The Registrants maintain credit facilities to enhance liquidity, provide credit support and provide a backstop to commercial paper programs. Amounts borrowed under these credit facilities are reflected in "Short-term debt" on the Balance Sheets. At September 30, 2025, the total committed borrowing capacity under credit facilities and the borrowings under these facilities were:

External


	Committed Capacity		Borrowed		Letters of Credit and Commercial Paper Issued (c)		Unused Capacity
PPL Capital Funding Credit Facilities (a)	$	1,600	$	—	$	596	$	1,004
PPL Electric Credit Facility	750		—		1		749


LG&E Credit Facility	600		—		—		600
KU Credit Facility	600		—		—		600
Total Credit Facilities (b)	$	3,550	$	—	$	597	$	2,953

(a)Includes a $1.5 billion syndicated credit facility with a $250 million borrowing sublimit for RIE and a $1.25 billion sublimit for PPL Capital Funding. RIE’s borrowing sublimit is adjustable, at the borrowers’ option, from $0 to $600 million, with the remaining balance of the $1.5 billion available under the facility allocated to PPL Capital Funding. At September 30, 2025, PPL Capital Funding had $445 million of commercial paper outstanding and RIE had $151 million of commercial paper outstanding. RIE's obligations under the facility are not guaranteed by PPL.

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

(c)Commercial paper issued reflects the undiscounted face value of the issuance.

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

Intercompany (LG&E and KU)


	Committed Capacity		Borrowed		Commercial Paper Issued		Unused Capacity

LG&E Money Pool (a)	$	750	$	—	$	—	$	750
KU Money Pool (a)	650		—		—		650

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

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

Commercial Paper (All Registrants)

The Registrants, and PPL Capital Funding and RIE, maintain commercial paper programs to provide an additional financing source to fund short-term liquidity needs, as necessary. Commercial paper issuances, included in "Short-term debt" on the Balance Sheets, are supported by the respective Registrant's credit facility, with PPL Capital Funding and RIE’s issuances supported by PPL Capital Funding’s syndicated credit facility. The following commercial paper programs were in place at September 30, 2025:


	Capacity		Commercial Paper Issuances (b)		Unused Capacity
PPL Capital Funding (a)	$	1,600	$	445	$	1,155
RIE (a)	400		151		249
PPL Electric	750		—		750

LG&E	600		—		600
KU	600		—		600
Total PPL	$	3,950	$	596	$	3,354

(a)Issuances under the PPL Capital Funding and RIE commercial paper programs are supported by the PPL Capital Funding syndicated credit facility, which has a total capacity of $1.5 billion, currently with a $250 million borrowing sublimit for RIE and a $1.25 billion sublimit for PPL Capital Funding. PPL Capital Funding's Commercial paper program is also backed by a separate bilateral credit facility for $100 million.

(b)Commercial paper issued reflects the undiscounted face value of the issuance.

Long-term Debt (All Registrants)

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

(PPL)

Equity Security Activities

ATM Program

In February 2025, PPL entered into an equity distribution agreement, pursuant to which PPL may sell, from time to time, up to an aggregate of $2 billion of its common stock through an ATM Program, 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.

Common Stock Dividends

In August 2025, PPL declared a quarterly common stock dividend, payable October 1, 2025, of 27.25 cents per share. Future dividends, declared at the discretion of the Board of Directors, will depend upon future earnings, cash flows, financial and legal requirements and other factors.

Rating Agency Actions

(All Registrants)

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

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

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

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

Ratings Triggers

(PPL, LG&E and KU)

Various derivative and non-derivative contracts, including contracts for the sale and purchase of electricity and fuel, commodity transportation and storage, and interest rate instruments, contain provisions that require the posting of additional collateral or permit the counterparty to terminate the contract, if PPL's, LG&E's or KU's or their subsidiaries' credit rating, as applicable, were to fall below investment grade. See Note 14 to the Financial Statements for a discussion of "Credit Risk-Related Contingent Features," including a discussion of the potential additional collateral requirements for PPL for derivative contracts in a net liability position at September 30, 2025.

(All Registrants)

For additional information on the Registrants' liquidity and capital resources, see "Item 7. Combined Management's Discussion and Analysis of Financial Condition and Results of Operations," in the Registrants' 2024 Form 10-K.

Risk Management (All Registrants)

Market Risk

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

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

Interest Rate Risk

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

The following interest rate hedges were outstanding at September 30, 2025.


	Exposure Hedged		Fair Value, Net - Asset (Liability) (a)		Effect of a 10% Adverse Movement in Rates (b)		Maturities Ranging Through
PPL and LG&E


Economic hedges
Interest rate derivatives (c)	$	64	$	(5)	$	(1)	2033

(a)Includes accrued interest, if applicable.

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

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

The Registrants are exposed to a potential increase in interest expense and to changes in the fair value of their debt portfolios. The estimated impact of a 10% adverse movement in interest rates on the fair value of debt at September 30, 2025 is shown below.


	10% Adverse Movement in Rates on Fair Value of Debt
PPL	$	727
PPL Electric	288
LG&E	137
KU	177

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.

Inflation and Supply Chain Related Risk

PPL and its subsidiaries continue to monitor the impact of inflation and supply chain disruptions. PPL and its subsidiaries monitor the cost of fuel, construction, regulatory and environmental compliance costs and other costs, including as a result of tariffs. Mechanisms are in place to mitigate the risk of inflationary effects and supply chain disruptions, to the extent possible, but increased costs and supply chain disruptions may directly or indirectly affect our ongoing operations. These mechanisms include pricing strategies, productivity improvements and cost reductions in order to ensure that the Registrants are able to procure the necessary materials and other resources needed to maintain services in a safe and reliable manner, and to invest in infrastructure consistent with the capital expenditure plan. For additional information see "Forward-looking Information” at the beginning of this report and “Item 1A. Risk Factors" of the Registrants' 2024 Form 10-K.

Credit Risk

See Notes 13 and 14 to the Financial Statements in this Form 10-Q and "Item 7. Combined Management's Discussion and Analysis of Financial Condition and Results of Operations - Financial Condition - Risk Management - Credit Risk" in the Registrants' 2024 Form 10-K for additional information.

Related Party Transactions (All Registrants)

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

Acquisitions, Development and Divestitures (All Registrants)

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

Environmental Matters (All Registrants)

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

See "Environmental Matters" in Item 1. "Business" in the Registrants' 2024 Form 10-K for information about environmental laws and regulations affecting the Registrants' business. See "Financial Condition - Liquidity and Capital Resources - Forecasted Uses of Cash - Capital Expenditures" in "Item 7. Combined Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Registrants' 2024 Form 10-K for information on projected environmental capital expenditures for 2025 through 2027. See "Legal Matters" in Note 10 to the Financial Statements for a discussion of the more significant environmental claims. See Note 15 to the Financial Statements for information related to the impacts of CCRs on AROs.

The information below represents an update to “Item 1. Business – Environmental Matters” in the Registrants' 2024 Form 10-K.

(PPL, LG&E and KU)

EPA Deregulatory Initiative

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

Air

NAAQS

The Clean Air Act has a significant impact on the operation of fossil fuel generation plants. The Clean Air Act requires the EPA periodically to establish and review NAAQS for six pollutants including ozone (contributed to by nitrogen oxide emissions) and particulate matter, which are particularly relevant for fossil fuel generation plants. On February 2, 2024, the D.C. Circuit Court granted the EPA’s motion for voluntary remand, without vacatur, of the ozone rule, which was under legal challenge. The EPA will complete a new review to incorporate new studies and updated analyses to determine the adequacy of the existing ozone standard. On March 6, 2024, the EPA finalized revisions to the particulate matter standard that lowers the primary standard for fine particulates. Several states and trade groups challenged the EPA’s finalized revisions to the particulate matter standard in the D.C. Circuit Court. In March 2025, the EPA announced that it would reconsider the revised fine particulate standard. Nonattainment designations for counties in which LG&E and KU generation is located, including Jefferson County, Kentucky, could potentially require additional particulate matter and nitrogen oxide reductions from sources including LG&E’s Mill Creek Station, and more stringent requirements for new generation. PPL, LG&E, and KU are unable to predict future implementation actions or the outcome of future evaluations by the EPA and the states with respect to the NAAQS standards.

In March 2021, the EPA released final revisions to the Cross-State Air Pollution Rule (CSAPR), aimed at ensuring compliance with the 2008 ozone NAAQS and providing for reductions in ozone season nitrogen oxide emissions for 2021 and subsequent years. In March 2023, the EPA released a final Federal Implementation Plan under the Good Neighbor provisions of the Clean Air Act providing for significant additional nitrogen oxide emission reductions for compliance with the revised 2015 ozone NAAQS. The reductions in Kentucky state-wide nitrogen oxide budgets were scheduled to commence in 2023, with the largest reductions planned for 2026. The rules provide for reduced availability of nitrogen oxide allowances that have historically permitted operational flexibility for fossil units and could potentially result in constraints that may require implementation of additional emission controls or accelerate implementation of lower emission generation technologies. In June 2024, the U.S. Supreme Court issued a stay of the Good Neighbor Plan while the D.C. Circuit Court considers legal challenges to the rule. On December 10, 2024, EPA published in the Federal Register a supplement to the record. On December 6, 2024, the U.S. Court of Appeals for the Sixth Circuit vacated and remanded the EPA’s disapproval of Kentucky’s state implementation plan for the ozone NAAQS. In March 2025, the EPA announced that it would reconsider the Good Neighbor Plan. PPL, LG&E, and KU are monitoring ongoing legal and regulatory developments.

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

Modification of Mercury and Air Toxics Standards

In 2012, the EPA issued the Mercury and Air Toxics Standards (MATS) rule requiring reductions in mercury and other hazardous air pollutants from fossil fuel-fired power plants. LG&E and KU installed significant controls to achieve compliance with MATS and other rules. On May 7, 2024, the EPA issued a final rule increasing the stringency of MATS and further reducing emissions of certain hazardous air pollutants to reflect perceived developments in control technologies. Legal challenges to the rule have been filed in the D.C. Circuit Court. PPL, LG&E, and KU have reviewed the final rule and do not expect significant operational changes or additional controls to be required. On June 17, 2025, the EPA proposed in the Federal Register to repeal the 2024 MATS revisions except for the Particulate Matter Continuous Emission Monitoring System testing criteria. The EPA intends to finalize the rule revisions by the end of the 2025 calendar year.

Greenhouse Gas Standards

On May 9, 2024, the EPA issued a final rule under Section 111 of the Clean Air Act, which establishes performance standards and emissions limits aimed at reducing GHG emissions from certain new, existing, and modified fossil fuel-fired electric generating units (EGUs). In the final rule, the EPA announced it would set performance standards for existing natural gas-fired turbines in a future rule. The standards require phased implementation of carbon mitigation technologies including state-of-the-art efficiency requirements, carbon capture and sequestration, and natural gas co-firing. New natural gas EGUs would be immediately subject to the stricter efficiency standard. Legal challenges to the rule have been filed in the D.C. Circuit Court. PPL, LG&E, and KU are unable to predict the impact of new GHG reduction requirements until completion of a comprehensive review and resolution of related legal and regulatory proceedings. While the impact of new GHG reduction requirements on operations and financial results of operations could potentially be substantial, the cost of complying with such requirements is expected to be subject to rate recovery. On June 17, 2025, the EPA proposed in the Federal Register two options for repeal of the 2024 standard. In the first proposal, the EPA would determine that EGU emissions of greenhouse gases do not pose an endangerment to the health and welfare of the public and repeal the 2024 and 2015 standards for EGUs. Under an alternate proposal, the EPA would repeal the 2024 standards for existing coal, natural-gas and oil-fired steam generating units along with most standards for new combustion turbines. On July 29, 2025, the EPA proposed revocation of the 2009 endangerment finding which provides the basis for regulating GHG emissions. This proposal would leave in place efficiency standards for new combustion turbines. The EPA intends to finalize the rule changes by the end of the 2025 calendar year.

New Accounting Guidance (All Registrants)

There has been no new accounting guidance adopted in 2025. See Note 17 to the Financial Statements for discussion of significant accounting guidance pending adoption as of September 30, 2025.

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

Financial condition and results of operations are impacted by the methods, assumptions and estimates used in the application of critical accounting policies. The following table summarizes the accounting policies by Registrant that are particularly important to an understanding of the reported financial condition or results of operations and require management to make estimates or other judgments of matters that are inherently uncertain. See "Item 7. Combined Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Registrants' 2024 Form 10-K for a discussion of each critical accounting policy.


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

PPL Corporation

PPL Electric Utilities Corporation

Louisville Gas and Electric Company

Kentucky Utilities Company

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