Q2 2024 PPL Corp Earnings Call

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I would now like to turn the conference over to Andy Ludwig Vice President of Investor Relations. Please go ahead.

Andy Ludwig: Good morning, everyone and thank you for joining the PPL Corporation conference call on second quarter 2024 financial results.

Speaker Change: We provided slides for this presentation on the investors section of our website.

Speaker Change: We'll begin today's call with updates from Vince Sorgi, PPL, President and CEO, and Joe Bergstein, Chief Financial Officer.

Speaker Change: I will conclude with a Q&A session following our prepared remarks.

Speaker Change: Before we get started I'll draw your attention to slide two in our brief cautionary statement.

Speaker Change: Our presentation today contains forward looking statements about future operating results or other future events.

Yes.

Speaker Change: Actual results may differ materially from these forward looking statements.

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Speaker Change: Please refer to the appendix of this presentation and Ppl's SEC filings for a discussion of some of the factors that could cause actual results to differ from the forward looking statements.

Speaker Change: We will also refer to non-GAAP measures, including earnings from ongoing operations or ongoing our earnings on this call.

Okay.

Okay.

Speaker Change: Reconciliations to the comparable GAAP measures please refer to the appendix.

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Speaker Change: I'll now turn the call over to Vince.

Vince Sorgi: Thank you Andy and good morning, everyone.

Vince Sorgi: Welcome to our second quarter Investor update.

Speaker Change: Good day and welcome to the P. P. L Corporation second quarter 'twenty 'twenty four earnings call all participants will be in a listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero after.

Vince Sorgi: Let's start with our financial results and a few highlights from our second quarter performance on slide four.

Vince Sorgi: Today, we reported second quarter GAAP earnings of 26 per share.

Speaker Change: Adjusting for special items second quarter earnings from ongoing operations were <unk> 38 per share.

After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on a touchtone phone.

Speaker Change: Backed by another strong quarter today, we reaffirmed our 2020 for ongoing earnings forecast of $1 63 to $1 75 per share and.

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Please note this event is being recorded.

Speaker Change: And expect to achieve at least the midpoint of our forecast range.

I'd now like to turn the conference over to Andy Ludwig Vice President of Investor Relations. Please go ahead.

Speaker Change: In addition, we continue to make excellent progress in delivering on our 2024 priorities.

Andy Ludwig: Good morning, everyone and thank you for joining the P. P O Corporation conference call on second quarter 2024 financial results.

Speaker Change: We're on track to complete approximately $3 $1 billion in infrastructure improvements this year too.

Speaker Change: To advance a reliable resilient affordable and cleaner energy future for our customers.

Speaker Change: We've provided slides for this presentation on the investors section of our website.

Speaker Change: We're on pace to exit our remaining transition service agreements with national grid in the coming weeks.

Speaker Change: Well begin todays call with updates from Vince Sorgi, PPL, President and CEO, and Joe Bergstein, Chief Financial Officer.

Speaker Change: And to complete what has so far been a seamless integration of Rhode Island energy into PPL.

Speaker Change: I will conclude with a Q&A session following our prepared remarks.

Speaker Change: Lastly, we expect to achieve our annual O&M savings target of $120 million to $130 million this year.

Speaker Change: Before we get started I'll draw your attention to slide two and a brief cautionary statement.

Speaker Change: Our presentation today contains forward looking statements about future operating results or other future events.

Speaker Change: Which is compared to our 2021 baseline O&M.

Speaker Change: Looking ahead.

Speaker Change: Actual results may differ materially from these forward looking statements.

Speaker Change: We're well positioned to achieve our projected 6% to 8% annual earnings per share and dividend growth through at least 2027.

Speaker Change: Please refer to the appendix of this presentation and P. P. O S. T SEC filings for a discussion of some of the factors that could cause actual results to differ from the forward looking statements.

Speaker Change: We remain as focused as ever on executing our capital plan, which includes $14 $3 billion in infrastructure improvements from 2024 to 2027.

Speaker Change: We will also refer to non-GAAP measures, including earnings from ongoing operations or ongoing earnings on this call.

Speaker Change: And across PPL, we continue to drive efficiencies through our utility of the future strategy keeping us on pace to achieve our annual O&M savings target of at least $175 million by 2026.

Reconciliations to the comparable GAAP measures please refer to the appendix.

Speaker Change: I'll now turn the call over to Vince.

Vince Sorgi: Thank you Andy and good morning, everyone.

Vince Sorgi: Welcome to our second quarter Investor update.

Speaker Change: Again compared to our 2021 baseline.

Vince Sorgi: Let's start with our financial results and a few highlights from our second quarter performance on slide four.

Speaker Change: Moving to slide five.

Speaker Change: I want to reiterate our utility of the future strategy.

Vince Sorgi: Today, we reported second quarter GAAP earnings of 26 cents per share.

Speaker Change: Which in a nutshell is to deliver a net zero energy system by 2050, but one that continues to be reliable and affordable for our customers.

Speaker Change: Adjusting for special items second quarter earnings from ongoing operations were 38 cents per share.

Speaker Change: The de Carbonization strategy here in the U S and even globally.

Backed by another strong quarter today, we reaffirmed our 2020 for ongoing earnings forecast of $1 63 to $1 75 per share.

Speaker Change: To electrify as much of the economy as we can.

And generate the needed electricity with no or low carbon solutions.

Speaker Change: And expect to achieve at least the midpoint of our forecast range.

Speaker Change: This will significantly increase the demand for electricity.

Vince Sorgi: In addition, we continue to make excellent progress in delivering on our 2024 priorities.

Speaker Change: Currently estimated at two to three times our current levels.

Speaker Change: But it also requires the electricity grid to be significantly more reliable and resilient than it is today.

Speaker Change: We're on track to complete approximately $3 $1 billion in infrastructure improvements this year.

Speaker Change: Our utility of the future strategy addresses this challenge head on.

Speaker Change: To advance our reliable resilient affordable and cleaner energy future for our customers.

Speaker Change: Across multiple focus areas.

Speaker Change: We're on pace to exit our remaining transition service agreements with national grid in the coming weeks.

Speaker Change: First we.

Speaker Change: We will improve the reliability and resiliency of our electric and gas networks through.

Speaker Change: And to complete what has so far been a seamless integration of Rhode Island energy into P. P. L.

Speaker Change: Through updated design criteria and system hardening to better protect against more frequent and severe storms through automation AI and smart grid technology that offer self healing grid capabilities.

Speaker Change: Lastly, we expect to achieve our annual O&M savings target of $120 million to $130 million this year.

Speaker Change: Which is compared to our 2021 baseline O&M.

Speaker Change: Through grid enhancing technologies that help us extract the most from existing infrastructure.

Speaker Change: Looking ahead.

Speaker Change: We're well positioned to achieve our projected 6% to 8% annual earnings per share and dividend growth through at least 2027.

Speaker Change: And through robust and ever evolving cyber security that protects against present and future threats.

At the same time, we will continue to advance the clean energy transition affordably and reliably.

Speaker Change: We remain as focused as ever on executing our capital plan, which includes $14 $3 billion in infrastructure improvements from 2024 to 2027.

Speaker Change: We will achieve this by transitioning to a reliable affordable and cleaner energy mix. One that includes an important role for dispatch able natural gas as we retire aging coal fired generation will.

Speaker Change: And across the P. P. L. We continue to drive efficiencies through our utility of the future strategy.

Speaker Change: Keeping us on pace to achieve our annual O&M savings target of at least $175 million by 2026.

Speaker Change: We will do it by positioning the grid to connect increased renewables, including behind the meter resources.

Speaker Change: And we will do it by continuing to lead partner and invest in R&D to accelerate the commercialization of low carbon technologies needed to achieve net zero technology.

Speaker Change: Again compared to our 2021 baseline.

Vince Sorgi: Moving to slide five.

Vince Sorgi: I want to reiterate our utility of the future strategy.

Speaker Change: Technologies, such as advanced nuclear carbon capture hydrogen and long duration energy storage.

Speaker Change: Which in a nutshell is to deliver a net zero energy system by 2050, but one that continues to be reliable and affordable for our customers.

Speaker Change: This includes the recent partnerships we've made with the department of energy to explore the feasibility of coal to nuclear transitions at some of our power plant sites in Kentucky and.

Speaker Change: The decarbonization strategy here in the U S and even globally is to electrify as much of the economy as we can.

Speaker Change: And generate the needed electricity with no or low carbon solutions.

Speaker Change: And a leading carbon capture R&D project at our cane run combined cycle gas plant.

Speaker Change: This will significantly increase the demand for electricity.

Speaker Change: Our utility of the future strategy also includes driving sustainable efficiencies to keep energy affordable for our customers as we invest in the clean energy transition.

Speaker Change: Currently estimated at two to three times.

Speaker Change: Pardon the interruption. It is the conference operator, Matt. We're speaking privately may I have your name for the call.

Speaker Change: For every dollar of O&M, we can take out of the business.

Speaker Change: We can invest about $8 in capital without impacting our customers' bills.

Matt: Your line may be muted or have to disconnect.

Speaker Change: This is why becoming more efficient is such an important part of our strategy and helps to keep the transition more affordable for our customers.

Matt: Your line may be muted.

Speaker Change: Yeah.

Speaker Change: We are also focused on using AI and other advanced technologies, more broadly, which will drive further efficiencies and improved results.

Speaker Change: We are starting to see firsthand the power of AI and how transformational this technology will be to our business.

Speaker Change: This includes balancing to create and peak shaving empowering our customers and enhancing their experience with our utilities.

Speaker Change: Further improving reliability, while lowering our costs.

Speaker Change: The applications of AI technology are tremendous for our industry and we are extremely focused to unlock that potential to deliver real value.

Speaker Change: And finally, we will continue to engage in lead discussions with a wide range of stakeholders to strengthen resource adequacy in the regions we serve.

Speaker Change: Specifically, including markets like PJM, which is even more critical following the capacity auction results that were just released this week.

Speaker Change: With increasing demand and tight supply we need to do everything we can to protect our customers from such price volatility include.

Speaker Change: Including investing further in transmission upgrades to alleviate constrained zones, incorporating additional grid enhancing technologies to get as much as we can from existing lines.

Speaker Change: And advocating for legislative changes in Pennsylvania that would drive me to generation development, including authority that would support regulated utility investments in new generation.

Speaker Change: Collectively these actions will not only maintain reliability, but also power economic development, while at the same time support datacenter growth and expansion, which we consider critical to American competitiveness and National security.

Speaker Change: This is our utility of the future playbook to not only address the challenges of delivering our clean energy future that is affordable and reliable, but to enable us to thrive and grow in that ever changing energy landscape.

Speaker Change: Moving to slide six.

Speaker Change: And a deeper dive on our support for data centers.

Speaker Change: Starting with Pennsylvania.

Speaker Change: We truly believe our Pennsylvania service territory is uniquely positioned to service.

We are also focused on using AI and other advanced technologies more broadly.

Speaker Change: Large scale data center connections.

Which will drive further efficiencies and improved results.

Speaker Change: First we've invested six $5 billion over the last decade in our transmission network.

We are starting to see firsthand the power of AI and how transformational this technology will be to our business.

Speaker Change: While leveraging advanced dynamic line rating technology, which together has improved the reliability of the network to top decile performance nationwide.

This includes balancing to create and peak shaving empowering our customers and enhancing their experience with our utilities and.

Speaker Change: Our advanced transmission network is capable of connecting the current data center demand in our Q and.

And further improving reliability, while lowering our cost.

Speaker Change: And we are confident we can support even further demand should it materialized.

The applications of AI technology are tremendous for our industry and we are extremely focused to unlock that potential to deliver real value.

Speaker Change: This means we can respond very quickly to develop our interconnection request our team responds within six weeks.

And finally, we will continue to engage in lead discussions with a wide range of stakeholders to strengthen resource adequacy in the regions we serve.

As a result, we now have a total of over 17 gigawatts of interconnection requests in Pennsylvania, and new requests continue to come in each month.

Specifically, including markets like PJM, which is even more critical following the capacity auction results that were just released this week.

Speaker Change: While it is likely that some of these requests are duplicative due to developers assessing multiple sites at the same time we.

With increasing demand and tight supply we need to do everything we can to protect our customers from such price volatility include.

Speaker Change: We have nearly five gigawatts of potential data center demand in advanced stages of planning.

Speaker Change: Up from the three Gigawatts, we discussed during our first quarter update in May.

Including investing further in transmission upgrades to alleviate constraints zones, incorporating additional grid enhancing technologies to get as much as we can from existing lines.

Speaker Change: These projects all have signed agreements with developers are in various stages of Pjm's review process with some having already completed that review.

And advocating for legislative changes in Pennsylvania that would drive me to generation development, including authority that would support regulated utility investments in new generation.

Speaker Change: And cost being occurred by PPL are reimbursable by the developers if they do not move forward with the projects.

Speaker Change: On the financial impacts of data centers. The primary upside is in the form of additional returns on transmission investments to FERC formula rates.

Collectively these actions will not only maintain reliability, but also power economic development, while at the same time support datacenter growth and expansion, which we consider critical to American competitiveness and National security.

Speaker Change: We estimate that the five gigawatts of potential demand in the advanced stages.

Speaker Change: Representing incremental PPL capital needs, a $400 million to $450 million.

This is our utility of the future playbook to not only address the challenges of delivering our clean energy future that is affordable and reliable, but to enable us to thrive and grow in that ever changing energy landscape.

Speaker Change: And because we operate in PJM in Pennsylvania. This data center development will reduce net transmission costs for our existing retail customers.

Speaker Change: We estimate for every one gigawatt of data center demand that's connected to the grid or.

Moving to slide six.

Speaker Change: Our residential customers would save about 10% on the transmission portion of their bill.

A deeper dive on our support for data centers.

Starting with Pennsylvania.

Speaker Change: For the average residential customer that would represent about $3 a month in savings.

We truly believe our Pennsylvania service territory is uniquely positioned to service large scale data center connections.

Speaker Change: So the five gigawatts in advanced stages of development that would represent about $15 a month in savings for the average residential customer using a 1000 kilowatt hours a month of electricity.

First we've invested six $5 billion over the last decade in our transmission network.

While leveraging advanced dynamic line rating technology, which together has improved the reliability of the network to top decile performance nationwide.

Speaker Change: Turning to Kentucky.

Speaker Change: Our service territory, there is better suited for mid sized data centers. As we also have an abundance of land and water have lower energy prices than much of the U S and.

Our advance transmission network is capable of connecting the current data center demand in our queue.

Speaker Change: And provide for tax incentives in certain counties that we serve.

And we are confident we can support even further demand should it materialized.

Speaker Change: We are also confident we can make the needed transmission and generation investments required to support continued data center and industrial growth in the Commonwealth.

This means we can respond very quickly to developer interconnection request our team responds within six weeks.

As a result, we now have a total of over 17 gigawatts of interconnection requests in Pennsylvania.

Speaker Change: We continue to work with data center developers in our LG <unk> and Ku service territories with active request totaling more than two gigawatts in the 2027% to 2033 timeframe with about 350 megawatts in advanced stages.

New requests continue to come in each month.

While it is likely that some of these requests are duplicative due to developers assessing multiple sites at the same time.

Speaker Change: As in Pennsylvania.

We have nearly five gigawatts of potential data center demand in advanced stages of planning.

Speaker Change: Any transmission upgrades in Kentucky would be additive to our capital plan, although the more significant capital investments in Kentucky would arise from any incremental generation investments.

Up from the three Gigawatts, we discussed during our first quarter update in May.

These projects all have signed agreements with developers are in various stages of Pjm's review process with some having already completed that review.

Speaker Change: Once our new Mill Creek five combined cycle gas plant is operational in 2027, we estimate that we will have approximately four to 500 megawatts of generation capacity available to support further load growth, while maintaining our prudent reserve margins.

And cost being incurred by PPL are reimbursable by the developers if they do not move forward with the projects.

On the financial impacts of data centers. The primary upside is in the form of additional returns on transmission investments through FERC formula rates.

Speaker Change: With Kentucky coming off the best four year period of economic growth in the state history.

On top of this potential new data center demand, we continue to actively monitor our capacity needs to maintain a safe and reliable network for customers.

We estimate that the five gigawatts of potential demand in the advanced stages represents incremental PPL capital needs, a $400 million to $450 million.

Speaker Change: Should new generation become necessary to serve higher electricity demand.

And because we operate in PJM in Pennsylvania. This data center development will reduce net transmission costs for our existing retail customers.

Speaker Change: Can use mill Creek unit five is a reference for pricing on potential new Baseload generation.

We estimate for every one gigawatt of data center demand connected to the grid.

Speaker Change: That unit, which was approved by the <unk> last year.

Speaker Change: As an expected cost of $1 billion.

Our residential customers would save about 10% on the transmission portion of their bill.

Speaker Change: The updated integrated resource plan, which will be filed with the PSC in October will guide any further generation needs.

For the average residential customer that would represent about $3 a month in savings.

Speaker Change: Keep in mind there are many factors that go into our generation planning and reserve margin analysis.

For the five Gigawatts in advanced stages of development that would represent about $15 a month in savings for the average residential customer using 1000 kilowatt hours a month of electricity.

Speaker Change: We will refresh that analysis. This fall and will include updated load projections and related supply needs.

Speaker Change: As we think about possibly needing to build the second combined cycle gas plant to meet that load growth. It's important to note that we still have a spot in the queue for a second gas turbine from our prior solicitation.

Turning to Kentucky, Our service territory, there is better suited for mid sized data centers. As we also have an abundance of land and water have lower energy prices that much of the U S.

Speaker Change: It is important to highlight that our rate designs in both Pennsylvania, and Kentucky protect our customers from undue burdens related to data center connections.

And provide for tax incentives in certain counties that we serve.

We are also confident we can make the needed transmission and generation investments required to support continued data center and industrial growth in the Commonwealth.

Speaker Change: In both jurisdictions the data centers are under tariffs that will benefit our non data center customer rates.

We continue to work with data center developers in our LGD and Ku service territories with active request totaling more than two gigawatts in the 2027% to 2033 timeframe with about 350 megawatts in advanced stages.

Speaker Change: Bottom line is as I shared last quarter were ready and eager to support perspective data centers, and we are well positioned to serve their needs.

Speaker Change: And the good news is that our customers shareowners and the states, which we serve.

As in Pennsylvania.

Any transmission upgrades in Kentucky would be additive to our capital plan, although the more significant capital investments in Kentucky would arise from any incremental generation investments.

Speaker Change: All benefit from this development.

Speaker Change: Moving to slide seven and several key operational and regulatory updates.

Speaker Change: On July 11th the Pennsylvania, PUC approved PPL electric utilities' request to modify its current long term infrastructure improvement plan or <unk>.

Once our new Mill Creek five combined cycle gas plant is operational in 2027, we estimate that we will have approximately $4 to 500 megawatts of generation capacity available to support further load growth, while maintaining our prudent reserve margins.

Speaker Change: The decision granted us permission to classify approximately $200 million of reliability investments through 2027 as capital eligible for recovery through the desk or the distribution system improvement charge.

With Kentucky coming off the best four year period of economic growth in the state history.

Speaker Change: While the PUC denied our request to classify $84 million of planned investments in predictive failure technology is being disc eligible.

On top of this potential new data center demand, we continue to actively monitor our capacity needs to maintain a safe and reliable network for customers.

Speaker Change: The PUC viewed our predictive failure project favorably and indicated PPL electric may seek recovery of these project costs in the future base rate case.

Should new generation become necessary to serve higher electricity demand.

We can use mill Creek unit five is a reference for pricing on potential new Baseload generation.

Speaker Change: Overall, the approves modification to our L. Tip represents a positive outcome that supports our continued investments to repair and replace aging infrastructure and strength in grid reliability.

That unit, which was approved by the <unk> last year.

And expected cost of $1 billion.

The updated integrated resource plan, which will be filed with the PSC in October will guide any further generation needs.

Speaker Change: Changes to the plan will be implemented during the current planned period, which extends through December 31 2027.

Keep in mind there are many factors that go into our generation planning and reserve margin analysis.

Also in Pennsylvania, our disc waiver petition continues to proceed through the process as expected.

We will refresh that analysis. This fall and will include updated load projections and related supply needs.

Speaker Change: In June an ALJ was assigned in a procedural schedule was created which we have provided in the appendix.

As we think about possibly needing to build the second combined cycle gas plant to meet that load growth. It's important to note that we still have a spot in the queue for a second gas turbine from our prior solicitation.

Based on that schedule, we continue to expect the proceeding to conclude later this year with a decision in early 2025.

It is important to highlight that our rate designs in both Pennsylvania, and Kentucky protect our customers from undue burdens related to data center connections.

Speaker Change: Shifting to Kentucky.

Speaker Change: We recently kicked off construction of our planned 650 megawatt Bell Creek unit five combined cycle natural gas plant following several months of prep work.

In both jurisdictions the data centers are under tariffs that will benefit our non datacenter customer rates.

Speaker Change: A new unit as part of more than $2 billion in plant generation investments over the next several years.

Bottom line is as I shared last quarter were ready and eager to support prospective data centers and we are well positioned to serve their needs.

Speaker Change: Economically replaced 600 megawatts of aging coal generation with a reliable affordable and cleaner energy mix.

Speaker Change: In addition, all long lead time equipment deliveries remain on schedule.

And the good news is that our customers shareowners and the states, which we serve all benefit from this development.

Speaker Change: Overall, we're on track to complete construction and begin commercial operation of the unit in 2027.

Moving to slide seven and several key operational and regulatory updates.

Speaker Change: We will earn <unk> on this capital project until it goes into commercial operation.

On July 11th the Pennsylvania, PUC approved PPL electric utilities' request to modify its current long term infrastructure improvement plan or <unk>.

Speaker Change: In addition, we secured a site compatibility certificate from the PSC in July for a planned 120 megawatt solar facility to be built in Mercer County, Kentucky.

The decision granted us permission to classify approximately $200 million of reliability investments through 2027 as capital eligible for recovery through the desk for the distribution system improvement charge.

Speaker Change: The approval helps pave the way for final site design and construction of the new facility, which we expect to begin commercial operation in 2026.

While the PUC denied our request to classify $84 million of planned investments in predictive failure technology is being desk eligible.

Finally, just this week, we successfully completed another labor contract negotiation this.

Speaker Change: This latest agreement covers about 60 employees in Kentucky and represents the fifth successful union negotiation over the last year, representing over 50% of our union workforce.

The PUC viewed our predictive failure project favorably.

<unk> indicated PPL electric may seek recovery of these project costs in the future base rate case.

Speaker Change: We look forward to continued success in this area for years to come balancing the needs of our employees and customers.

Overall, the approved modifications to our L. Tip represents a positive outcome that supports our continued investments to repair and replace aging infrastructure and strength in grid reliability.

Speaker Change: That concludes my strategic and operational update I'll now turn the call over to Joe for the financial update.

Changes to the plan will be implemented during the current planned period, which extends through December 31 2020.

Joe Bergstein: Thank you Vince and good morning, everyone, let's turn to slide nine.

Joe Bergstein: <unk> second quarter GAAP earnings were <unk> 26 per share.

Also in Pennsylvania, our disc waiver petition continues to proceed through the process as expected.

Joe Bergstein: Impaired to <unk> 15 per share in Q2 2023.

In June an ALJ was assigned in a procedural schedule was created which we have provided in the appendix.

Joe Bergstein: We recorded special items of <unk> 12 per share during the second quarter, primarily due to integration and related expenses associated with the acquisition of Rhode Island Energy.

Based on that schedule, we continue to expect the proceeding to conclude later this year with a decision in early 2025.

Joe Bergstein: Adjusting for these special items second quarter earnings from ongoing operations were <unk> 38 per share an improvement of <unk> <unk> per share compared to Q2 2023.

Shifting to Kentucky.

We recently kicked off construction of our planned 650 megawatt Bell Creek unit five combined cycle natural gas plant following several months of prep work.

Joe Bergstein: Primary drivers of this increase were returns on capital investments at higher sales volumes, primarily due to the return to more normal weather conditions.

The new unit is part of more than $2 billion in plant generation investments over the next several years.

To economically replaced 600 megawatts of aging coal generation with a reliable affordable and cleaner energy mix.

Joe Bergstein: In total we estimate that weather was about <unk> <unk> favorable compared to the prior year and about <unk> <unk> favorable to normal conditions.

In addition, all long lead time equipment deliveries remain on schedule.

Joe Bergstein: These positive drivers were partially offset by higher interest expense, primarily due to higher debt balances with the issuances at PPL electric and Rhode Island Energy earlier, this year, which were executed at attractive rates favorable to our forecast.

Overall, we're on track to complete construction and begin commercial operation of the unit in 2020.

We will earn <unk> on this capital project until it goes into commercial operation.

In addition.

We secured a site compatibility certificate from the <unk> in July for a planned 120 megawatt solar facility to be built in Mercer County, Kentucky.

Joe Bergstein: We will continue to monitor the markets and leverage our excellent credit position to be opportunistic and efficiently finance our capital plans.

Joe Bergstein: Our Q2 performance puts Ppl's GAAP earnings at <unk> 67 per share year to date through June 30, compared to <unk> 54 per share through the same period last year.

The approval helps pave the way for final site design and construction of the new facility, which we expect to begin commercial operation in 2026.

Finally, just this week, we successfully completed another labor contract negotiation.

Joe Bergstein: Adjusting for special items recorded through the second quarter, earning.

Joe Bergstein: Earnings from ongoing operations totaled <unk> 92 per share for the first half of 2024, an improvement of <unk> 15 per share compared to the first half of 2023.

This latest agreement covers about 60 employees in Kentucky and represents the fifth successful union negotiation over the last year, representing over 50% of our union workforce.

Joe Bergstein: We estimate that weather has been <unk> <unk> favorable compared to the first six months of 2023, while tracking slightly below normal conditions year to date in 2024.

We look forward to continued success in this area for years to come balancing the needs of our employees and customers.

That concludes my strategic and operational update I will now turn the call over to Joe for the financial update.

Joe Bergstein: The full year to date ongoing earnings walk by segment is included in the appendix.

Thank you Vince and good morning, everyone, let's turn to slide nine.

Speaker Change: Turning to the Argus growing segment drivers for the second quarter on slide 10.

Ppl's second quarter GAAP earnings were <unk> 26 per share.

Speaker Change: Our Kentucky segment results increased by <unk> <unk> per share compared to the second quarter of 2023.

<unk> to <unk> 15 per share in Q2 2023.

Speaker Change: The improvement in Kentucky's results was driven by higher sales volumes, primarily due to the return to normal weather and lower operating costs.

We recorded special items of <unk> 12 per share during the second quarter, primarily due to integration and related expenses associated with the acquisition of Rhode Island Energy.

Our Pennsylvania regulated segment results increased by <unk> <unk> per share compared to the same period a year ago.

Adjusting for these special items second quarter earnings from ongoing operations were <unk> 38 per share an improvement of <unk> <unk> per share compared to Q2 2023.

Speaker Change: The increase was driven by higher transmission revenues and higher sales volumes due to a combination of a return to normal weather and increased usage per customer.

Primary drivers of this increase were returns on capital investments at higher sales volumes, primarily due to the return to more normal weather conditions.

Speaker Change: Our Rhode Island segment results increased by one seven per share compared to the same period a year ago.

Speaker Change: This increase was primarily driven by higher distribution revenue from capital investments.

In total we estimate that weather was about <unk> <unk> favorable compared to the prior year at about one favorable to normal conditions.

Speaker Change: Transmission revenue and higher interest income, partially offset by higher operating costs and higher property taxes.

These positive drivers were partially offset by higher interest expense primarily.

Speaker Change: Finally results of corporate and other decreased by <unk> <unk> per share compared to the prior period, primarily due to higher interest expense.

Primarily due to higher debt balances with the issuances at PPL electric and Rhode Island Energy earlier, this year, which were executed at attractive rates favorable to our forecast.

Speaker Change: With another strong quarter behind us we're on track to achieve at least the midpoint of our 2024 earnings forecast of $1 69 per share on.

And we'll continue to monitor the markets and leverage our excellent credit position to be opportunistic and efficiently finance our capital plans.

Speaker Change: I am extremely pleased with our financial performance as we continue to execute our plan and our utility of the future strategy.

Our Q2 performance puts Ppl's GAAP earnings at <unk> 67 per share year to date through June 30 <unk>.

Speaker Change: This concludes my prepared remarks, I'll now turn the call back over to Vince.

Compared to <unk> 54 per share through the same period last year.

Thank you Joe.

Vince Sorgi: In closing we continued our strong track record of execution in the second quarter.

Adjusting for special items recorded through the second quarter.

Earnings from ongoing operations totaled <unk> 92 per share for the first half of 2024, an improvement of <unk> 15 per share compared to the first half of 2023.

Vince Sorgi: Further strengthening ppl's investment thesis.

Vince Sorgi: We are implementing our utility of the future strategy necessary to deliver a clean energy future affordably and reliably.

Speaker Change: We estimate that weather has been <unk> <unk> favorable compared to the first six months of 2023, while tracking slightly below normal conditions year to date in 2024.

Speaker Change: We are securing constructive outcomes in key regulatory proceedings.

Speaker Change: We're achieving strong financial results, which positions us to deliver at least the midpoint of our targeted EPS growth this year and to grow earnings and dividends by 6% to 8% through at least 2027.

The full year to date ongoing earnings walk by segment is included in the appendix.

Turning to the ongoing segment drivers for the second quarter on slide 10.

Speaker Change: We're maintaining one of the premier balance sheets in our sector that supports the growing investment needs across our jurisdictions.

Our Kentucky segment results increased by <unk> <unk> per share compared to the second quarter of 2023.

Speaker Change: We're advancing the economic transition of our generation fleet in Kentucky.

The improvement in Kentucky's results was driven by higher sales volumes, primarily due to the return to normal weather and lower operating costs.

Speaker Change: And we're continuing to power economic development that strengthens our communities, including the support of data center expansion.

Our Pennsylvania regulated segment results increased by <unk> <unk> per share compared to the same period a year ago.

Speaker Change: Overall, we've made significant progress on our plans through the first half of the year.

Speaker Change: We're eager to build on this momentum in the back half of 2024 and beyond.

Speaker Change: The increase was driven by higher transmission revenues and higher sales volumes due to a combination of a return to normal weather and increased usage per customer.

Speaker Change: And we look forward to once again delivering on our commitments to shareowners customers and the communities we serve.

Speaker Change: With that operator, let's open it up for questions.

Speaker Change: Our Rhode Island segment results increased by one seven per share compared to the same period a year ago.

Speaker Change: 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.

Speaker Change: This increase was primarily driven by higher distribution revenue from capital investments.

Speaker Change: Higher transmission revenue and higher interest income, partially offset by higher operating costs and higher property taxes.

Speaker Change: Anytime Youre question has been addressed and you would like to withdraw your question. Please press Star then two at.

Speaker Change: Finally results of corporate and other decreased by <unk> <unk> per share compared to the prior period, primarily due to higher interest expense.

Speaker Change: At this time, we will pause momentarily to assemble our roster.

Speaker Change: With another strong quarter behind us we're on track to achieve at least the midpoint of our 2024 earnings forecast of $1 69 per share.

Shar <unk>: The first question comes from Shar <unk> with Guggenheim Partners. Please go ahead.

Vince Sorgi: I am extremely pleased with our financial performance as we continue to execute our plan and our utility of the future strategy.

Shar <unk>: Hey, guys good morning good.

Shar <unk>: Good morning, Vince Vince just trying to get a sense on the transmission side. We're looking at 400 to 450 incremental per this update we've also seen a blowout print and the capacity auction potentially foreshadowing more our type work what does all this start to add up to as we look at the at your.

Speaker Change: This concludes my prepared remarks, I'll now turn the call back over to Vince.

Vince Sorgi: Thank you Joe.

Speaker Change: In closing we continued our strong track record of execution in the second quarter further strengthening ppl's investment thesis.

Speaker Change: We are implementing our utility of the future strategy necessary to deliver a clean energy future affordably and reliably.

Speaker Change: $725 million placeholder for 27, how should we think about the timing of the shape of that spend as we update our models for 28 and beyond versus that 27 play solar you have in plan. Thanks.

Speaker Change: We are securing constructive outcomes in key regulatory proceedings.

Speaker Change: We're achieving strong financial results, which positions us to deliver at least the midpoint of our targeted EPS growth this year and to grow earnings and dividends by 6% to 8% through at least 2027.

Speaker Change: Yes sure.

Speaker Change: What you are bringing up is a good point in terms of.

Speaker Change: What what is the capacity auction signifying right.

Vince Sorgi: We're maintaining one of the premier balance sheets in our sector that supports the growing investment needs across our jurisdictions.

Speaker Change: Clearly I think it's.

Speaker Change: There is a clear signal that we need new generation and transmission investments needed in PJM.

Vince Sorgi: We're advancing the economic transition of our generation fleet in Kentucky.

Vince Sorgi: And we're continuing to power economic development that strengthens our communities, including the support of data center expansion.

In terms of.

Speaker Change: Our ability to invest in transmission I think thats in a few areas.

Speaker Change: Overall, we've made significant progress on our plans through the first half of the year.

Speaker Change: There were the two zones.

Speaker Change: We're eager to build on this momentum in the back half of 2024 and beyond.

Speaker Change: That broke out above the RTL.

Speaker Change: And we look forward to once again delivering on our commitments to shareowners customers and the communities we serve.

Speaker Change: Clearly I think there is opportunity for additional transmission solutions going into there. So I think we can probably expect there to be an open window to try to resolve some of that.

Speaker Change: With that operator, let's open it up for questions.

Speaker Change: 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.

Speaker Change: As you know in the past we have been successful.

And winning some projects going down into the Maryland, Virginia area.

Speaker Change: So it could be additional opportunity. There. In addition to just the investments in our own area.

Speaker Change: Anytime Youre question has been addressed and you would like to withdraw your question. Please press Star then two at.

Speaker Change: I would say that from a from a broader.

Speaker Change: At this time, we will pause momentarily to assemble our roster.

Speaker Change: Strategic perspective, I think those auction results also.

Speaker Change: I would reinforce our strategy and working with the state of Pennsylvania, and the other agencies in the state to help resolve.

Speaker Change: The first question comes from Shar <unk> with Guggenheim Partners. Please go ahead.

Speaker Change: The resource adequacy concerns that many of us have been talking about for a while now.

Speaker Change: Hey, guys good morning good.

Shar: Good morning, Vince Vince just trying to get a sense on the transmission side. We're looking at 400 to 450 incremental per this update we have also seen a blowout print in the capacity auction potentially foreshadowing more our tap work what does all this start to add up to as we look at the at your <unk>.

Speaker Change: <unk> and PJM and so we're not going to just sit back and wait for this issue to resolve itself. We have an obligation to serve and do everything we can for our customers whether it's these additional transmission investments I think we can do additional grid enhancing technologies on the on the existing grid.

Speaker Change: $125 million placeholder for 27, how should we think about the timing of the shape of that spend as we update our models for 28.

Speaker Change: And then continuing to advocate for legislative change. So, we'll we will continue to push that agenda.

Speaker Change: And beyond versus that 27 play solar you have in plan. Thanks.

Speaker Change: Ultimately lowered the price of electricity for our customers and reduce the volatility.

Speaker Change: Thanks.

Speaker Change: Yes sure.

Speaker Change: I think what you're bringing up is a good point in terms of.

Vince Sorgi: And then Vince just on the it's a good that's a good segue to my follow up is on the broader resource adequacy question in light of DRA a lot of your wireless peers have commented on it. This way you just did we've had in the past we've had similar attempts on this kind of reregulation of certain amount of generation over 13 years.

Vince Sorgi: What.

Vince Sorgi: What is the capacity auction signifying right.

Speaker Change: Clearly I think yes, it's.

Speaker Change: It's showing that there is a clear signal that we need new generation and transmission investments.

Speaker Change: In PJM.

Speaker Change: In terms of.

Speaker Change: Alright, and New Jersey, and Maryland, with El cap, an end cap program, which ultimately got struck down by the court. So there was a little bit more on the capacity side versus energy, but I guess, what's different now focusing on potential generation request by the wireless companies.

Speaker Change: Our ability to invest in transmission I think thats in a few areas. Obviously there were the two zones.

Speaker Change: That broke out above the RTL.

Speaker Change: Clearly I think there is opportunity for additional transmission solutions going into there so.

Speaker Change: The conversations Atwood policymakers are they waiting for the IP piece to step up and build what's the trigger point should should we be watching legislative window next year I guess.

Matt: We could probably expect there to be an open window to try to resolve some of that.

Speaker Change: Just elaborate a little bit on some of the dialogue you guys are having.

Speaker Change: In the past we have been successful in winning some projects going down into the Maryland, Virginia area.

Speaker Change: Yes, well look I think the biggest difference shar is what's in the queue right.

Speaker Change: So it could be additional opportunity. There in addition to just investments in our own area.

Speaker Change: And what we're seeing right now.

Speaker Change: I would say that from from a broader.

Speaker Change: Significant a significant amount of dispatch of generation being retired.

Speaker Change: Strategic perspective, I think those auction results also.

Speaker Change: With very little dispatch will generation coming on.

Speaker Change: I would reinforce our strategy and working with the <unk>.

Speaker Change: And so I think thats the big.

Speaker Change: The big issue is not so much the energy plan, the capacity planning and having making sure that we have enough capacity to serve.

Speaker Change: Date of Pennsylvania, and the other <unk> in the state to help resolve the resource adequacy concerns that many of us have been talking about for a while now in particular in PJM and so we're not going to just sit back and wait for this issue to resolve itself, we have an obligation to serve in.

Speaker Change: 24 hours a day seven days a week to under 65, so thats really the Thats really the big difference I would say from what we're seeing now.

Speaker Change: And so what's being less in the market is creating real concerns around.

Speaker Change: Do everything that we can for our customers whether it's these additional transmission investments I think we can do additional grid enhancing technologies on the on the existing grid and then continuing to advocate for legislative changes.

Speaker Change: Resource adequacy, I think Theres, a few signposts that we're certainly watching.

Speaker Change: To determine what the long term impact of this capacity auction will be in terms of our customer bills, but also just on resource adequacy, we want to see what the auction results are for the 'twenty six 'twenty seven planning year, which will happen in December.

Speaker Change: We will continue to push that agenda.

Speaker Change: Ultimately lowered the price of electricity for our customers and reduce the volatility.

Speaker Change: And then Vince just on the it's a good that's a good segue to my follow up is just on the broader resource adequacy question in light of BRL.

Speaker Change: Thanks for the 2728 planning gear that will occur next June.

Vince Sorgi: Sort of your wireless peers have commented on it this way you just did.

Speaker Change: I want to see if there's any new dispatch a whole generation entering the queue between now and December right.

Speaker Change: In the past we've had similar attempts on this kind of reregulation of certain amount of generation over 13 years ago, right in New Jersey, and Maryland, with El cap cap program, which ultimately got struck down by the court. So there was a little bit more on the capacity side versus energy, but I guess, what's different now focusing on potential generation requests.

Speaker Change: We suspect that the Ipp's will want to see more than just this one data point before theyre committing to building new dispatch will Jan with natural gas.

Speaker Change: So we'll be keeping an eye on that.

Speaker Change: So theres a few things that we'll be looking at this of course is one data point, but I think it clearly supports.

Speaker Change: By the wireless companies, where the compensations Atwood policymakers are they waiting for the IP piece to step up and build what's the trigger point should should we be watching legislative window next year I guess.

Speaker Change: Our strategy, which is.

Speaker Change: We need to make sure we keep resource adequacy adequacy front and center.

Speaker Change: The states are going to have to play an active role in that.

Speaker Change: Just elaborate a little bit on some of the dialogue you guys are having.

Speaker Change: Fortunately I think Pennsylvania is taking this issue very seriously and we look forward to continuing to work with all the stakeholders in the state to see what we can do to show this up.

Speaker Change: Yes, well look I think the biggest difference shar is what's in the queue right and what we're seeing right now.

Speaker Change: Okay perfect I appreciate the additional color and congrats on the result of an seriously we will see you soon.

Speaker Change: Significant significant amounts of dispatch of all generation being retired.

Speaker Change: With very little dispatch will generation coming on.

Mark: Thanks Mark.

Speaker Change: The next question comes from Derek <unk> Chopra with Evercore ISI. Please go ahead.

Speaker Change: And so I think thats the big the big issue is not so much the energy and capacity planning and having making sure that we have enough capacity to serve.

Derek Chopra: Good morning.

Hey, good morning wins.

Thank you for taking my questions, Hey, I just wanted to continue the discussion on the PJM auction results.

Speaker Change: 24 hours a day seven days a week to under 65. So that's really the that's really the big difference I would say from what we're seeing now.

Speaker Change: You mentioned.

Speaker Change: <unk>, probably want another signal before they can commit capital here.

Speaker Change: And so what's what's being less in the market is creating real concerns around <unk>.

Speaker Change: This is a pretty dramatic signal in terms of price increases.

Speaker Change: Resource adequacy, I think Theres, a few signposts that we're certainly watching.

Speaker Change: One of the things we're consistently getting asked from investors is what does it do to rebuilds.

Speaker Change: To determine what the long term impact of this capacity auction will be in terms of our customer bills, but also just on resource adequacy, we want to see what the auction results are for the.

Speaker Change: Just kind of talked about double digit increases.

Speaker Change: Some of their service territories I know this is not nine times translates into that large of a bill increase but just maybe can you.

Speaker Change: We discussed that a bit what does this mean for customer bills.

Speaker Change: <unk> 'twenty six 'twenty, seven planning year, which will happen in December.

Speaker Change: Yes of course so.

Speaker Change: I would say for the near term impact for our customer bills and this of course assumes.

Speaker Change: Thanks for the 27 to 28 planning year that'll occur next June.

Speaker Change: I want to see if there's any new dispatch of all generation entering the queue between now and December right.

Speaker Change: All else equal, which never is the case, but all else equal we would estimate that.

Speaker Change: We suspect that the Ipp's will want to see more than just this one data point before theyre committing to building new dispatch, we'll adjourn with natural gas.

Speaker Change: These higher prices would impact the generation portion of it.

Speaker Change: The bill for an average customer by about 10% to $15 per month that represents rough.

Speaker Change: So we'll be keeping an eye on that.

Speaker Change: Roughly a 5% to 10% of the total bill.

Speaker Change: So theres a few things that we'll be looking at this of course is one data point, but I think it clearly supports our strategy which is.

Speaker Change: We would expect that to begin in 2025.

Speaker Change: Our suppliers start to reflect these higher prices in their solicitations.

Yes, I did talk in our prepared remarks.

Speaker Change: We need to make sure we keep resource adequacy adequacy front and center. We think the states are going to have to play an active role in that.

Speaker Change: Fortunately in addition to the other actions that I just talked about with Shar.

Speaker Change: That we're taking on this issue we are seeing that substantial data center load.

Speaker Change: Unfortunately, I think Pennsylvania is taking this issue very seriously.

Speaker Change: And if we just stick with that five gigs in advance stages right that would reduce our customer bills over time by a similar amount that we're talking as a result of the capacity price increases once once that demand all comes online so.

Speaker Change: We're continuing to work with all the stakeholders in the state and see what we can do to show this.

Speaker Change: Okay perfect I appreciate the additional color and congrats on the result of an seriously we'll see you soon.

Chuck: Thanks Chuck.

Speaker Change: Lots of lots of moving parts on here.

Speaker Change: Our next question comes from Derek <unk> Chopra with Evercore ISI. Please go ahead.

Obviously, the capacity prices will have a near term.

Speaker Change: Increase impact and then we will look to mitigate that over time with.

Derek Chopra: Good morning.

Derek Chopra: Hey, good morning. Thank.

Speaker Change: Various actions, including the data center, let's comment on La.

Derek Chopra: Thank you for taking my questions, Hey, I just wanted to continue the discussion on the PJM auction results.

Speaker Change: That's very helpful. I appreciate the detail.

Speaker Change: You mentioned.

Speaker Change: And then just switching gears on the balance sheet.

Speaker Change: <unk>, probably want another signal before they can commit capital year.

Speaker Change: Just thinking about the $400 million to $450 million you mentioned in other opportunities across the different states, how should we be thinking about your balance sheet capacity.

Speaker Change: This is a pretty dramatic signal in terms of price increases.

Speaker Change: One of the things we're consistently getting asked from investors is what does it do to utility bills.

Speaker Change: What capex could be done.

Speaker Change: With that and at what point you might consider equity as we think about rolling forward Your plan here.

Speaker Change: <unk> kind of talked about double digit increases.

Speaker Change: Some of their service territories I know this is not nine times translates into that large of a bill increase but just maybe can you.

Speaker Change: Into 2029 now.

Speaker Change: Yes.

Speaker Change: Sure Hey, Doug This is Joe so to.

Speaker Change: Discuss that a bit what does this mean for customer bills.

Joe Bergstein: To say that our balance sheet is in really good shape and we expect to be.

Speaker Change: Yes of course so.

Speaker Change: Within our <unk> to.

Speaker Change: I would say for the near term impact for our customer bills and this of course assumes.

Speaker Change: That range of 16% to 18% through the planning horizon capital.

Speaker Change: As just one factor that goes into our financing needs and we'll work that through as we update our business plan, but obviously theres other things that drive those financing needs are determined ultimately do interest rates inflation.

Speaker Change: All else equal, which never is the case, but all else equal we would estimate that.

Speaker Change: These higher prices would impact the generation portion.

Speaker Change: The bill for an average customer by about 10 to $15 per month that represents.

Speaker Change: Our efficiency strategy certainly plays a role in that and then rate case outcomes. So as we go through the plan.

Speaker Change: <unk>, 5% to 10% of the total bill.

Speaker Change: We would expect that to begin in 2025 as our suppliers start to reflect these higher prices and theyre solicitation debt.

Speaker Change: All of these factors, including potential additions for for data centers and other opportunities, we'll take that into account, but again our balance sheet is in really good shape.

Speaker Change: Fortunately in addition to the other actions that I just talked about with Shar.

Thanks, Joe. Thank you both I appreciate the time.

Speaker Change: And that we're taking on this issue we are seeing that substantial data center load.

Josh: Thanks, Josh.

Speaker Change: The next question comes from David Arcaro with Morgan Stanley. Please go ahead.

Speaker Change: And if we just stick with that five gigs in advance stages.

Speaker Change: That would reduce our customer bills over time by a similar amount that we're talking as a result of the capacity price increases once once that demand all comes online so.

David Arcaro: Hey, good morning.

David Arcaro: Hey, Thanks for taking my questions.

David Arcaro: Okay.

Looking ahead to the Kentucky ERP in October just curious does it looked likely at this point that youll need new generation.

Speaker Change: Lots of lots of moving parts on here.

Speaker Change: As you're as you're crafting that before you file it.

Speaker Change: Obviously, the capacity prices will have a near term.

Speaker Change: <unk> impact and then we will look to mitigate that over time with <unk>.

Speaker Change: Well I, certainly don't want to get in front of that process.

Speaker Change: Right.

Speaker Change: Various actions, including the data center, let's comment on La.

Speaker Change: A very extensive process that we go through when we update the IRB. We are required to update that in October with the commission.

Speaker Change: That's very helpful. I appreciate the detail there.

Speaker Change: And then just switching gears on the balance sheet.

Speaker Change: The reason I say that David obviously, we have to do a full load forecast update right. So we will look at.

Speaker Change: Just thinking about the $400 million to $450 million you mentioned in other opportunities across the different states, how should we be thinking about your balance sheet capacity.

Speaker Change: What's going on with the industrial growth, what's going on with data centers, just general customer new customer additions and what we're seeing from a relatively use for customer perspective. We also have to take into account energy efficiency programs and distributed energy resource penetration of course.

Speaker Change: What capex could be done.

Speaker Change: And at what point you might consider equity as we think about rolling forward your plan here.

Speaker Change: Into 2029 now.

Speaker Change: Yes sure.

Speaker Change: Joe.

Joe Bergstein: To say that our balance sheet is in really good shape and we expect to be.

Speaker Change: Electric vehicles are starting to come in so we will do a comprehensive load forecast with multiple scenarios around that forecast and then ultimately.

Speaker Change: Within our <unk> to debt.

Speaker Change: That range of 16% to 18% through the planning horizon capital.

Speaker Change: As just one factor that goes into our financing needs and we'll work that through as we update our business plan, but obviously theres other things that drive those financing needs are determined ultimately do interest rates inflation.

Speaker Change: Feed into.

Speaker Change: We believe we will need to deal with that.

Speaker Change: Generation supply perspective, which.

Speaker Change: Which could include a combination of.

Speaker Change: Dispatch level resources to ensure we have capacity, there, which would be something like another combined cycle natural gas plant, but.

Speaker Change: Our efficiency strategy certainly plays a role in that and then rate case outcomes. So as we go through the plan.

Speaker Change: But it could also entail additional.

Speaker Change: Corporate all of these factors, including potential additions for for data centers and other opportunities, we'll take that into account, but again our balance sheet is in really good shape.

Speaker Change: Solar renewable resources batteries.

Speaker Change: Well, we got approved last year so.

Speaker Change: We don't want to get in front of what that result will be but suffice it to say, we'll go through that full analysis and we will have a pretty good sense when we file that.

Joe Bergstein: Thanks, Joe Alright. Thank you both I appreciate the time.

Speaker Change: Okay.

Josh: Thanks, Josh.

What our generation needs and then.

Speaker Change: The next question comes from David Arcaro with Morgan Stanley. Please go ahead.

Speaker Change: It shows the need for incremental generation, we would follow that up shortly thereafter with the CPC.

David Arcaro: Hey, good morning.

Speaker Change: To request approval for that.

David Arcaro: Hey, Thanks for taking my questions.

Speaker Change: Yeah understood that makes sense.

David Arcaro: Looking ahead to the Kentucky AARP in October just curious does it looked likely at this point that youll need new generation.

Speaker Change: I was also curious do you have a view on how long just thinking about the PJM market how tight.

Speaker Change: As you're as you're crafting that before you file it.

Speaker Change: That market has gotten here.

Speaker Change: How long does it take to build a new gas plant in PJM realistically like when could we actually see a supply response.

Speaker Change: Well I, certainly don't want to get in front of that process.

Speaker Change: Right.

Speaker Change: A very extensive process that we go through when we update the IRB we.

Speaker Change: It kind of from anybody.

Speaker Change: As we as we.

Speaker Change: We are required to update in October with the commission.

Speaker Change: Look at.

Speaker Change: Supporting this supply demand tightness.

Speaker Change: Yes, youre not going to love this answer but it depends right.

Speaker Change: The reason I say that David obviously, we have to do a full load forecast update right. So we'll look at.

Speaker Change: Are we talking <unk> or are we talking combined cycle do you own turbine Mr. You have to get in the queue.

Speaker Change: What's going on with the industrial growth, what's going on with data centers, just general customer new customer additions and what we're seeing from a relatively used for customer perspective. We also have to take into account energy efficiency programs and distributed energy resource penetration of course.

Speaker Change: Theoretically if you if you owned.

Speaker Change: Turbines and we're talking to <unk> and.

Speaker Change: And you have you have done some site work, probably 18 months 18 to 24 months on the short end.

Speaker Change: If you are starting from scratch and you want to go combined cycle, its probably four to five years.

Speaker Change: Electric vehicles are starting to come in so we will do a comprehensive load forecast with multiple scenarios around that forecast and then ultimately.

Speaker Change: Yeah got it got it that makes sense tough problem to solve but depending on which direction you go.

Speaker Change: Feed into.

Speaker Change: Maybe one last.

Speaker Change: We believe we will need to deal with that.

Question from me you highlighted the TMO.

Speaker Change: Generation supply perspective, which.

Speaker Change: In the slides and so looking at the O&M opportunities I was wondering.

Which could include a combination of.

Speaker Change: Dispatch level resources to ensure we have capacity, there, which would be something like another combined cycle natural gas plant, but it could also entail additional.

Speaker Change: Have you taken a look at kind of beyond the 2026 targets what are the what's the opportunity set here can you continue.

Speaker Change: Beyond your existing targets on O&M cost reductions.

Solar renewable resources batteries.

Speaker Change: Yes, David It's Joe certainly beyond 'twenty, six we continue to see opportunities.

Speaker Change: Similar to what we've got approved last year. So.

Speaker Change: Mentioned AI and some of the use cases that we're seeing that we think can drive longer term.

Speaker Change: We don't want to get in front of what that result will be but suffice it to say, we'll go through that full analysis and we will have a pretty good sense when we file that.

Speaker Change: Efficiency opportunities clearly, we're focused on achieving the $175 million that we've laid out which were good.

Speaker Change: What our generation needs and then.

Speaker Change: It shows our need for incremental generation, we would follow that up shortly thereafter with the CPC.

Speaker Change: Making good progress on and we'll achieve that we will continue to look for opportunities beyond that timeframe, but certainly, though there will be opportunities to get more efficient.

Speaker Change: To request approval for that.

Speaker Change: Yeah understood that makes sense.

Speaker Change: I was also curious do you have a view on how long just thinking about the PJM market how tight.

Speaker Change: Great. Thanks, so much I appreciate the color.

Ed: Sure. Thanks, Ed.

Speaker Change: That market has gotten here.

Speaker Change: Our next question comes from Julien Dumoulin Smith with Jefferies. Please go ahead.

How long does it take to build a new gas plant in PJM realistically like when could we actually see a supply response.

Speaker Change: Hi, Good morning. Thank you guys for the time nice to chat with you guys.

Speaker Change: It kind of from anybody.

Yes, so lots there's lots been said here, but let me pivot a little bit in a different direction here on this conversation on data centers and that's the heuristic that you provided about like one gigawatt, reducing the bill by like $3 a month.

Speaker Change: As we as we.

Speaker Change: Look at.

Speaker Change: Supporting this supply demand tightness.

Speaker Change: Yes, youre not going to love this answer but it depends right.

Are we talking <unk> or are we talking combined cycle do you own turbine industry, you have to get in the queue.

Speaker Change: How do you think about that scaling here at written because you talked about more than one gigawatt of datacenter. Obviously I think there's an element of time here of when you realize those cost savings, but can you speak to that again, yes, youre at like a five gigawatt potential for instance, here of late I'm not going to reduce transmission costs that sizable linearly, what we're saying what we're seeing with <unk>.

Speaker Change: It's theoretically if you if you own.

Speaker Change: Turbines and we're talking to <unk> and.

Speaker Change: And you had you've done some site work, probably 18 months 18 to 24 months on the short end.

Speaker Change: If you are starting from scratch and you want to go combined cycle, its probably four to five years.

Speaker Change: The current five games.

Speaker Change: Is that that starts in 2026, we would expect to be at our first gig in 2007, and then probably added negate each year thereafter.

Speaker Change: Yeah got it got it that makes sense tough problem to solve but depending on which direction you go.

Speaker Change: Maybe one last.

Speaker Change: Got it and what does that mean for as you think about like bill cost reductions through that period of time right using that heuristic of that $3 a month.

Speaker Change: Question from me you highlighted the TMO.

Speaker Change: In the slides and so looking at the O&M opportunities I was wondering.

Speaker Change: Yes.

Speaker Change: Have you taken a look at kind of beyond the 2026 targets what are the what's the opportunity set here can you continue.

Speaker Change: See compounding benefit every year, yes, it's about $3 a month per gigawatt. So.

Speaker Change: By the time, we get the full five gigawatts it would be about $15, a month and lower bills for the residential class.

Speaker Change: Beyond your existing targets on O&M cost reductions.

Speaker Change: Yes, David It's Joe certainly beyond 'twenty, six we continue to see opportunities.

Speaker Change: Well, Okay, that's pretty impressive.

Speaker Change: Mentioned AI and some of the use cases that we're seeing that we think can drive longer term O&M efficiency opportunities clearly we're focused on achieving the $175 million that we've laid out which were good.

And then separately here just in terms of.

Speaker Change: You talked about this predictive failure technology not being disc eligible can you talk about what that does rate case timing if at all or can you talk about Pennsylvania writ large on the rate case.

Speaker Change: So is there other factors there as well.

David Arcaro: Good progress on and we'll achieve that.

Speaker Change: Yes, sure I mean in general.

David Arcaro: We need to look for opportunities beyond that timeframe, but certainly though there will.

Speaker Change: $4 million isn't going to necessarily impact our rate case timing Julien.

David Arcaro: There'll be opportunities to get more efficient.

Speaker Change: But.

Speaker Change: Great. Thanks, so much I appreciate the color.

Speaker Change: So we'll look to continue to to deploy that technology and seek recovery.

Our next base rate case, but Joe you can talk about timing on that yes, I think at this point. The earliest we would see a rate case in Pennsylvania would be 2026 and that would be at the earliest we may be able to go beyond that timeframe.

Speaker Change: Hi, Good morning. Thank you guys for the time nice to chat with you guys.

Speaker Change: Yes.

Speaker Change: Lots been said here, but let me pivot a little bit in a different direction here on this conversation on data centers.

Joe Bergstein: At this point is right $84 million isn't going to drive that decision, but we'll deploy it and we will seek recovery of that in the next rate case whenever it may be.

Speaker Change: And that's the heuristic either you provided about like one gigawatt, reducing the bill by like $3 a month.

Do you think about that scaling hit rate because you talked about more than one gigawatt of data center, obviously I think that there is a element of time here.

Joe Bergstein: Got it alright, excellent and then related here.

Speaker Change: Its on just going back to that I think you said October filing on the next IRB here.

Speaker Change: When you realize those cost savings, but can you speak to that again, you've got like a five gigawatt potential for instance, here of late I'm not going to reduce some costs that sizable linearly.

Speaker Change: Just to the extent to which that you are able to move swiftly on that second combined cycle here presumably.

Peter: Peter piece of that I mean.

Linearly what we're seeing what we're seeing with the current five games.

How front end loaded versus longer dated could some of these opportunities prove themselves.

Speaker Change: Yes, so near term transmission upgrades those will go in line with that request.

Speaker Change: Just to give you again we're in.

Speaker Change: And at 10% to $75 million per project range in Kentucky, just given the size of the projects.

Speaker Change: Yes.

Speaker Change: See compounding benefit every year, yes, it's about $30 a month per gigawatt. So by the time, we get the full five gigawatts it would be about $15, a month and lower bills for our residential pest.

Speaker Change: There just to give you a sense for the 350 megawatts that are in more advanced stages in Kentucky, that's just under $30 million of incremental capital there.

Speaker Change: Wow, Okay, that's pretty impressive.

Speaker Change: On the transmission side, so those will get those will get.

Speaker Change: And then separately here just in terms of.

Speaker Change: Done.

Speaker Change: You talked about this predictive failure technology not being disc eligible can you talk about what that does rate case timing if at all or can you talk about Pennsylvania writ large on the rate case.

Speaker Change: Concert with.

Speaker Change: With the data center demand coming on in terms of the generation.

Speaker Change: And any large scale generation likely would.

I suppose there are other factors there as well.

Speaker Change: Would not come online until around 2030.

Speaker Change: Yes, sure I mean in general I mean.

Speaker Change: $4 million isn't going to necessarily impact our rate case timing Julien.

Speaker Change: The indication we got from the commission when we talked to EPC contractors. When we look at when we can get.

Speaker Change: Yes, but.

Speaker Change: So we'll look to continue to to deploy that technology and seek recovery.

Turbines.

Speaker Change: That's probably where we're talking.

Speaker Change: And kind of the 2030 timeframe.

John: Our next base rate case, but John you can talk about timing on that yes, I think at this point. The earliest we would see a rate case in Pennsylvania would be 2026 and that would be at the earliest we may be able to go beyond that timeframe.

Speaker Change: So obviously, that's a few years prior to that as well.

Speaker Change: We'll be spending the capital.

Speaker Change: Alright, yes, probably 2030, there alright cool excellent. Thank you guys I appreciate it very much.

Speaker Change: Sure.

Next question comes from Ryan Levine with Citi. Please go ahead.

John: Got it alright, excellent and then related here.

Ryan Levine: Hi, Good morning, Hi, everybody.

Speaker Change: That's on just going back to that.

Ryan Levine: The five gigawatt opportunity whats the timetable for go no go decisions for for these potential customers there any cadence or color you can provide around how that could play out.

Speaker Change: He said October filing on the next RFP here.

Speaker Change: Just to the extent to which that you are able to move swiftly on that second combined cycle here presumably.

Speaker Change: As a piece of a piece of that.

Speaker Change: Yes, so look we're making good progress with the developers.

Speaker Change: How front end loaded versus longer dated could some of these opportunities prove themselves.

Speaker Change: All of those we're working through the PJM planning process as well as the PUC processes all of that is progressing well.

Speaker Change: Yes, so near term transmission upgrades those will go in line with the requests.

Speaker Change: I would say probably no change Brian from what we talked about.

Speaker Change: Just to give you again we're in.

Speaker Change: On the Q1 call, we still expect that any formal announcements.

Speaker Change: At 10% to $75 million per project range in Kentucky, just given the size of the projects.

Speaker Change: With common kind of at the end of the year beginning of next year.

Speaker Change: The.

Down there just to give you a sense for the 350 megawatts that are in more.

Speaker Change: The data center companies are going to want to make sure we get through those those full processes before they are announcing.

Speaker Change: Advanced stages in Kentucky, that's just under $30 million of incremental capital there.

We would expect that to be really around the end of the year beginning of next year.

Speaker Change: On the transmission side, so those will get those will get.

Ian: Ian there year decision for the initial three gigawatts or to the entire site.

Done.

Speaker Change: With the data center demand coming on in terms of the generation.

Speaker Change: That's all fine.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: And then in terms of the Pennsylvania, Capex associated with that and I. Appreciate the color provided in terms of scaling beyond five is there any key key.

Speaker Change: Any large scale generation likely would.

Speaker Change: Would not come online until around 2030.

Speaker Change: The indication we got from the commission when we talked to EPC contractors. When we look at when we can get.

Speaker Change: Millstones are alright.

Speaker Change: Mt that you'd have to achieve to be able to have a maybe a bigger step up on a per megawatt basis from an investment standpoint.

Speaker Change: The turbines.

Speaker Change: That's probably where we're talking.

Speaker Change: And kind of the 2030 timeframe.

Speaker Change: Okay.

Speaker Change: So obviously the absolutely the few in years prior to that as well when we will be spending the capital.

Speaker Change: I mean again.

Speaker Change: Thats really very project specific so.

Speaker Change: We'll update this quarterly so you have a sense of how we're progressing on overall data center demand in our jurisdictions how much is in the Q. How much is in advanced stages, we'll try to provide updated capex.

Speaker Change: Yes, probably 2030, there alright cool excellent. Thank you guys I appreciate it very much.

Speaker Change: Sure.

Speaker Change: Next question comes from Ryan Levine with Citi. Please go ahead.

Speaker Change: Estimates as we go along but it would be it would be hard to.

Ryan Levine: Hi, good morning, everybody.

Speaker Change: Again, we're talking $50 million to $150 million.

Ryan Levine: The five gigawatt opportunity what's the timetable for go no go decisions for these potential customers is there any cadence or color you can provide around how that could play out.

Speaker Change: $100 million range, depending on the projects. So we'll keep that disclosure updated as we go.

Speaker Change: Okay.

Speaker Change: Just one last one from me in terms of the headquarters in Pennsylvania is there any practical implications from head count or cost outlook, given the real estate sale.

Speaker Change: Yeah. So look we're making good progress with the developers.

Speaker Change: On all.

All of those we're working through the PJM planning process as well as the PUC processes all of that is progressing well.

Speaker Change: That was great.

Speaker Change: No I mean this was really.

Speaker Change: Yes, I would say probably no change Ryan from what we talked about.

Speaker Change: The decision to sell the building is worth.

Ryan Levine: On the Q1 call, we still expect that any formal announcements.

Speaker Change: Kind of post Covid pathway way too much real estate from what we need to hit was underutilized and so.

Speaker Change #100: Nothing to do with head count.

Speaker Change #101: Okay. Thanks for the color.

Speaker Change #101: Sure.

Anthony <unk>: Our next question comes from Anthony <unk> with Mizuho. Please go ahead.

Ian: Ian there year decision for the initial three gigawatts or to the entire site.

Anthony <unk>: Hey, good morning, <unk> morning, some exceedingly well.

Anthony <unk>: Likewise.

Ian: That's all fine.

Speaker Change #103: Ranger schedule is out, but we will keep it just to the call here.

Ryan Levine: Okay. Okay.

Hey.

Speaker Change: And then in terms of the Pennsylvania, Capex associated with that and I. Appreciate the color provided in terms of scaling beyond five is there any key.

Anthony <unk>: I'm just wondering you talk about some of the.

Speaker Change #104: Transmission opportunities.

Speaker Change #105: The infrastructure investment associated with this higher capacity prices.

Speaker Change #105: And then we're going to look at December to see what the print is there I mean do you think higher capacity prices.

Speaker Change: Milestones are.

Speaker Change: The amount that you'd have to achieve to be able to have a maybe a bigger step up on a per megawatt basis from an investment standpoint.

Speaker Change #105: Good for PPL, given the potential added investment.

Speaker Change: I mean again.

Speaker Change #106: Well look I think there is there is a number of things where we're focused on Anthony right Theres resource adequacy overall in the market.

That's really very project specific so.

Speaker Change: We'll update this quarterly so you have a sense of how we're progressing on overall data center demand in our jurisdictions how much is in the Q. How much is in advanced stages, we'll try to provide updated capex.

Speaker Change #106: In particular in PJM and so if.

Speaker Change #107: If those higher prices incentivize, new generation and shore up resource adequacy Thats a good thing for all of us in PJM.

Speaker Change: Estimates as we go along but it would be it would be hard to.

Speaker Change #107: We talked about the higher the higher cost debt that will ultimately.

Speaker Change: Again, we're talking $50 million to $150 million.

That's $100 million range, depending on the projects. So we'll keep that disclosure updated as we go.

Speaker Change #107: Bear for our customers, which obviously is not.

Speaker Change #107: Great for our customers.

Speaker Change: Okay and then just one last one from me in terms of the headquarters in Pennsylvania is there any practical implications from head count or cost outlook, given the real estate sale.

Speaker Change #107: We're looking at all alternatives to see how we can bring that generation to bear and the most least cost way as you know so.

Speaker Change #108: There are some puts and there are some takes I would say with with that brand.

Speaker Change #108: Okay.

Speaker Change: That was great.

Speaker Change #109: Got it and then just and then just following up and I apologize to just keep harping on the PJM.

Speaker Change: No I mean this was really.

Speaker Change: Decision to sell the building is.

Speaker Change #110: Not that familiar with it.

Speaker Change #111: Our customers in Pennsylvania that maybe don't shop that maybe the utility cures. The energy is there a hedging strategy you guys pursued to mitigate any energy price volatility for our customers.

Speaker Change: Kind of post Covid pathway way too much real estate from what we needed it was underutilized and stuff.

Speaker Change: Nothing to do with head count.

Vivek: Okay. Thanks Vivek.

Speaker Change: Sure.

Speaker Change #112: Yes, that's why the range is 10 to $15. So.

Speaker Change: Our next question comes from Anthony <unk> with Mizuho. Please go ahead.

Speaker Change #113: We have in the early part of 'twenty, five where we felt ready.

Speaker Change #114: That power it wouldn't have as big of an impact as the back half when we're procuring additional power in those prices might be might be reflected in butler and what we're buying so the next solicitation is.

Anthony: Hey, good morning team, so I'm exceedingly well.

Likewise.

Speaker Change: Ranger schedule as output will keep it just to the call here.

Speaker Change: I'm just wondering Vince you talk about some of the.

Speaker Change: Transmission opportunities.

Speaker Change #113: October.

Speaker Change #113: The fourth quarter of this year so.

Vince Sorgi: The infrastructure investment associated with this higher capacity prices.

Speaker Change #113: We're suspecting that those prices will make its way into that solicitation.

Speaker Change: And then we're going to look at December to see what the print is there I mean do you think higher capacity prices.

Speaker Change #115: Great. Thank you for taking my questions looking forward to seeing you guys next week.

Speaker Change #116: Great. Thanks Anthony.

Speaker Change: Our good for PPL, given the potential added investment.

Speaker Change #116: This concludes our question and answer session I would like to turn the conference back over to Vince Sorgi for any closing remarks.

Vince Sorgi: Well look I think there is there is a number of things where we're focused on Anthony right Theres resource adequacy overall in the market.

Vince Sorgi: Great. Thank you I just want to thank everybody for joining us on today's call we will be in New York next.

Vince Sorgi: Next week and hopefully we will get to see as many of you as we can so thanks again for joining.

Vince Sorgi: In particular in PJM and so if.

Speaker Change: If those higher prices incentivize, new generation and shore up resource adequacy Thats a good thing for all of us in PJM.

Speaker Change #117: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Speaker Change: We talked about the higher the higher cost that that will ultimately.

Speaker Change: <unk>.

Speaker Change: Bear for our customers, which obviously is not.

Speaker Change: For our customers.

Speaker Change: We're looking at all alternatives to see how we can bring that generation to bear and the most least cost way as you know so.

Speaker Change: There are some puts and there are some takes I would say with with that print.

Speaker Change: Got it and then just and then just following up and I apologize just keep harping on the PJM.

Speaker Change: Just not that familiar with it.

Speaker Change: Customers in Pennsylvania that maybe don't shop that maybe the utility procured the energy is there a hedging strategy you guys pursued to mitigate any energy price volatility for our customers.

Speaker Change: Yes, that's why the range is 10 to $15. So we had in the early part of 'twenty five where we already took care of that power. It wouldn't have as big of an impact as the back half when we're procuring additional power in those prices might be might be reflected in butler and what we're buying.

Speaker Change: So the next solicitation is.

October.

Speaker Change: The fourth quarter of this year so.

Speaker Change: We're suspecting that those prices will make its way into that solicitation.

Speaker Change: Great. Thank you for taking my questions looking forward to seeing you guys next week.

Speaker Change: Great. Thanks, Kevin.

Speaker Change: This concludes our question and answer session I would like to turn the conference back over to Vince Sorgi for any closing remarks.

Vince Sorgi: Great. Thank you I just want to thank everybody for joining us on today's call we will be in New York next.

Vince Sorgi: Next week and hopefully we will get to see as many of you as we can so thanks again for joining.

Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Speaker Change: [music].

Speaker Change: Yes.