The operator introduces the PPL Corporation Fourth Quarter 2023 Earnings Conference Call, followed by a welcome from Vice President of Investor Relations, Andy Ludwig. The presentation contains forward-looking statements and will refer to non-GAAP measures. PPL President and CEO Vince Sorgi expresses excitement for the call and highlights the company's strong performance in 2023.

In the past year, the company faced challenges but was able to meet them and fulfill promises. They delivered electricity and natural gas safely and reliably to their customers, achieved top quartile reliability, and exceeded financial commitments. They also executed planned capital spending and exceeded their annual O&M savings target. The company also saw success in other areas, including securing regulatory approvals for generation replacement investments in Kentucky.

The KPSC's decision allows us to meet our customers' future energy needs while advancing a cleaner energy mix in the state. We have also received approval for infrastructure plans in Rhode Island and will be implementing advanced metering functionality. Our focus on execution, disciplined investment strategy, and experienced leadership have led to successful integration milestones and progress towards our Utilities of the Future Strategy. Looking ahead, we have announced our updated business plan and ongoing earnings forecast for 2024, which shows continued growth and a quarterly common stock dividend of $0.2575 per share.

The company has announced a 7.3% increase in quarterly dividends and has extended their EPS and dividend growth targets through 2027. They plan to invest $14.3 billion in grid reliability and a cleaner energy mix, which is expected to drive average annual rate base growth of 6.3%. The company's balance sheet remains strong and they are on track to achieve their target of $175 million in annual O&M savings by 2026. There are no plans for base rate case filings in 2024 in Pennsylvania, Kentucky, or Rhode Island, but there may be filings in the first half of 2025 for Kentucky and late 2025 for Rhode Island. The company does not plan to file for a base rate case in Pennsylvania before 2026.

The DSIC mechanism in Pennsylvania has been effective in supporting long-term infrastructure investment, but there is a need for increased investment to improve reliability. The company plans to file a request to modify the DSIC mechanism to support accelerated replacement of aging infrastructure. Their focus is on maintaining affordability for customers and they will continue to evaluate the need for future rate cases. The company's Utilities of the Future Strategy includes updating design criteria, hardening systems against climate change and cyber threats, and investing in technology and R&D to meet customers' energy needs and achieve net zero.

The Utilities of the Future requires significant investments and changes across the entire business to support a net zero economy. With a projected increase in electricity demand and rapid retirement of aging fossil fuel plants, there is a need for reliable and dispatchable generation capacity. However, current technology is not yet proven and scalable enough to achieve net zero carbon emissions by 2050. The industry needs to cut the timeframe for commercializing new technologies in half to meet this goal.

The author emphasizes the importance of leveraging existing resources, such as natural gas, to reduce carbon footprint and maintain reliability in the energy transition. They also mention the need for efficiency to keep costs affordable for customers. The company's Utilities of the Future strategy and generation transition plan in Kentucky are cited as examples of their approach to this challenge. The author concludes by stating their commitment to leading the way in the energy transition and outlines their priorities for 2024.

PPL's 2024 priorities include advancing their Utilities of the Future Strategy, achieving earnings per share forecast, executing infrastructure investments, delivering on O&M savings targets, completing the integration of Rhode Island Energy, and exiting all remaining tranches and service agreements with National Grid. They are confident in their strategy and ability to execute it. In the fourth quarter of 2023, PPL's GAAP earnings were $0.15 per share, with special items of $0.25 per share. Adjusting for these items, earnings from ongoing operations were $0.40 per share, driven by returns on capital investments and lower O&M expenses, offset by lower sales volumes due to mild weather.

In the fourth quarter of 2023, weather had a negative impact of $0.02 per share on the company's results, but on an annual basis, the company's GAAP earnings were $1 per share. Adjusted for special items, the ongoing earnings for 2023 were $1.60 per share, a 13% increase from the previous year. The company's teams were able to execute their plan and achieve their financial goals despite adverse weather conditions, demonstrating their ability to deal with adversity. The Pennsylvania Regulated segment saw an increase of $0.04 per share, while the Kentucky and Rhode Island segments also saw improvements. Corporate and other results remained flat.

In 2023, PPL saw significant growth following their strategic repositioning in 2022. Despite challenges such as mild weather and storms, they outperformed their own targets and achieved over 8% growth. Moving forward, they are on track to continue this growth trajectory, with a forecasted midpoint of $1.69 per share in 2024 and an extension of their 6% to 8% growth targets to 2027. This is supported by their updated capital investment plan, which is discussed in more detail on Slide 13.

The expected increase in results for our Pennsylvania, Kentucky, and Rhode Island segments in 2024 is due to various factors such as higher sales volume, lower O&M, and higher capital investment rider revenue. However, corporate and other results are projected to decrease due to higher interest expense. The company plans to invest $14.3 billion over the next four years to improve service and customer experience, with a focus on grid modernization, transmission networks, and natural gas safety. This represents a $2.4 billion increase from the previous four-year plan, with most of the increase expected in Pennsylvania and Kentucky. The company expects significant investment needs until the end of the decade.

The company plans to invest nearly $1.2 billion in Pennsylvania, $1.8 billion in Kentucky, and over $700 million in Rhode Island for transmission and distribution enhancements, generation replacement, and grid modernization. This is expected to result in an annual rate base growth of 6.3% from 2023 to 2027, with a focus on reducing coal generation and increasing investments in electric T&D networks. The company remains committed to balancing customer affordability and shareholder value through rate base growth and operating efficiencies.

PPL has announced an increase in their quarterly cash dividend, aligning with their projected earnings growth and long-term targets. Their strong balance sheet and limited refinancing risk allow them to maintain strong credit metrics and fund their growth without needing equity. They have already executed a portion of their financing plan for 2024 and plan to focus on funding utility capital plans with operating company debt. They also plan to be in the market for Rhode Island with their first debt offering since the acquisition.

During the call, PPL Corporation's CFO Joe Bergstein stated that there are no current plans for debt issuances in Kentucky or a PPO capital funding this year, but the company will continue to evaluate these options based on market conditions and their strong financial position. CEO Vince Sorgi expressed confidence in the company's strategy and leadership team, and emphasized their commitment to delivering long-term earnings growth and a safe, reliable, affordable, and sustainable energy future. During the Q&A session, an analyst asked about the company's transmission plans in Pennsylvania, which have seen a $200 million increase.

During an earnings call, Joe Bergstein and Shar Pourreza asked about the increase in transmission needs and transfer capability across utilities in Eastern PJM and EMAC, and how much of it is tied to the recent RTEP Window 3 awards. Joe Bergstein responded that about half of the increase is driven by those awards. Shar Pourreza also asked about the deferred CPCN process for a second CCGT in Kentucky and if it could be revisited and potentially start landing in the outer years of the latest plan. Vince Sorgi confirmed that they plan to file an updated IRP this year and a CPCN filing in a couple of years to have the plant in service by 2030. Durgesh Chopra then asked for more information on what they plan to do in Pennsylvania.

The speaker is discussing the regulatory environment in the state and the company's plans to amend their DSIC mechanism. They have already filed a petition to modify their LTIP plan and are proposing to increase it from $500 million to $800 million. They also plan to include new programs and projects for predictive failure technology and distribution reliability. The parties have 30 days to file comments on their LTIP filing and the company has notified the PUC of their intention to file a DSIC waiver request.

The company is working on a request to increase the cap on the DSIC and expects to file it soon. They are also seeing data center activity in their territories and are working with Talen to ensure reliability for a specific data center near the Susquehanna nuclear plant. They have strong reliability in their transmission side of the business, making their territories attractive for data centers.

The company has inexpensive land and available capacity on the transmission network in both PA and Kentucky, making it attractive for data center companies. They are actively working with these companies, but have not included them in their load forecast yet. The grid in Kentucky is getting tighter, causing the company to reassess their plans for coal plant retirements and new gas plant additions. Data center providers prioritize reliability of power over the source of energy, but some may also prefer green energy sources.

The company exceeded its 2023 O&M target by $20 million, driven by the acceleration of initiatives from 2024. The company has initiative owners and set milestones and KPIs for these projects.

The company has seen success in accelerating their process and is confident in achieving their financial goals for next year and overall. They will continue to focus on efficiency and affordability for customers. The company will also consider the outcomes of rate cases for their peers as they plan their own rate cases, but their decision will not be solely based on this factor. They have no rate cases planned for this year and are likely to start in 2025, giving them time to assess the regulatory environment and outcomes for their peers. The analyst congratulates the company on their success in the previous year.

During the conference call, Mizuho's Anthony Crowdell asked a few questions regarding load growth forecast, the DSIC filing in Pennsylvania, and the financing plans for 2026. Joe Bergstein, the operator, answered that they are assuming a 50 basis points load growth and that if the DSIC filing does not get approved, they have other offsets to maintain their growth targets. Vince Sorgi added that the DSIC filing would enable them to stay out longer in Pennsylvania and make investments, but they are comfortable managing if it does not get approved. On Slide 17, Crowdell asked about the financing vehicles and Joe Bergstein replied that they will assess it closer to the time and their assumption is to refinance them.

Vince Sorgi and Anthony Crowdell discuss FFO-to-debt and the company's plan for the future. They are currently comfortably in the 16% to 18% range and expect to operate around the midpoint. They also mention opportunities with the pending offshore wind solicitations, including an RFP in Rhode Island and enhancements to the transmission grid to handle the offshore wind load.

The company is discussing a joint venture with Wind Grid to provide wet transmission solutions in Rhode Island and New England for offshore wind. They are closely monitoring regulations that could limit the eligibility of the ITC credit for wet transmission, which would raise costs for the offshore wind industry. The company is engaging with policymakers to improve the final regulations and bring down the overall cost of offshore wind. The potential for this venture is not currently included in the company's growth projections.

In closing, Vince Sorgi thanks the participants for joining the conference and highlights the strong end to 2023. He also mentions the Utility of the Future strategy and the company's strong balance sheet and dividend policy. The conference has now concluded.

This summary was generated with AI and may contain some inaccuracies.