The paragraph is an introduction to the PPL Corporation's Third Quarter 2024 Earnings Conference Call. It includes greetings from the operator and Andy Ludwig, the Vice President of Investor Relations, who states that the call includes updates from President and CEO Vince Sorgi, and CFO Joe Bergstein, followed by a Q&A session. Ludwig highlights that the presentation contains forward-looking statements and cautions that actual results may vary. The focus is on third-quarter financial results, with PPL reporting GAAP earnings of $0.29 per share and adjusted ongoing earnings of $0.42 per share. Due to strong year-to-date performance, the company has narrowed its 2024 ongoing earnings forecast to $1.67 to $1.73 per share.

The company increased its earnings per share guidance and is on track with its 2024 priorities, including completing $3.1 billion in infrastructure improvements and achieving significant operational savings compared to 2021. It projects 6-8% annual earnings and dividend growth through 2027 and plans $14.3 billion in capital improvements from 2024 to 2027. The company also aims for $175 million in annual operational savings by 2026. Additionally, LG&E and KU submitted their updated Integrated Resource Plan to the Kentucky Public Service Commission, analyzing various factors to guide resource planning, with 300 potential scenarios considered.

The paragraph discusses the latest Integrated Resource Plan (IRP) analysis, highlighting increased demand forecasts and rising costs for new supply-side resources compared to the 2021 IRP. The mid-load scenario anticipates a 1.5% annual load growth through 2039, with a notable 3% growth through 2032, driven significantly by data center loads. Scenarios for data center growth range from 0 to nearly 2 gigawatts by 2032, with the mid-load assuming over 1 gigawatt. The cost of new generation, excluding batteries, has risen sharply, enhancing the value of existing resources and influencing the recommended generation mix. For the first time, battery storage costs, including tax incentives, are lower than new combustion turbines, leading to a recommendation of 900 megawatts of battery storage. Expected solar projects may not proceed due to increased costs. Environmental regulations add uncertainty as several are under current federal court scrutiny.

The paragraph outlines an Integrated Resource Plan (IRP) with four environmental regulation scenarios and assumes completion of previously approved resource and retirement plans by 2028, except some solar PPAs. It includes retiring 650 megawatts of coal and peaking units, while adding new natural gas, solar, and battery storage capacity. The recommended plan involves a "no-regrets" strategy, preparing for potential high economic growth or CO2 regulation scenarios. This projects building 2,700 megawatts of generation from 2028 to 2035, including new natural gas plants, additional battery storage, and solar energy. It also highlights the necessity for new environmental controls at specific coal plants for regulatory compliance.

The enhanced solar plan proposes accelerating solar energy additions to 1,000 megawatts by 2032, instead of 500 megawatts by 2035, to address potential demand and price declines. Additional generation needs are estimated at 2,700 to 3,200 megawatts, requiring $6 to $7 billion in investments through 2035. The company plans to engage with the Kentucky Public Service Commission (KPSC) and may file a CPCN request early next year for immediate generation needs. Additionally, data center interest in Pennsylvania and Kentucky is growing, with Pennsylvania seeing over 39 gigawatts in the queue, including 8 gigawatts in advanced planning stages, suggesting $600 to $700 million in future capital needs. These projects are reflected in PJM's forecast of load additions, where PPL Electric is projected to have the second highest peak load increase by the decade's end.

The paragraph highlights the ongoing development of "front of the meter" data center projects in the PPL service area, noting that some may be duplicates as developers assess multiple sites. Projects in advanced planning have signed agreements and are undergoing or have completed PJM's review process. Costs for these projects are reimbursable by developers, even if not completed. The connection of data centers is expected to reduce transmission costs for residential customers by nearly 10% for the first gigawatt of demand, equating to about $3 per month in savings based on current rates. Additional savings will depend on various factors. In Kentucky, there are 400 megawatts in advanced planning, with potential for growth to 1 gigawatt, and active requests now totaling nearly 3 gigawatts, up from 2 gigawatts. Transmission upgrades in Kentucky will add to the capital plan, with significant investments needed for any incremental generation there.

The paragraph discusses LG&E and KU's response to Hurricane Helene, which caused significant power outages. They successfully restored power to most customers within days and highlighted the support received from crews in other regions. The company has requested regulatory asset treatment for $11 million in restoration costs. Additionally, LG&E and KU sent workers to aid other states impacted by Hurricanes Helene and Milton. They also filed a request with the KPSC to recover $125 million in retirement costs for the Mill Creek 1 facility, set to retire soon, through the Retired Asset Recovery Rider.

The paragraph discusses several updates and initiatives by PPL Electric Utilities. It mentions a cost recovery plan over a 10-year period, which includes a return on investments at utilities based on a weighted average cost of capital, possibly resulting in a slight credit for customers starting May 2025. In Pennsylvania, there is a waiver petition to increase the revenue cap, with a decision anticipated by early 2025. Additionally, new residential rates effective December 2023 will be about 2% lower than the previous winter. PPL Electric is focused on affordability and has reached a settlement regarding its default service program and procurement plan for electricity from mid-2025 to mid-2029, aiming to stabilize prices and support renewable growth. A decision on this settlement is expected by the end of the year.

In the third quarter, PPL successfully integrated Rhode Island Energy, having concluded over 130 transition services from National Grid since acquiring it in May 2022. This integration involved collaborative efforts from teams across various states, including Rhode Island, Pennsylvania, and Kentucky. The Rhode Island Public Utilities Commission approved PPL's winter last resort service rates, resulting in an 8% decrease for non-shopping residential customers starting October 1. Joe Bergstein then reported that PPL's third quarter GAAP earnings were $0.29 per share, slightly down from $0.31 per share in Q3 2023, with special items due to integration costs affecting earnings. Adjusted earnings from ongoing operations were $0.42 per share, a $0.01 decrease from Q3 2023, with higher capital returns and sales volumes in Kentucky offset by increased costs. Weather conditions were slightly favorable in Kentucky, with cooling degree days up by 13%.

Through the first nine months of 2024, the company reported GAAP earnings of $0.96 per share, up from $0.85 per share the previous year, and earnings from ongoing operations of $1.34 per share, an improvement of $0.14 per share. The Kentucky segment remained stable, while the Pennsylvania segment saw a slight decrease due to higher operational costs, and the Rhode Island segment experienced a slight increase due to a favorable tax adjustment. Corporate results decreased slightly due to higher interest expenses. The company issued $750 million in senior notes at a 5.25% rate, with strong demand attributed to its solid credit position.

The article paragraph discusses PPL's strong financial performance and outlook, indicating they are on track to exceed their 2024 earnings forecast with a midpoint estimate of $1.70 per share. The company is well-positioned for long-term growth, with plans for significant capital investments to advance their "Utility of the Future" strategy. They have created financial flexibility to support these investments while continuing to meet earnings growth targets. PPL has successfully integrated Rhode Island Energy, maintained grid reliability, responded effectively to storms, and advanced clean energy initiatives. The leadership expresses confidence in their strategy and is optimistic about opportunities in 2025, inviting questions from stakeholders.

In the paragraph, Shar Pourreza from Guggenheim Partners asks Vince Sorgi about the current status of resource adequacy issues concerning Eastern wires companies. Sorgi acknowledges that there is a delay in the capacity auction and emphasizes the importance of Pennsylvania taking control of the situation rather than being slowed down by the auction delay. He mentions that the auction delay may lead to improvements on the supply side and an updated load forecast, especially considering the increased demand from data centers. However, Sorgi cannot predict whether the capacity prices in the upcoming auction for the 2026-2027 period will be lower than those of the 2025-2026 period due to the various factors affecting supply and demand.

The paragraph discusses anticipated legislation expected in early 2025 aimed at addressing resource adequacy issues in the state's energy sector. It highlights ongoing discussions with key stakeholders and mentions a scheduled technical conference by the Public Utilities Commission (PUC) to explore resource adequacy. The text outlines potential legislative options, such as permitting utilities to invest in new generation and offering low-interest loans or incentives for long-term power purchase agreements. The speaker emphasizes the importance of allowing utilities to invest directly in generation to address resource adequacy gaps, while acknowledging that new legislation may incorporate some or all of these ideas.

The paragraph is a discussion between Vince Sorgi and others about the capital requirements and strategy for data centers in Kentucky compared to Pennsylvania. Vince explains that Kentucky requires less capital investment in transmission because of existing generation sites and supply constraints. Instead, the main capital requirement is for generation, as detailed in the updated Integrated Resource Plan (IRP). The conversation then shifts to David Arcaro from Morgan Stanley, who asks about the potential elements of the first Certificate of Public Convenience and Necessity (CPCN) related to the IRP in Kentucky, including the possibility of a gas plant, to which Vince suggests that the CPCN could be filed as early as the first quarter following the IRP.

The paragraph discusses the need to advance the development of a second CCGT (Combined Cycle Gas Turbine) to be operational by 2030 due to increasing electricity demand, particularly from a new data center. The plan includes filing for a CPCN (Certificate of Public Convenience and Necessity) to address this demand. Some of the associated energy infrastructure, like batteries for dispatchable generation, may come online by 2028 to meet immediate demand increases. David Arcaro asks about the certainty of data center demand growth in Kentucky, given it's a significant investment driver. Vince Sorgi responds, noting that the data center is not the only large demand source, especially with recent economic development in the region.

The paragraph discusses the growing demand for data centers, with 400 megawatts in advanced discussions potentially increasing to a gigawatt. The speaker, Vince Sorgi, expresses confidence in achieving this goal. Jeremy Tonet from JPMorgan inquires about the timing of formal deal announcements and when capital expenditure (CapEx) will begin. Sorgi suggests that they are close to making initial announcements, which could lead to further declarations due to competitive pressures among hyperscalers. He anticipates the first major announcement by the end of the year, with more potential developments in 2025.

The paragraph discusses the constructive relationship between PPL and the commission in Kentucky. Vince Sorgi expresses confidence in maintaining this positive relationship despite changes in the commission's composition, including new appointments. He highlights the continued support and depth of their team's analyses, which have been regarded as a model by the commission. The conversation ends with Jeremy Tonet acknowledging the situation positively before the operator introduces a question from Durgesh Chopra, who compliments PPL's strong balance sheet, although he does not want to pre-empt the upcoming Q4 update.

In the paragraph, Vince Sorgi and Joe Bergstein discuss their company's approach to financial planning and capital expenditure (CapEx) needs. Joe indicates that they are currently evaluating their financing needs as part of their business planning process, considering factors such as additional capital requirements for grid modernization, resilience to severe weather, digital transformation, and supporting load growth. The company has been consistently identifying more capital spending, leading to growth in their rate base by about 100 basis points annually. Joe assures that their strong credit position allows flexibility in their financial planning to maximize shareholder value while achieving earnings growth targets, despite the expected additional capital demands. Durgesh Chopra, the questioner, highlights that some industry peers have decreased dividend growth to support higher earnings per share (EPS) growth.

The paragraph involves a discussion among company representatives about their financial strategies and future project potentials, particularly in the context of electricity transmission in the PJM region. Joe Bergstein discusses their strong balance sheet and mentions that their capital allocation decisions currently do not include changes seen in companies with weaker financials. Paul Zimbardo from Jefferies inquires about potential projects related to the PJM RTEP, especially around the PPL zone and Three Mile Island. Vince Sorgi responds that they have submitted several project proposals and will know more by December or January. He indicates that regardless of the current proposals' outcomes, there will be ample future transmission opportunities in Pennsylvania, driven by economic development and increased resource needs, and notes that most of their transmission spending does not rely on these specific RTEP windows.

The paragraph is a discussion between Paul Zimbardo and Vince Sorgi regarding the Kentucky Integrated Resource Plan (IRP) and its potential impacts. They talk about whether the customer bill impacts of the base plan have been disclosed, and address concerns regarding the availability of labor and resources for implementing the plan. Vince Sorgi explains that the IRP is not a rate case or a request for rate adjustments, but these considerations will be included in the upcoming Certificate of Public Convenience and Necessity (CPCN) filing. He mentions the mechanism in place to handle retiring coal plants and their associated costs to minimize customer bill impacts, as well as strategies to ensure affordability while pursuing necessary investments. Paul Zimbardo inquires further about the ability to execute the plan given the labor and construction challenges, and Sorgi expresses confidence in handling these aspects.

The paragraph discusses the challenges and opportunities related to power supply and data center development. Due to supply chain constraints, new combined cycle plants are delayed until 2030-2031. Angie Storozynski questions the potential of an 8-gigawatt data center load, noting the company's strategic advantage due to an oversupply of power in its operational zone in Pennsylvania. Vince Sorgi confirms the lack of duplicate projects in the 8-gigawatt estimate, suggesting these projects are likely to proceed, though there may be duplicates in the broader 39 projects of interest. The discussion highlights the company's competitive edge in serving data center loads within the PJM region.

The paragraph discusses a conversation between Angie Storozynski and Vince Sorgi about the benefits of adding more generation and load, particularly for data centers, within the PJM region. It highlights that increasing generation capacity can lower the average cost per gigawatt over time, making investments cheaper per unit. Vince Sorgi expresses confidence in their ability to connect and support additional generation capacity beyond the 8 gigawatts currently planned. Angie points out that transmission benefits for customers result in providing room for more investments or absorbing higher energy and capacity prices, but aren’t a direct earnings driver due to return caps on existing transmission assets. The dialogue concludes with David Paz initiating a question about capital investment opportunities and positioning.

In the conversation, Joe Bergstein discusses the company's earnings growth driven by energy efficiencies and rate base growth. He indicates that their earnings growth is increasingly transitioning towards being driven by rate base growth. David Paz seeks clarification on how rate base growth and operational and maintenance (O&M) savings will contribute to earnings, highlighting the need for capital investments to achieve O&M efficiencies. Furthermore, Vince Sorgi suggests that the Pennsylvania Public Utility Commission (PUC) will play a significant role in any potential legislative actions related to resource adequacy and generation solutions in Pennsylvania.

The paragraph is part of an exchange during a conference call where David Paz and Vince Sorgi discuss the Public Utility Commission's (PUC) proactive approach to potential legislation. They note that while no current laws exist requiring action, the commission is preparing for possible future developments. The discussion then shifts to a question from Gregg Orrill about the timing of general rate cases in specific jurisdictions. Joe Bergstein responds, outlining the tentative schedule for rate cases in Kentucky, Rhode Island, and Pennsylvania, with Kentucky's potentially starting in the first half of next year, Rhode Island in late 2025, and Pennsylvania in 2026. The paragraph concludes with a statement that the timing will be reassessed and updated on a year-end call, followed by the closing of the session.

The speaker expressed anticipation for meeting attendees at an upcoming EEI event and thanked everyone for their participation before the operator announced the conclusion of the conference.

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