Q1 2023 PPL Corp Earnings Call
Contract exit the remaining transition services with national grid in 2024.
We also advanced several key regulatory proceedings, which I'll discuss further on the next couple of slides.
Further we successfully executed more than $3 billion of financings in the first quarter, reducing our interest rate exposure and strengthening our ability to achieve our top tier earnings growth targets.
And finally, our execution of approximately $600 million in capital investments during the first quarter keeps us on track to invest nearly $2 $5 billion in infrastructure investments this year.
These investments benefit customers and shareowners as we continue to advance our strategy to create the utilities of the future.
As a result today, we are reaffirming our plans to invest nearly $12 billion in infrastructure improvements through 2026.
Modernize our electric and gas networks and replace retiring generation in Kentucky.
Looking forward, we remain confident in our low risk business plan, we outlined in January and reaffirmed our projected compound annual earnings per share and dividend growth rate of 6% to 8% through at least 2026.
Turning to slide five.
We were pleased to secure a positive outcome in our first infrastructure safety and reliability proceedings before the Rhode Island Public Utilities Commission.
ISR plans are submitted annually in Rhode Island, and outline proposed capital investments and related operating costs the strength in safety reliability and resiliency of our electric and gas distribution networks.
The approved plans address Rhode Island <unk> proposed spending from April one 2023.
At March 31 2024.
And its decision to public Utilities Commission approved $290 million of the approximately $350 million, Rhode Island energy proposed in its ISR filing.
This allowed investments on the electric side were largely tied to grid modernization and associated improvement.
On the gas side, most of the disallowed investment related to roughly 10 miles of leak prone pipe replacement.
While we believe the disallowed investments are the right projects to better serve our customers we understand the commission's desire to complete reviews of our grid modernization and advanced meter filings and to make further progress in the future of gas stakeholder proceedings before approving additional spending in those areas.
Investments not approved in this year's ISR plans may be recoverable in future proceedings subject to regulatory approval.
This could be through future ISR filings new base rate cases.
<unk> reopener provisions within the base rate cases that we are currently operating under.
Particularly related to the grid modernization and IMF projects.
Ultimately, we look forward to continued engagement on these matters with the commission the division of public utilities and carriers and other stakeholders in Rhode Island.
Turning to slide six.
We continue to progress our generation investment plan in Kentucky and remain confident that this plan is the best path forward for our customers as we plan for the state's energy future.
Our plan is more affordable maintains reliability and represent significantly cleaner energy resources for our customers and continuing to operate the coal units that we have proposed to retire by 2028.
In fact, we estimate that our plan provides nearly $600 million of net present value benefits for our customers compared to continuing to operate these coal units.
As we shared in March when Senate Bill four became law.
We're confident that the generation replacement plan, we filed in December exceeds the standards set by the new law and as a result, we have not changed our CPC and strategy.
As proposed our plan would replace 500 megawatts of aging coal generation.
With over 200 megawatts of new combined cycle natural gas generation, nearly 1000 megawatts of solar generation and 125 megawatts of battery storage and.
In addition, our plan proposes the implementation of more than a dozen new energy efficiency programs by 2028.
Altogether the plan represents a $2 $1 billion investment in Kentucky's energy future.
And the least cost option to reliably meet the needs of our Kentucky customers 24 hours a day 365 days a year.
As an added benefit our proposed plan would cut our carbon emissions nearly 25% from current levels, while further diversifying our generation fleet.
To comply with the new law, we expect to file our retirement request with the PSC by May 10.
Given the law provides the <unk> 180 days to issue a decision on retirement request.
This timing essentially aligns the retirement ruling with the expected decision on our CPC and filings.
Decision on our filings as expected by November 6th.
Again, we're confident the plan we proposed offers the best path forward for the customers and communities we serve we.
We don't see any signs of federal environmental mandates easing over time, and we believe investing hundreds of millions of dollars in environmental controls.
<unk> operating aging uneconomic coal plants is not.
In our customers' best interest.
However, should we be required to make such investments, we do have the environmental cost recovery mechanism or ECR in place that.
That would enable recovery of these investments outside of base rate cases.
We will continue to actively engage with stakeholders in Kentucky throughout the CPC and process to demonstrate how our plans to best meet the needs of our customers.
That concludes my strategic and operational update I will now turn the call over to Joe for the financial update.
Thank you Vince and good morning, everyone, let's turn to slide eight.
Ppl's first quarter GAAP earnings were <unk> 39 per share.
We recorded special items of <unk> <unk> per share in the first quarter, primarily due to integration and related expenses associated with the acquisition of Rhode Island Energy.
Adjusting for these special items first quarter earnings from ongoing operations were <unk> 48 per share.
An improvement of <unk> <unk> per share compared to Q1 2022.
The addition of Rhode Island energy to our portfolio and our focus on O&M savings were the primary drivers of the increase partially offset by lower sales volumes of about <unk> <unk> per share.
The unusually mild winter weather in Kentucky, and Pennsylvania, and higher interest expense.
Overall, our team performed very well in the face of significant storms and results for the quarter were in line with expectations apart from the weather.
Heating degree days were down nearly 25% in our Kentucky service territory and 30% in our Pennsylvania territory.
This resulted in lower quarterly sales volumes of nearly 9% in Kentucky and 7% in Pennsylvania.
We remain confident in delivering our 2023 earnings forecast as we have several potential offsets to the mild weather.
The benefit of our recent financings at attractive rates compared to our plan.
Incremental disk revenues in Pennsylvania.
Outperformance on our integration of Rhode Island energy and effective O&M cost management.
While we are not relying on whether a warmer than normal summer could also provide some potential upside.
We have an excellent track record of achieving our targets, which we expect to continue in 2023.
Turning to the ongoing segment drivers for the quarter on slide nine.
Our Pennsylvania regulated segment results were flat year over year.
<unk> were primarily driven by increased transmission revenue and distribution rider recovery.
Offset by lower sales volumes due to the mild weather and higher interest expense due to increased borrowings and higher rates.
Our Kentucky segment decreased by <unk> <unk> per share year over year.
<unk> were impacted primarily by lower sales volumes due to the mild weather and higher interest expense from increased borrowings, partially offset by lower O&M expenses.
The addition of our Rhode Island segment increased earnings by <unk> 10 per share for the quarter.
The island's Q1 results reflect the seasonal nature of gas operations during the winter months as a significant amount of annual natural gas demand and earnings occur within the heating season.
Finally results of corporate and other increased one seven per share compared to the prior year, primarily due to lower O&M expenses and other factors that were not individually significant partially offset by higher interest expense.
The increased debt and higher rates.
Moving to slide 10.
During the quarter, we successfully navigated a volatile rate market and completed our financing plan for 2023.
This included five separate transactions issuing a combined total of $3 2 billion of debt, including a $1 billion convertible offering that was the first executed in our industry in 20 years.
Our first mover advantage on the convert.
The strong demand from investors as our deal ended up pricing about 250 basis points lower than straight debt.
Resulting in roughly $25 million in annual interest expense savings.
Given the savings this transaction is favorable to issuing straight debt.
Any potential share dilution as a result of significant share price appreciation will be manageable.
We also executed several operating company issuances in Pennsylvania, and Kentucky for.
For combined proceeds of nearly $2 2 billion.
A portion of the proceeds were used to reduce both short term and floating rate debt. While the remaining will be used primarily to fund each utilities' perspective Capex plans.
In total we repaid $1 75 billion of floating rate debt.
Reducing our floating rate exposure to approximately $600 million, which is less than 5% of our total debt portfolio.
In summary, our strong execution of the financing plan. This quarter reflects ppl's excellent credit position and we continue to target strong credit metrics and maintain one of the sector's best credit profiles without any planned equity issuances through our planning horizon.
That concludes my prepared remarks, I will turn the call back over to Vince.
Thank you Joe and.
In closing we remain solidly on track to deliver the midpoint of our 2023 earnings forecast and.
And we remain well positioned to deliver top tier earnings and dividend growth of 6% to 8% annually through at least 2026.
We're off to a strong start in 2023.
Executing on our $2 4 billion capital plan.
<unk> the integration of Rhode Island, NRG, advancing our plants in Kentucky, and Rhode Island to deliver at least cost reliable energy for our customers and.
And remaining on track with our first leg of achieving at least a $175 million in O&M savings by 2026.
As we pursue our strategy to create the utilities in the future. We are as strong as we've been in years and I am convinced we are only getting stronger.
With that operator, let's open it up for questions.
We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone if youre using a speakerphone. Please pick up your handset before pressing the keys.
To withdraw your question. Please press Star then two and at this time, we will pause momentarily to assemble our roster.
And the first question will come from <unk> Chopra with Evercore ISI. Please go ahead.
Hey, Tim Good morning, Thanks for giving me the time.
I'm wondering if you guys. Thanks, good morning, guys.
A lot of Investor discussion Vince around just.
The legislation and conducting can you just share some initial feedback if you have any from your from your filings.
A lot of investors are looking at this legislation thinking about what the.
What it May mean for you and whether the state is actually.
Going to accept your application to regard. These calls so just any additional color that you can share there would be would be appreciated.
Sure So look in general.
These are these are open proceedings so.
Going through the formal processes with the commission so not a lot to share directly in terms of feedback from the commission, but as we think.
Strategically the CPM that we filed with the commission is again, our view is the least cost option to serve our customers again as I mentioned in my remarks.
<unk>.
We quantify the NPV savings to our customers at about $600 million versus continuing to operate the coal plants that we're proposing to retire our plan also ensures reliability.
It checks all of the issues that SB four.
In terms of cost and reliability et cetera. So we think we meet the requirements that have come out in the new law.
So from our perspective, we.
We still feel very confident that we can get our plans approved through the commission.
Gauging with our customers and the various interveners and stakeholders in the process. So.
Overall, nothing changing from our perspective in terms of the CPC on strategy.
Got it that's helpful brands is there a middle road here, perhaps and I know this is early innings, but like not not youre planning anxiety, but a portion of your plant might get it.
Accepted in and you have alternatives for the balance of the plan.
And then just thinking about the risks because it is a significant portion of your capex.
Capex, which has been giving your plan as you go into the CPA CN filings in and whether there is.
Sort of a collaborative approach here to get some of it if not all of it approved.
Yes look I think that's a fair question Doug.
We'll ultimately have to see when we go through the process with our intervenors, if theres a settlement.
Scenario, our case that we ultimately can agree to to your point.
Yes.
We're always open to those types of discussions.
It's important to to comment that if we do need to continue to operate the aging on economic coal plants that we're proposing to retire that would require us to invest potentially significant amounts of capital to comply with existing EPA regulations, which which again, we don't think we'd be in.
In the best interest of.
All of our customers, but if we're required to do that we would have to make those capital investments.
You look at all of the plants that we're talking about.
Retiring.
Again, we'd have to evaluate the final EPA regs once they come out in final form and then analyze all of that but sitting here today that could be between 5 billion and $1 5 billion of environmental investments alone not to mention that.
Maintenance capital that we would have to incur to keep those plants operating so quite quite a significant amount.
Potentially of investment that would that would be required there and as I discussed.
Again in my remarks that rate that would recover be recovered through the ECR mechanism, which basically.
It's real time recovery for our shareowners should we need to make those investments we have other.
If we're not going to spend $2 1 billion on Gen replacement and then from a from an affordability perspective, we have other investments we can make in Kentucky, primarily in the T&D businesses, and we're seeing increased severity and frequency of storms in the state. We saw that just this quarter so continuing to see.
Strengthen the grid in Kentucky, we certainly have the opportunity to do that as well and then from a from a capital plan perspective, we really don't have a lot of the IHA a project funding in our plan so.
Specific to Kentucky, we have about $300 million worth of projects that we've seen.
Submitted with the $150 million would be would be funded by us and 150 million will be funded by the DLA. So at the end of the day, we're feeling really good about the overall capital plan.
And obviously feeding the earnings targets that we've laid out.
That's great color Vince Thank you so much.
Sure.
The next question will come from David Arcaro with Morgan Stanley . Please go ahead.
Hey, good evening. Thanks, so much for taking my question.
<unk>.
Let's see wondering if you could just maybe give an update on your confidence level in achieving your.
You previously planned cost cuts for this year, what youre seeing for inflationary pressures and I guess, how hard of a.
Stretches.
Dig deeper and also offset the weather headwinds that youre facing.
Yes, sure so I'll ask Joe maybe to comment on that yes.
Yeah, sure Hey, Dave well first of all for the <unk>.
O&M targets that we've set for this year, we are on track to achieve those and we feel really good about our ability to do so.
As far as offsets for this year.
The weather impact that we saw in the first quarter I had a number of them. During my prepared remarks, but those include the benefits from the strong execution of the convert that we issued earlier this year and that's about one to two <unk> better than our expectations. We're also.
Anticipating that this mechanism in Pennsylvania provides additional earnings.
It could be about another 1% or two cents there and then.
And then.
Any potential outperformance on the integration of Rhode Island Energy and we're very focused on that integration process, there and always trying to do better than our plan and that could be another penny maybe <unk> and then so looking beyond that we always have the ability to flex our O&M spending.
Which we could do on top of that.
So it's not the number of levers we have at our disposal David.
Yes, great. Yes, you anticipated my my other question, which was to get a little more clarity on those other levels.
That's really helpful and then just.
Wondering if you could touch on Rhode Island, and just following the ISR decision.
And maybe when do you think there is still interest in pursuing those projects by the commission that Didnt get approval and then just wondering maybe more holistically or are there other opportunities that you would look for additional capex upside in Rhode, Rhode Island more broadly.
Yes, sure. So first of all I'd say I think the.
The process in Rhode Island was was very constructive.
And as I talked about in my prepared remarks, the projects that did not get approved.
We are really associated with other proceedings that are currently in front of the commission.
In particular the.
Grid modernization on the electric side and the leap.
Leak prone pipe on the gas side so.
Because we have other proceedings in front of the commission on those areas.
It wasn't a total surprise to me that they decided to.
Temper some of the increase in those areas pending.
Getting a little further down the road on those proceedings.
We'll have the opportunity to your question too.
Request those projects in future proceedings again, though those could be future ISR proceedings, there could be future base rate cases, depending on the timing of when we file our next base rate case.
Also have reopened our provisions in the current rate case for both grid Mod and.
The IMF filings so we could also potentially.
Use that.
Avenue as well, but I think it's important to point out that the $290 million almost $300 million of investments that we did get approval for alright, those are vital in strengthening the safety reliability and resiliency of our networks and so I think it highlights the importance of the ISR mechanism for our customers, but it also demonstrates the constructive regulatory.
A framework for our investors.
In terms of additional.
Capital opportunities I think probably the biggest one.
It would be would be again in the Iga.
Buckets, we have.
About $480 million worth of projects that we have.
Slide four with the Doe.
$330 million of that would be PPL funded $150 million of that would be funded.
Obviously that helps the economics on those on those projects. So we could.
Again funnel those through the ISR or other mechanisms to get approval, we would need regulatory approval for those projects, but again with.
With the Doe kicking in about 30% funding on those it really helps the cost benefit analysis on those projects.
Hopefully, we would get we would get a lot of support in the state to do those types of projects.
Okay excellent I appreciate it thanks, so much.
Sure.
The next question will come from Paul Zimbardo with Bank of America. Please go ahead.
Hey, Bob.
Hi, Good morning, Thank you Tim.
And thank you for the color on Kentucky in particular, and just if I add up the pieces that you mentioned is it fair to say that in a worst case scenario you could offset the majority of that $2. One generation plan with other spending if you needed to.
Yes, Paul.
We're very confident in being able to meet our earnings targets and trajectory I think how we get there.
Under different scenarios <unk> approval process, we have to look at that depending on what exactly gets approved so like I like I was saying if if some of that capital ends up being environmental spend on coal plants, what we earn.
Cash recovery on that spend pretty much as we're spending it where.
As we now our base plan is assuming.
Under the $2 1 billion will be spending under the under the CPC and $1 6 billion and our time period that that requires a base rate case for for cash funding. So we will get we would get some potential upside on the earnings profile by by recovering quicker.
Again, we have to see how much the impact on the overall capital plan is if any coming out of the CPC and but but really.
Really we feel confident in our ability to hit our targets under various scenarios.
Out of the CPC and funding so it's a little tough to just say.
This capital bucket for that capital bucket because you also have the.
A positive effect of the ECR mechanism in there.
Okay, and I think that's good context I appreciate it.
And then switching topics that Joe mentioned that the outperformance of the Rhode Island integration could be penny or two favorable for 2023 should we think of that as more of a timing element or if you're successful there would that accrue to 2024 plus thank you.
Yes, Joe do you want to yes, no I think it's more on just our overall performance against our expectations, there and being able to integrate it.
Lower cost and we expect the TSA period goes through 2024. So my comments were really focused on 'twenty, three and our ability to offset the negative weather start to the year.
Okay, great. Thanks, a lot.
Sure.
The next question will come from Angie <unk> with Seaport. Please go ahead.
Thank you.
Maybe something completely different.
We're probably halfway through the earnings season, and we haven't yet heard from any utility about Tom.
Additional O&M efficiencies associated with that.
Lower.
This office space.
Is that even something that you guys are considering I mean, it seems like this hybrid.
Model.
Persistence.
Even in your industry and I just wonder if.
Got.
It is a lever that you might pull in the future.
From an O&M perspective.
That's your consequently, considering.
Yes Angie.
That's a great great question, Great point, we so I think generally why you haven't probably heard a lot about it is either utilities own their buildings office.
Office buildings that they are operating out of where they have leases that they're fixed leases that there currently.
Paying under.
And so maybe not an immediate source of of.
Operating efficiency or O&M savings, but but clearly in the post pandemic world and as we think about hybrid or remote working versus in the office working.
It's an area that you will see most of corporate America, focusing on over the years to come So I think specifically to answer your question.
Not necessarily seeing it right away or even in the next year or so, but certainly I think that that could be an opportunity longer term as we rightsize, our real estate needs for sure.
Okay, and then just taking it one step further.
Are you seeing any sort of slowdown.
And among commercial customers again somehow linked to office buildings, and downsizing or any other signs of economic slowdown.
Any leading indicators that you're seeing among your customers not only on commercial on the commercial side, but also industrial.
Yes, Joe you want to talk about maybe just load in general Yeah, sure Hi, Andrew It's Joe.
We continue to see.
A number of positive economic factors in both of our jurisdictions in Pennsylvania, Kentucky, including continued low unemployment rates and strong GDP growth.
And in Kentucky, as we've talked about a number of times, we saw back to back record years of economic development.
Over $10 billion of announced investments in each of 2021 and 'twenty. Two that includes the Ford EV battery plant initiative that we've talked about a number of times, that's recently broken ground and well under construction and we continue to see strong industrial growth primarily in the manufacturing and agriculture sectors.
We have not.
Seen that in other territories.
Rhode island's decoupled.
And less relying on those things and I think just in general you're seeing people catch up from from the lull in Cove, it right, whether or not the supply chain supply chain driven or.
The lull in the economy during COVID-19 and kind of the.
The bow wave to not only catch up to pre COVID-19 levels, but then the growth we're seeing some of our major industrials not only getting back to pre COVID-19, but talking also about expansion.
Expanding their footprints and their production facility so.
In our jurisdictions generally I think we're feeling really good about.
Our local economies and where the.
The growth that we're seeing in our in our areas.
And then just one last follow up on that Kentucky.
And again I should know that.
So I mean the.
The purpose of the Bill.
Was to basically continue.
The usage of the call.
That is mined in Kentucky or is that.
Continued operations of coal plants.
I mean, it might be a subtle difference but.
How about just running these coal plants on gas and dust checking that box of continued operations of these plants Wow.
Sourcing energy from those new gas plants, which given the gas price environment, just became even more.
Beneficial to the end user.
Well look I don't want to comment on the.
Purpose of the Bill I think we'd have to.
Probably hear that from the folks that wrote the bill but.
In general I would say coming out of the winter storm.
Elliot.
There was a general concern on.
Just ensuring that reliability is is.
Kind of at the forefront of.
Generation decisions in the state.
There was concern that the clean energy transitioning transition is happening too quickly.
And making sure that reliability again is front and center I will say that.
That has always been an area that we and our commission.
Has focused incredibly on as we put together our generation planning, our CPC and filings.
The form of generation replacement looks like et cetera, It's why we have two combined cycle units in our.
And our CPC AD and it's not 100% renewables we were absolutely.
As focused on reliability as I think the legislator is legislature is in the state too.
To ensure that we can deliver that power 24 hours a day seven days a week and so.
I think we were already operating under the reliability.
Issues that were addressed in the.
And the bill in terms of.
Driving either coal mining or running coal plants, I can't necessarily speak to that per se. However.
I would say, we will continue to put forth plans that.
Ensure reliability, but do that in the lease cost manner for our customers, which to bill also.
Has any of it as well so and again, we think our CPC and plan.
Absolutely balances all of those in the most productive way for our customers.
Great. Thank you.
Thank you.
The next question will come from Paul Patterson with Glenn <unk> Associates. Please go ahead.
Hey, good morning, guys.
Wonderful.
With respect to the Dr.
Back to the Rhode Island gas.
Modernization program.
I guess.
It comes from Laura Nguyen.
Looking at the cases.
Again sustaining myself.
How do you think about the potential for stranded investment.
We've electrification efforts in places like <unk>.
Rhode Island, or what have you I know, it's different in different jurisdictions, but.
But I'm just sort of wondering through.
Broad picture.
We're thinking about this.
Does that how does the idea of electrification or are these sort of a really aggressive.
Carbon retailer.
Gas reduction efforts.
Do you think about that with respect to you.
Gas.
Capex plan from what have you.
Yes, I think Theres, a number number of factors that go into that Paul.
One is is.
The cost of electrification.
The second is the reliability of supplying electricity if the bulk of the economy is where the vast majority of the economy becomes electrified.
And then ultimately.
The benefits of fuel diversity by having natural gas in addition to.
In addition to electricity obviously the.
The state has targets to be economy wide net zero by 2050 on the electricity side net.
Basically 100% renewable driven bye bye.
By 2033, our investment plans on the T&D networks are geared towards that 2000 22033, 100% renewable date, we are actively engaged with.
Numerous stakeholders in Rhode Island, including the PUC on the future of gas docket.
And so we are actively engaged with doing analysis on various scenarios on how we could see the future.
Of the Rhode Island energy sector feeding the economy, there in <unk> and.
And how the natural gas system will ultimately be used or not we would expect to have our initial view.
Of that and issue a report to the PUC late fall of this year.
In the spring of next year that the PUC within target issuing its report to the government agency that's in charge of.
Implementing the act on climate rules within the state.
And then we would expect that.
That organization EC four to issue their report and.
In 2025 so.
Great question Theres, a lot of work and actually a formal docket within the commission to exactly answer that question.
And I think you could see various.
Possibilities, there right, whether whether or not we're blending.
Current molecules through the through the pipes, maybe it's not all natural gas, we're using more renewable natural gas.
Using hydrogen combination of those things.
So really really we're right in the middle of it right now Paul.
More to come as I think we made progress on that that analysis and ultimately those reports coming out of those various agencies.
Okay Awesome and then.
You, obviously have a reliability.
The initiative in Kentucky, what have you.
Obviously things are a little bit limited in places like Pennsylvania, Rhode Island, just given the structure there but.
As you know there is some.
A a logo, bringing all for <unk> for some time in PJM regarding reliability.
We're seeing some stuff in new Hampshire with respect to long term ppas.
Potentially and what have you.
And I'm just wondering is there any potential on the electric side.
That you guys are thinking about here either in terms of.
Longer term ppas, maybe in terms of on the reliability side batteries.
Virtual power plants I don't know just.
Or just one generation or what have you in terms of addressing these issues as opposed to maybe.
The way the construct has been which is sort of like relying on them.
PJM.
<unk>.
The RPM model capacity market. So what have you that maybe it's time to.
To sort of pivot or at least a little bit.
Look at terms of maybe other structures.
And yet another sort of <unk>.
Has the market remake if you follow what I'm, saying or I don't know.
Just thinking about when we're just hearing a lot about.
Right now.
I'll say that hearing with FERC I'm just sort of.
Just wondering what your thoughts are on that.
I would say, yes to all of that.
This is an area that I spend a lot of time thinking about and where.
We're starting to formulate our strategy along the lines of many of the things that you just mentioned so to your point PJM themselves I think are very concerned about.
40% to 45 Gigawatts of thermal generation announced to be retired between now and 2030, that's an incredible amount.
A very reliable dispatch of generation that is schedule two.
Two that come out of the out of the ISO out of the Gen stack.
The vast majority almost all of the replacement generation are intermittent renewables.
And developers are having a hard time getting the siting and permitting are getting any of it bill so.
Even if it does get built which there is a lot of I think concern in terms of the timing of when this replacement generation gets built youre, replacing.
Very reliable dispatch at <unk> energy with intermittent energy and so on.
So I do think PJM is concerned as they're looking at their generation.
Stack and I'm thinking about the ISO itself, which which of course then.
It makes me focus on how do we ensure we have electrons flowing to our wires in Pennsylvania in Rhode Island, and so we are we are absolutely focused on this laser focused on this I would say.
Some of the things that you had mentioned I would I would say all of those I think are are areas that we think we can we.
We can take a look at to try to sure up the gen supply in our own jurisdictions.
Great question.
Just a quick follow up on that do you think the people.
The legislator legislature or whatever.
We will make whatever the official in the states.
We are open to those ideas as well because I would assume it might have to take changes on the.
Part of the.
The regimes in those states do you follow what I'm, saying I mean are they open to this do you think.
Recognize it or.
I think it's new.
This is a new topic for them, we will be engaging.
With not only our legislators, but our regulators just to make sure that we're all on the same page as we look at security of energy going forward, but we have we have flexibility within the current rules to do a lot of what you suggested so.
Not all of this requires legislative change and so we'll certainly use as much.
As much as the levers within current legislation and regulation to sure up.
Gen supply, but to your point, if we need to go beyond that.
That might require legislative change I can.
Handicap today, the likelihood of that happening or not.
Okay Gotcha awesome. Thanks, so much guys.
Sure.
The next question will come from Ross Sandler with UBS. Please go ahead.
Good morning.
Most of my questions. Most of my questions have been asked.
Asked and answered but.
Maybe let me ask this one and apologies if I drag out in the past here, but.
Can you just sort of give us the context or at least the contention and this fraudulent conveyance claim against PPL Hydro that's out there with Cowen.
And sort of if theres any process here.
Timeline around absolutely resolving that.
Sure So the case itself.
It relates to.
Our when we still owned PPL, Montana, when PPL still owned PPL, Montana, we had solved.
The hydro assets to northwestern and the proceeds of those.
Those assets $700 million about we.
Distributed those proceeds back to PPL following the sale.
That was.
None in negotiated when we created talent energy as part of spinning out energy supply and merging that with.
With Riverstone assets and so all of that was well understood well documented.
The the contention is that.
That we somehow by doing that.
We.
We made PPL, Montana and solvent and so that is that is the fraudulent conveyance.
Charge.
We feel extremely confident in our position in defense that that.
That PPL, Montana was not only in compliance with all applicable laws at the time.
The distributions were made but that it was also a solvent at all relevant times as it relates to the law and dose distributions. So we.
We.
Just in terms of an update on the situation with with the case, we we did go into mediation between the parties recently, we could not come to agreement.
And that mediation and so we have discontinued that.
So we're basically back in the bankruptcy court, we would we would expect to resolve this.
With the court proceeding.
Hopefully by the end of the year.
So.
Yes talent has indicated.
Certain timeframes on coming out of bankruptcy within the next couple of months. This this issue.
We'll not and does not necessarily need to be resolved before they can do that but we do expect it will be resolved by the end of the year.
That's a fantastic update branch banking.
Sure.
This concludes our question and answer session I would like to turn the conference back over to Mr. Vince <unk> for any closing remarks. Please go ahead Sir.
Well, thanks again for joining us. This morning, we look forward to speaking with investors at our annual Shareowners meeting in a couple of weeks.
Or perhaps we'll see you on the road here soon so thanks again for joining us.
We will close out.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Okay.
Sure.
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