The PPL Corporation held a conference call to discuss their first quarter 2024 financial results. The call was led by Vice President of Investor Relations, Andy Ludwig, and included updates from President and CEO Vince Sorgi and Chief Financial Officer Joe Bergstein. The presentation included forward-looking statements and non-GAAP measures, with a focus on first quarter earnings of $0.42 per share, or $0.54 per share when adjusted for special items. This represents a 12.5% increase from the previous year's ongoing earnings of $0.48 per share.

The company saw an increase in returns and sales due to milder weather last year, and they are confident in meeting their earnings forecast for 2024. They are also making infrastructure improvements to improve reliability and move towards cleaner energy while keeping costs affordable for customers. The company has a long-term plan for growth and efficiency, with a target of $175 million in annual savings by 2026. They also received positive outcomes for their annual infrastructure and safety plans from the Rhode Island PUC, which approved $326 million in planned spending and investments.

PPL Electric Utilities has filed a petition with the Pennsylvania PUC to raise the distribution system improvement charge cap from 5% to 9% in order to accelerate the repair and replacement of aging infrastructure. This change is necessary to maintain and improve reliability in the face of more frequent and powerful storms. The company also filed a default service plan that focuses on energy affordability and includes modifications to lessen price volatility and support renewable generation. PPL Electric used data analytics to optimize the procurement strategy for affordability.

PPL expects their modifications to result in lower supply costs for customers from 2025-2029 and is awaiting a decision from the PA PUC. They are also advancing plans to support data center development in Pennsylvania and Kentucky, citing their capacity, reliability, availability of land, and proximity to large markets as advantages. These projects could potentially bring significant upside to PPL's business plan through required investments in transmission and returns on related rate base through the FERC formula rate. PPL estimates each data center would require $50-150 million of capital investment from their end.

The company expects a small increase in EPS from their $125 million investment in PPL. They are also seeing potential for growth in Kentucky due to data centers, which could lead to additional transmission and generation investments. The company is actively engaged in supporting the expansion of data centers. The EPA recently announced new rules for fossil fuel-fired power plants, including stricter standards for carbon pollution and wastewater discharge.

The coal combustion residuals rule and the Mercury and Air Toxics Standards rule will likely be challenged in court and could lead to resource adequacy concerns and additional environmental capital investments. LG&E and KU have issued a request for proposal for renewable energy to address these concerns and expect to file their triennial Integrated Resource Plan later this year. The IRP will review electricity supply and demand and update load forecasts for the service territories.

PPL's first quarter GAAP earnings were $0.42 per share, with special items of $0.12 per share primarily due to integration and related expenses. Adjusting for these special items, earnings from ongoing operations were $0.54 per share, an improvement of $0.06 per share compared to the same quarter in 2023. This was driven by returns on capital investments, higher sales volumes, and lower operating costs, partially offset by higher interest expense. PPL remains on track to achieve at least the midpoint of their 2024 earnings forecast of $1.69 per share. They also issued $1.2 billion of debt in two separate offerings during the quarter, taking advantage of lower rates and derisking for the remainder of the year.

In March, PPL issued $500 million of senior unsecured notes at Rhode Island Energy, which was the first debt offering since their acquisition. The company's balance sheet remains strong and they have limited near-term refinancing risk. PPL's Kentucky, Pennsylvania, and Rhode Island segments saw increased results, while Corporate and Other saw a slight decrease. Overall, the company's financial performance for the quarter was strong and in line with their plan.

The speaker concludes his prepared remarks and hands the call back to Vince. Vince thanks Joe and mentions their strong performance in the first quarter, keeping them on track to meet their commitments to shareowners. They are well positioned to achieve or exceed their 2024 earnings guidance and are on track to invest $3.1 billion in infrastructure improvements this year. The newly issued EPA regulations pose some concerns but also provide upside to their long-term outlook. They are making progress in integrating Rhode Island Energy and remain focused on driving efficiency. The first question from a caller is about the data center side and the timing and progress of the 3 gigawatts in Pennsylvania.

The speaker discusses the firmness of agreements for 3 gigawatts of data center projects and mentions that they are still working through the process with multiple companies. They have signed agreements and the in-service dates for these projects are in 2026, 2027, and 2028. The speaker also mentions that if the DSIC waiver process is unsuccessful, it could potentially impact the timing of their next rate case in Pennsylvania, but not their distribution capital plans. The next question is about data center opportunities in the transmission investment, and the speaker is asked to provide more information on whether there will be new generation or additional generation attached to these contracts.

The speaker discusses the time line for the construction of data centers in Pennsylvania and Kentucky, mentioning that they have signed agreements and are currently spending money on development. They expect to be ready for a 2026 launch date. The investment opportunity for these data centers ranges from $25 million to $150 million, with the biggest opportunity being the need for additional generation in Kentucky. The current reserve margins in Kentucky are at 23%, but with the solar projects being built, they expect to be over 25%.

The company is working on an IRP to update their load forecast and determine if they need additional generation. They have a spot in the queue for a second CCGT from a previous solicitation. The transmission agreement in Pennsylvania is not tied to a specific generation source. There is no specific timeline for the DSIC application, but a decision is expected by the end of the year.

The speaker mentions that they requested the DSIC decision to be made before the end of the year so they could apply it for 2025. They also thank James for his helpful data center information and congratulate the company on a great quarter. The next question is from Steve Fleishman who asks about the significance of the deposits for pursuing data centers. The speaker declines to give details but mentions that the agreements in Pennsylvania allow them to start spending and they are confident in their ability to meet in-service deadlines. They expect to have at least one data center in their service territories and possibly more. Data center growth is also being seen in other parts of the PJM market.

Vince Sorgi discusses the potential need for more transmission in PJM due to the growth of data centers. He mentions a previous FERC 1000 process to build in the Dominion Zone and suggests that data center hubs may start to form around the country, creating a demand for transmission. He also briefly mentions the DSIC waiver filing in Pennsylvania and the possibility of settling with the commission. The call ends with a reminder about the upcoming Kentucky Derby.

The speaker concludes the conference call by thanking everyone for attending and invites them to enjoy the race. The operator then thanks the participants and ends the call.

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