The paragraph is an introduction to the PPL Corporation Fourth Quarter 2024 Earnings Conference. The host, Andy Ludwig, Vice President of Investor Relations, welcomes participants and provides an overview of the conference structure, which includes presentations by PPL's President and CEO, Vince Sorgi, and Chief Financial Officer, Joe Bergstein, followed by a Q&A session. Andy highlights the availability of presentation slides on the company's website and cautions that the presentation includes forward-looking statements, with actual results potentially differing. He also mentions the use of non-GAAP measures and refers to the appendix for more details. Vince Sorgi then begins speaking, expressing pride in the company's 2024 achievements related to their utility of the future strategy.

The paragraph outlines the company's efforts in delivering electricity and natural gas safely and reliably to its customers in Pennsylvania, Kentucky, Rhode Island, and Virginia. Despite facing severe storms, the company maintained high reliability and increased its vegetation management spending to reduce storm-related outages. Financially, they achieved ongoing earnings of $1.69 per share, slightly under their updated guidance, due to mild weather affecting demand. The company invested $3.1 billion in infrastructure to enhance grid reliability and resilience and achieved significant operational savings through smart technology and automation, aligning with their goal of delivering a safe, affordable, and cleaner energy mix.

The paragraph discusses PPL's completion of integrating Rhode Island Energy, exiting a transition services agreement with National Grid. It highlights the successful collaboration during the transition. The company announced an updated business plan that supports growth in annual earnings and dividends, with a 2025 earnings forecast range of $1.75 to $1.87 per share, marking a 7% growth from the 2024 midpoint. PPL aims for 6% to 8% annual growth through 2028, supported by a refreshed capital plan of $20 billion for infrastructure investments, aimed at strengthening the grid, enhancing storm response, and promoting a cleaner energy mix.

The paragraph outlines PPL's strategic plan to achieve an average annual rate base growth of 9.5% to 10% through 2028 by making critical investments and enhancing operational efficiency. The company aims to support customer affordability by improving efficiency, targeting $175 million in O&M savings by 2026. Due to increased capital needs, PPL plans to raise $2.5 billion in equity by 2028 while maintaining strong credit metrics. The company announced a 6% increase in its quarterly dividend to 27.25 cents per share, aligning with its significant investment plans. PPL has made progress in restructuring to execute its "utility of the future" strategy, enhancing operational efficiencies, and has initiated an IT transformation for better system alignment.

The paragraph highlights the company's engagement with leading technology firms to integrate advanced technologies, such as AI, into the utility industry for improved customer and employee experiences. It discusses the investment in AI and other technologies for asset planning, supply and demand management, and customer empowerment. The company is pursuing a generation replacement strategy in Kentucky, including a 640-megawatt natural gas plant and plans for solar and battery storage. It is also involved in over 175 R&D initiatives, including a significant carbon capture project, and has established common design and operation standards across its utilities to enhance future grid designs. Additionally, despite low wildfire risks, the company has implemented wildfire mitigation plans for 2024 to ensure public safety.

The paragraph outlines the company's commitment to enhancing economic development through data center expansion and improving resource adequacy in the PJM area. In Pennsylvania, the focus is on implementing a state-directed strategy to tackle energy shortfalls and stabilize prices, suggesting regulated utilities should be allowed to invest in and operate generation resources. The paragraph also updates on regulatory proceedings, especially in Kentucky, where LG and KU are progressing with their integrated resource plan (IRP) and are planning to request a certificate of public convenience and necessity (CPCN) later in the quarter. They also anticipate filing a base rate case later in the summer, as their stay-out period ends soon.

PPL Electric Utilities in Pennsylvania is awaiting a decision from the PUC on their petition to increase the distribution system improvement charge from 5% to 9% of revenue, following a recommendation for denial. Despite this, they are confident in their request and have filed exceptions while considering the timing for a new rate case due to increased investments and inflation. In Rhode Island, Rhode Island Energy has submitted annual electric and gas infrastructure plans for FY 2026, totaling about $260 million and $225 million, respectively, for enhancing safety and infrastructure. Hearings are set for March, with decisions expected by April. A base rate case filing in Rhode Island is planned for late 2025 after the stay-out period ends.

The paragraph provides an update on the transition plans for Rhode Island Energy and developments in data center projects within their service areas. They mention that a base rate increase in Rhode Island isn't planned until 12 months after completing the transition from National Grid in September 2024. In Pennsylvania, they have substantial interconnection requests, with nearly 9 gigawatts in advanced stages and an estimated $600-$700 million in transmission capital investment. In Kentucky, they've announced a significant hyperscale data center in Louisville, with 6 gigawatts of potential demand in the pipeline. Overall, there's strong demand for data centers in both states, and they're prioritizing projects to optimize customer benefits.

In the fourth quarter, PPL's GAAP earnings were $0.24 per share, up from $0.15 per share in Q4 2023. Special items of $0.10 per share were recorded due to expenses related to the acquisition of Rhode Island Energy and IT transformation costs. Excluding these, ongoing earnings were $0.34 per share, a $0.06 decline from the previous year. For 2024, annual GAAP earnings were $1.20 per share, up from $1.00 in 2023. Ongoing earnings, adjusted for special items, were $1.69 per share, a $0.09 increase from 2023. The Kentucky segment was flat due to favorable weather but higher operating costs. The Pennsylvania segment was also flat, with higher transmission revenues offset by increased costs. The Rhode Island segment decreased by $0.03 per share due to lower transmission and distribution revenues. Corporate and other results decreased by $0.03 per share compared to the previous year.

The paragraph discusses a company's financial performance and growth strategy. It highlights a decrease in earnings due to higher interest expenses and taxes but notes a successful 7% growth achievement. The company has extended its annual EPS growth target of 6% to 8% through 2028, primarily driven by significant investments and rate base growth. The plan aims for sustainable shareholder growth and improved customer service. The company anticipates a $0.05 per share increase in earnings for its Kentucky and Pennsylvania segments in 2025, despite higher interest expenses, due to factors such as increased sales, lower operating costs, and higher AFUDC income.

The paragraph discusses financial projections and planned investments for a company's operations. It highlights that while increased capital investments in transmission and reduced operating costs are expected, higher interest expenses due to larger debt balances will offset some benefits. The Rhode Island segment is projected to increase by $0.04 per share in 2025 due to rider revenue and lower costs, while corporate results are expected to decrease by $0.02 per share due to higher interest expenses. No base rate increases are expected until January 2026. Over the next four years, the company plans $20 billion in capital investments to enhance service and support growth, including grid modernization and new generation projects. This represents a $5.7 billion increase over the previous plan, with significant investments in Kentucky and Pennsylvania, including $1.3 billion for new generation and environmental retrofits in Kentucky.

The paragraph discusses the company's investment plans for new generation and grid infrastructure. It details a strategic alignment with their Integrated Resource Plan (IRP), which includes the establishment of natural gas plants and battery storage by 2031, alongside significant investments in transmission and distribution to enhance grid resilience and support data center growth. The company anticipates around $5 billion in investments by 2028, focusing on replacing aging infrastructure, increasing reliability, and supporting new generation in Kentucky. A projected 9.8% annual rate base growth from 2024 to 2028 is highlighted, mainly driven by electric transmission and distribution network investments. The paragraph also notes a decrease in the reliance on coal generation, expecting it to account for less than 11% of the total rate base by 2028.

As coal plants are retired by the mid-2030s, the company plans to replace them with natural gas, renewables, and energy storage, driving growth in its rate base. While transitioning to a growth-driven model, the company remains focused on operational efficiencies to support affordability. They aim to maintain a strong balance sheet to ensure financial flexibility, targeting a 16% to 18% FFO to debt ratio and a holding company to total debt ratio below 25%. The company anticipates $2.5 billion in equity needs and plans to use an ATM program and possible additional equity-like financing. With limited refinancing risk and minimal floating rate debt exposure, they are well-positioned to execute their business plan and growth targets, delivering value to customers and shareholders.

The paragraph discusses PPL Corporation's financial strategies and future plans. The company announced a quarterly cash dividend increase to 27.25 cents per share, leading to an annualized dividend growth of 6%. They aim for future annual dividend growth of 6-8%, focusing on the lower end due to their significant capital expenditure plan. PPL anticipates an attractive total shareholder return of 9-12% through a combination of earnings per share growth and dividend yield. Vince Sorgi expresses optimism about PPL's future, highlighting a $20 billion infrastructure investment plan from 2025-2028 which supports long-term earnings growth and maintains affordable, reliable customer service. PPL boasts a strong balance sheet and a track record of operational excellence, ensuring financial flexibility and high reliability in their services.

The paragraph is a segment from a Q&A session following an update on a utility company's vision to be the best in the U.S. Durgesh Chopra from Evercore ISI asks about the Kentucky CPCN (Certificate of Public Convenience and Necessity) and the capital investment plan, inquiring specifically about the inclusion of a $1.3 billion capital increase for Kentucky and timelines for decisions. Vince Sorgi responds by outlining updates to the capital plan, which include a $2.5 billion investment for new generation facilities, such as two new combined cycle plants set for the early 2030s, 400 megawatts of additional battery storage by 2028, and environmental upgrades to the coal fleet. Sorgi confirms that these elements will be included in the CPCN filings.

The paragraph discusses a conversation between Durgesh Chopra, Joe Bergstein, and Paul Zimbardo regarding the timing and methods of issuing equity by the company. Joe Bergstein mentions the company's flexibility in timing equity issuances due to a strong balance sheet and indicates the potential use of alternative equity-like financing structures, such as hybrids with 50% equity treatment, to complement their At-The-Market (ATM) program. Bergstein suggests for modeling purposes to assume issuing $400 to $500 million in equity this year while staying adaptable to market conditions to optimize funding needs. Paul Zimbardo asks for clarification on the equity-like finance options, and Bergstein confirms the strategy of leveraging different funding tools for efficiency.

The paragraph discusses a conversation between Paul Zimbardo and Vince Sorgi about power generation capacity and future plans in Kentucky. Vince Sorgi mentions that with the anticipated Mill Creek CCGT (Combined Cycle Gas Turbine) going into service in 2027, they will be able to accommodate a 400-megawatt data center but not much more due to load growth projections. To address this gap, they plan to include 400 megawatts of batteries as an interim solution until two additional CCGTs go online in 2030 and 2031, as detailed in their Integrated Resource Plan (IRP). Paul Zimbardo queries if increased load demands would require more generation capacity, to which Vince Sorgi agrees. James Kennedy from Guggenheim then asks a question regarding resource adequacy in Pennsylvania and mentions stakeholders' interest in competitive entry.

In the paragraph, Vince Sorgi discusses the future of energy policy legislation in Pennsylvania, emphasizing the state's pivotal role within the PJM energy market. Although no legislation has been proposed yet, there are ongoing discussions with the governor's office and legislators, which Sorgi describes as constructive. He anticipates proposed legislation by spring or summer, which may include measures such as allowing utilities to invest in and operate generation facilities, creating incentives for long-term power purchase agreements, and offering low-cost financing similar to proposals like the Texas Energy Fund. Sorgi emphasizes support for initiatives aimed at improving generation capacity and resource adequacy in Pennsylvania.

The paragraph discusses the financial plans and progress related to a data center project in Pennsylvania. Vince Sorgi explains that while they have committed $400 million to the project, there's potential for up to $600 to $700 million. They plan to provide updates throughout the year as projects move through development stages, noting that there is some redundancy in the six gigawatts queued. They have high confidence in nine gigawatts of projects, and estimate possibly extending to twelve or thirteen gigawatts. In response to a question about customer billing and capital expenditure impacts, Sorgi emphasizes that affordability remains a central strategy, which drives their focus on business efficiencies.

The paragraph outlines a financial strategy where for every dollar saved in Operations and Maintenance (O&M), the business can fund eight dollars in Capital Expenditures (CapEx) without affecting customer bills. The plan aims to maintain affordability by keeping bill increases within inflation rates. In discussions about filings in Kentucky, it's mentioned that the process is expected to be smooth, with no surprises anticipated from the commission. The growth trajectory for Earnings Per Share (EPS) is projected to be linear, around 6% to 8%, and is expected to continue steadily from the midpoint set for 2025.

The paragraph discusses the potential impact of utility-owned generation on wholesale costs in the current auction environment. Vince Sorgi mentions a settlement with PJM capping auction prices between $175 and $325 per megawatt day for the next two auctions. Due to increased demand, particularly from data centers, there's an expectation that auctions might clear at the cap. While some generation previously set to retire might return, potentially mitigating price hikes, the cap may still be reached. If legislation is approved this year allowing utilities to own generation, implementation would take at least six months, followed by challenges like supply constraints for new turbines in combined cycle plants.

The paragraph consists of a dialogue involving Paul Patterson, Joe Bergstein, Vince Sorgi, and Angie Storozynski during a discussion or conference call. Paul Patterson inquires about the timeframe for a decision on a DISC or DSIC waiver by a commission, to which Joe Bergstein responds that they are still waiting for a decision and nothing has been scheduled. Angie Storozynski then shifts the topic away from Pennsylvania legislative matters to address a significant increase in rate base growth, which surprisingly does not impact the earnings growth trajectory despite the additional equity involved. She also notes the company's strong balance sheet in the utility industry.

In the paragraph, Joe Bergstein discusses the company's financial strategy, emphasizing the importance of maintaining a strong balance sheet as a strategic advantage for delivering long-term shareholder value. Though there is a notable gap between rate base growth and earnings growth, he attributes this to the need for equity financing. The company is focused on long-term growth and managing uncertainties by optimizing their business plan, which includes executing capital and financing plans, regulatory outcomes, and operational management. By doing so, they aim to mitigate risks and handle potential uncertainties effectively.

The paragraph features a conversation about financial projections and tax impacts between Angie Storozynski and Joe Bergstein. Angie questions if a tax benefit that existed in 2023, linked to the transferability of tax credits and sale of WPD, will continue to impact subsequent years, particularly after 2025. Joe clarifies that this was a one-time benefit for 2023 and will not affect future results. The dialogue ends with Joe addressing David Paz's question about EPS growth, clarifying expectations about annual growth within a specified range.

The paragraph discusses a 7% growth rate for 2025 as part of a strategic repositioning plan, achieved without implementing new rate cases. Vince Sorgi notes that 2025 is the final year of staying out of rate cases across three jurisdictions, indicating a shift in earnings growth focus from rate base and O&M efficiencies to a more rate base-driven approach. David Paz inquires about the impacts on returns for Kentucky and Pennsylvania. Joe Bergstein responds, highlighting effective O&M management during the stay-out period, which has supported returns at or near allowed levels, but acknowledges that an increased capital plan will pressure these returns. He refrains from providing specifics on future rate case or return on equity assumptions.

In the paragraph, Vince Sorgi and David Paz discuss financial matters related to rate cases and the cost of gas. Vince mentions there is a lag between rate cases, but they aim to minimize it and achieve allowed returns on equity (ROEs). When asked about future costs related to their projects in 2030 and 2031, Vince indicates detailed figures will be available later but are expected to be similar to current costs. The paragraph concludes with Vince thanking participants and expressing eagerness to discuss these topics further in future meetings.

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