Q1 2025 PPL Corp Earnings Call
Good day and welcome to the PPL Corporation first quarter 2025 Conference earnings Conference call.
All participants will be able to slowly build.
Should you need assistance places I'll call. Her specialists my question to start key followed by zero.
After todays presentation, there will be an opportunity to ask questions.
Speaker Change: Can I ask a question.
Speaker Change: There's also a coupon that's all it's all your questions. Please go starve them too.
Speaker Change: Please note today's event is being recorded.
Speaker Change: I would now like to turn the conference over to Andy Ludwig Vice President of Investor Relations. Please go ahead. Good morning, everyone and thank you for joining the PPL Corporation Conference call on first quarter 2025 financial results. We have provided slides for this presentation on the investors section of our website.
Speaker Change: We can todays call with updates from Vince Sorgi, PPL, President and CEO.
Speaker Change: And Joe Bergstein, Chief Financial Officer.
Speaker Change: I will conclude with a Q&A session following our prepared remarks.
Speaker Change: Well, 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: Results may differ materially from these forward looking statements.
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 earnings on this call.
Speaker Change: A reconciliation to the comparable GAAP measures please refer to the appendix.
Vince Sorgi: I'll now turn the call over to Vince.
Vince Sorgi: Thank you Andy and good morning, everyone.
Welcome to our first quarter Investor update.
Vince Sorgi: Turning to slide four.
Vince Sorgi: I'm pleased to share that we're off to a strong start this year as we continue to make progress on our utility of the future strategy.
Vince Sorgi: Today, we reported first quarter GAAP earnings of 56 cents per share.
Vince Sorgi: I think for special items first quarter earnings from ongoing operations were <unk> 60 per share or an 11% increase over ongoing earnings up 54 cents per share a year ago.
Vince Sorgi: This increase was supported by additional returns on capital investments to improve service to our customers.
Vince Sorgi: As well as higher sales volumes, which reflect more favorable weather this year compared to last year.
Vince Sorgi: Looking ahead, we remain confident in our ability to deliver on our 2025 ongoing earnings forecast of $1 75 to $1 87 per share with a midpoint of $1 81 per share.
Vince Sorgi: We're on track to complete over $4 billion in infrastructure improvements this year to strengthen grid reliability and resiliency make our operations more efficient and advance our generation replacement strategy in Kentucky.
Vince Sorgi: We continue to project $20 billion in capital investment needs from $2025 to 2028, resulting in average annual rate base growth of nine 8%.
Vince Sorgi: We also remain on track to deliver at least $150 million of cumulative O&M savings compared to our 2021 baseline a key component of our utility of the future strategy to help support customer affordability.
Vince Sorgi: Finally, we remain confident in our ability to execute our long term business plan and are well positioned to achieve the top half of our projected 6% to 8% annual earnings per share growth target through at least 2028.
Vince Sorgi: On the dividend, we continue to target annual growth in the 6% to 8% range.
Vince Sorgi: We also expect to maintain strong credit metrics throughout the plan period, maintaining a 16% to 18% <unk> to debt ratio and holding company to total debt ratio below 25%.
Vince Sorgi: Moving to slide five for operational and regulatory highlights.
Vince Sorgi: On February 28, we filed the CPC and request with the Kentucky Public Service Commission to address near term generation needs identified an LGD accuse latest integrated resource plan and reinforced by recent increases in demand for electricity in our Kentucky service territories.
Vince Sorgi: The plan includes the construction of two new highly efficient 645 megawatt natural gas combined cycle units with 2030 and 2031 in service dates.
Vince Sorgi: The addition of 400 megawatts of battery storage by 2028.
Vince Sorgi: Upgrades to environmental controls on unit two at our jet generating station.
Vince Sorgi: To date, the CPC and process has proceeded as expected.
Vince Sorgi: <unk> has set a hearing date of August 4th.
Vince Sorgi: And we anticipate a decision on our request by November.
Vince Sorgi: Also in late February LGD, and Ku received regulatory approval to recover $125 million and costs associated with the retirement of Mill Creek unit, one third the retired asset recovery rider.
Vince Sorgi: Recall that this writer allows for recovery of and a return on certain generation retirement costs.
Vince Sorgi: The approved cost will be recovered over 10 years through the rider.
Vince Sorgi: Finally construction continues to advance on several new previously approved generation resources in Kentucky.
Vince Sorgi: We recently began construction on both the 120 megawatt Mercer solar facility and 125 megawatt battery storage system at our Brown station.
Vince Sorgi: And we continue to make good progress on our 640 megawatt combined cycle natural gas facility, which we began at our Mill Creek station mid last year.
Vince Sorgi: We expect completion of these projects in 2027 and early 2028.
Vince Sorgi: This is critically important as Kentucky continues to be a tremendous success story when it comes to economic development that creates new jobs and additional tax revenue for Kentucky communities.
Vince Sorgi: Our generation strategy directly supports this economic development.
Vince Sorgi: Turning to slide six.
Vince Sorgi: Just as we've done in Kentucky, we've continued to advance key initiatives in Pennsylvania in Rhode Island that supports safe reliable and efficient energy service to our customers.
Vince Sorgi: In February we secured Pennsylvania, PUC approval to increase PPL electric utilities disc revenue cap to seven 5% up from the prior cap of 5%.
Vince Sorgi: The new cap will be in effect through the remainder of PPL Electric's current long term infrastructure improvement plan, which extends through 2027 or until a new distribution base rate case takes effect whichever occurs first.
Vince Sorgi: In Rhode Island.
Vince Sorgi: We received approval for nearly $400 million in infrastructure investments in select operating costs and <unk>.
Vince Sorgi: Connection with our latest electric and gas infrastructure safety and reliability plants.
Vince Sorgi: The Rhode Island, ISR as a very constructive capital recovery mechanism and we appreciate the Puc's continued support in approving these critical investments via this mechanism.
Vince Sorgi: The ISR plans for gas and electric are submitted annually and outlined proposed capital investments and related operating costs to strengthen the safety reliability and resiliency of our electric and gas distribution networks.
Vince Sorgi: The latest plans address Rhode Island Energy's proposed spending from April one 2025 to March 31, 2026 <unk>.
Vince Sorgi: Included in the nearly $400 million approval is approximately $220 million in capital investments for electric which includes $88 million for advanced metering infrastructure.
Vince Sorgi: At approximately $145 million for capital investments and gas, including $108 million for gas main replacement.
Vince Sorgi: The PUC also authorized recovery of approximately $35 million in operating costs for vegetation management and restoration paving tied to gas main replacement projects.
Vince Sorgi: We look forward to executing on these plans and continuing our delivery of exceptional service to the residents of Rhode Island.
Vince Sorgi: Moving to slide seven.
Vince Sorgi: We continue to see increased interest from data center developers in our Pennsylvania, and Kentucky service territories.
Vince Sorgi: In Pennsylvania, we now have nearly 11 gigawatts of projects in the advanced stages of planning up from nearly nine gigawatts as we shared last quarter.
Vince Sorgi: Keep in mind for a project to be in the advanced stages of planning.
Vince Sorgi: It means the data center developer has signed a letter of authorization, which allows us to begin spending money to connect them to the grid.
Vince Sorgi: The developer in turn is obligated to reimburse us for those costs.
Vince Sorgi: As a result developers in this phase have more at stake and while that doesn't guarantee that a data center will be built it certainly signals a higher probability of connection.
Vince Sorgi: The potential capital investment related to these data centers in advance stages in Pennsylvania ranges from $700 million to $850 million of which we have $400 million in the plant.
Vince Sorgi: And within this category of projects, we now have load that has progressed to fully executed contracts.
Vince Sorgi: Importantly, we've structured these energy services agreements to include minimum load commitments for the data centers, which significantly reduces the risk to our other customers from these large projects.
Vince Sorgi: In addition to the projects in advanced stages.
Vince Sorgi: We now have more than 50 gigawatts of other interconnection requests in our queue demonstrating continued interest in our Pennsylvania service territory.
Vince Sorgi: And as we've shared previously conducting large scale data centers is a win win for our customers. As these data centers will share in the cost of transmission system and they will help reduce transmission costs for our other customers.
Vince Sorgi: Turning to Kentucky.
Vince Sorgi: We remain very excited to support our first 400 megawatt datacenter customer, which we highlighted on our year end earnings call in.
Vince Sorgi: In addition, we continue to manage nearly six gigawatts of active datacenter request in our Kentucky Q.
Vince Sorgi: And the Kentucky Legislature recently expanded the sales tax incentive program for datacenter projects across the entire Commonwealth and not just in Jefferson County, We expect this will further attract datacenters to Kentucky, including across our broader service territories.
Vince Sorgi: Turning to slide eight and several items on the horizon.
Vince Sorgi: On April 4th we notified the Kentucky Public Service Commission of our intent to file a base rate case on or after may 30th.
Vince Sorgi: As background LGD NK use last base rate increase occurred in July 2021 at which time, we agreed to a four year stay out provision.
Vince Sorgi: Our intent with the expected filing will be to seek new rates effective January one 2026 to support continued infrastructure investments that improve reliability enhance the customer experience enable long term grid resilience and support projected load growth.
Vince Sorgi: Our application will be supported by a fully forecasted test period, ending December 31 2026.
Vince Sorgi: Turning to Pennsylvania, we continue to advocate for legislative changes to incentivize construction of new generation in the Commonwealth.
Vince Sorgi: And help address both rising electricity prices for consumers and potential energy shortfalls.
Vince Sorgi: We believe Pennsylvania must take control of its energy future rather than being wholly reliant on the PJM market, which is struggling to incentivize new generation build even with all the expected load growth coming from data centers.
Vince Sorgi: We believe one way of addressing this issue is to allow regulated electric utilities to invest in generation resources. This would complement the competitive market by addressing resource adequacy gaps rather than relying solely on market forces to deliver a solution.
Vince Sorgi: We're absolutely convinced the time to act is now.
Vince Sorgi: And we're encouraged by the recent introduction of legislation House Bill $12 72.
Vince Sorgi: That supports allowing regulated utilities to build and own generation in the state.
Vince Sorgi: A co sponsor memo was also filed in the Senate and we expect companion legislation later this spring.
Vince Sorgi: Finally, <unk> is very well positioned to manage through the recently proposed trade tariffs and we do not expect a significant impact on our plant.
Vince Sorgi: Our team has done an excellent job managing supply chain disruptions and constraints for several years now.
Vince Sorgi: I'd highlight that about 70% to 80% of our capital projects and nearly 90% of our O&M is labor.
Vince Sorgi: On top of that most of our materials are sourced domestically. So the size of the potential impact from tariffs shrinks very quickly.
Vince Sorgi: Bottom line, we remain very well positioned despite the current macroeconomic uncertainty and remain very confident in our ability to deliver our plan for customers and shareowners.
Vince Sorgi: That concludes my strategic and operational update I'll now turn the call over to Joe for the financial update.
Joe Bergstein: Thank you Vince and good morning, everyone, let's turn to slide 10.
Joe Bergstein: <unk> first quarter GAAP earnings were <unk> 56 per share compared to 42 per share in Q1 2024.
Joe Bergstein: We recorded special items of <unk> <unk> per share during the first quarter, primarily due to it transformation costs, a settlement charge related to energy efficiency programs in Rhode Island for activity prior to our ownership.
Joe Bergstein: And some remaining Rhode Island integration costs.
Joe Bergstein: Adjusting for these special items first quarter earnings from ongoing operations were <unk> 60 per share an improvement of <unk> <unk> per share compared to Q1 2024.
Joe Bergstein: Our solid first quarter results keep us on track to achieve at least the midpoint of our 2025 earnings forecast of $1 81 per share.
Joe Bergstein: We also continue to maintain one of the strongest balance sheets in our sector, which provides the company with significant financial flexibility.
Joe Bergstein: February we established a $2 billion ATM program that supports our financing needs associated with the increased capital plan.
Joe Bergstein: Year to date, we've issued about $170 million of equity through the ATM with forward contracts that expire at the end of the year.
Joe Bergstein: We continue to expect to issue between 400 and $500 million of equity in total this year.
Joe Bergstein: Turning to the ongoing segment drivers for the first quarter on slide 11.
Joe Bergstein: Our Kentucky segment results increased by <unk> <unk> per share compared to the first quarter of 2024 the.
Joe Bergstein: The improvement in Kentucky's results was primarily driven by higher sales volumes.
Joe Bergstein: Due to mild weather experienced during the first quarter of last year.
Joe Bergstein: Plenty of that favorable variance was due to colder than normal weather in Q1 2025.
Joe Bergstein: Our Pennsylvania regulated segment results increased by <unk> <unk> per share compared to the same period a year ago.
Joe Bergstein: The increase was also primarily driven by higher sales volumes due to mild weather experienced last year as well as higher transmission revenue from our ongoing capital investments.
Our Rhode Island segment results decreased by one seven per share compared to the same period a year ago.
Joe Bergstein: This decrease was primarily driven by lower transmission revenues due to a prior period true up and higher operating costs.
Joe Bergstein: Partially offset by higher distribution revenue from capital investments.
Joe Bergstein: Finally results at corporate and other decreased by one seven per share compared to the prior year period, primarily due to higher interest expense.
Vince Sorgi: We continue to be pleased with our execution as we deliver on our commitments to customers and shareowners. This concludes my prepared remarks, I'll now turn the call back over to Vince.
Vince Sorgi: Thank you Joe.
Vince Sorgi: In closing we're off to a good start with our strong first quarter results our.
Vince Sorgi: Our Q1 performance puts us solidly on track to deliver on our 2025 commitments.
Vince Sorgi: Meanwhile, across our operations, we continue to make excellent progress in executing our utility of the future strategy.
Vince Sorgi: We're responsibly investing in our networks, which supported first quarter storm response that was considerably improved compared to last year. Despite more severe weather this winter.
Vince Sorgi: We're progressing in building new in cleaner generation resources in Kentucky that support our communities.
Vince Sorgi: We're achieving our O&M savings targets that benefit our customers in a time of inflationary pressures.
Vince Sorgi: We're driving continued economic development in our regions, including new data centers.
Vince Sorgi: And we're advancing an it transformation that includes key digital solutions that will strengthen cyber security improve the customer and employee experience improve our grid operations and make our field workers more efficient and effective in their jobs, all while lowering our ongoing technology costs.
Vince Sorgi: We're extremely excited about the opportunities ahead for PPL, our customers and our shareowners and we look forward to building continued momentum as we proceed throughout the year.
Vince Sorgi: With that operator, let's open it up for questions.
Speaker Change: Thank you if you'd like to ask a.
Speaker Change: Gross Star then one on your telephone keypad.
Speaker Change: If your question has already been addressed like to remove yourself from Q Press Star then two.
Speaker Change: Once again those Furthermore, if you have a question.
Speaker Change: Today's first question comes from Shar <unk> with Guggenheim Partners. Please go ahead.
Hey, guys. Good morning, good morning good.
Speaker Change: Morning morning wondering if.
Speaker Change: So let me just on the resource adequacy legislation that you've kind of talked about in your prepared remarks, maybe just speak a little bit what you see as the advantages of the Io use versus the ipp's in bringing generation to market I mean, it seems like.
Speaker Change: Everyone faces the same turbine Q issues, so trying to understand I guess, what makes the iou's faster or better or could this actually turn into maybe providing a better price signal to generators through a longer term PPA structure. So do you really want to build or provide that incentive for someone else to build and maybe earn on.
Speaker Change: That incentive.
Speaker Change: Yes, sure there's quite a bit there in that question I think.
Speaker Change: <unk>.
Speaker Change: The limitation with the market is the capacity.
Speaker Change: Market is really a one year price signal three years forward and so.
Speaker Change: The question becomes is that enough to incentivize.
Speaker Change: The competitive market to build new generation 30, 40 year assets.
And can you finance it obviously, that's a different calculation and calculus when you're when you're in.
Speaker Change: Regulated utility model with the asset going in rate base is getting depreciate. It over 40 years, so from a from a stability.
Speaker Change: Of power price and predictability and reducing volatility clearly I think the regulated utility model.
Speaker Change: Can provide some benefits there in terms of your question on the PPA versus building Jan.
Speaker Change: We are absolutely willing to to build and own generation in rate base in Pennsylvania should we be allowed to do that with this new legislation. Obviously, we have one of the highest performing genco is down in Kentucky, Our engineering and construction group is building.
Speaker Change: Generation as we speak we could clearly do it in Pennsylvania as well as we're doing getting Kentucky. So we are able and ready to to provide that service to the market and our customers. If we're allowed to do it on the Ppas. We do have the ability to do some of that today under the default service provisions that we have.
Speaker Change: It would be somewhat limited when youre thinking about or.
Speaker Change: Load Thats under default service and the need across PJM. So we could probably do a little bit there, but not enough to really solve the issue that we're talking about Shaun.
Speaker Change: Perfect Thats helpful.
Speaker Change: Let me just just to quickly for just a quick one for Joe.
Speaker Change: Obviously, we've been.
Speaker Change: Past few weeks, we've been getting a lot of inbounds on an equity REIT I, just I guess, Joe is a block a consideration or the forwards under the ATM kind of sufficient at this time. Thanks.
Speaker Change: Yeah sure. Thanks for the question. So I mean, as we've said since we.
Speaker Change: Provided our updated plan in February our base case is that we will use the ATM program to satisfy most of our equity needs clear.
Speaker Change: Clearly, we see it as an efficient and cost effective tool.
Ben: Obviously Ben.
Speaker Change: Okay.
Speaker Change: And so we feel really good about where we are already now, but given our flexibility.
Speaker Change: <unk> that were in.
Speaker Change: We will remain opportunistic.
Speaker Change: To assess all of our options.
Speaker Change: And just try to achieve the most efficient cost of capital that we can.
Vince Sorgi: Got it but Joe is that still the ATM route.
Again, we like the ATM and we're very happy with the execution of that.
Vince Sorgi: We've talked about and I've said before that we will evaluate the market and you.
Vince Sorgi: Use what is ever the most efficient tool at the time, we have to need so continue with the base of the ATM.
Vince Sorgi: Program, but we'll continue to assess other options.
Speaker Change: Okay, perfect Thats fantastic guys I appreciate it congrats on the result.
Vince Sorgi: Thanks Chuck.
Jeremy Tonet: And our next question today comes from Jeremy Tonet with JP Morgan. Please go ahead.
Speaker Change: Good morning, Jeremy.
Speaker Change: Hey, good morning, this is actually <unk> on for Jeremy maybe.
Speaker Change: Maybe just wondering if we could focus more on the potential tariff exposures. It looks like in the 2024 ERP. The plan includes roughly 400 megawatts of battery storage, maybe you can just walk through how the tariffs might impact that or like maybe just more broadly the domestic versus international breakdown youre kind of seeing anything else on that lines.
Speaker Change: Yes, sure Joe So we have actually two.
Speaker Change: Battery projects one.
Speaker Change: It was part of the 2020 to CP CN for 125 megawatts that that better facility is under construction and so.
Speaker Change: We're obviously.
Speaker Change: Talking to the vendor all the time and working closely with them.
Speaker Change: To minimize any potential tariff impacts there and then the one that you referenced is in the 2025 Bcf.
Speaker Change: <unk> filing.
Speaker Change: We're 400 megawatt storage clearly, we see a need for those projects.
Speaker Change: The significant economic development, we're seeing in the data center interest in just that increasing demand.
Speaker Change: We continue to think that.
Speaker Change: The battery is the best solution to meet that plan, but certainly as you suggest there is.
Speaker Change: Potentially other options for the battery and the 2025 <unk> and if we see.
Speaker Change: Companies increase their use production.
Speaker Change: Our batteries, then that could could alleviate some of the pressures on the tariff and so with that second unit. We have we have time, obviously to work through that.
Speaker Change: And we will continue to do that with a variety of vendors that are that are manufacturing batteries.
Speaker Change: Got it got it thank you.
Speaker Change: And then maybe just one one question on I appreciate the ongoing nature here, but like to what extent do you see the recent announcement in Kentucky in Oldham County, kind of maybe potentially unlocking more upside to generation needs there and just any other thoughts on resident concerns are the other considerations to that project's viability from your perspective.
Speaker Change: <unk>.
Speaker Change: Yeah. This is Vince Aden.
Speaker Change: So, yes youre referencing.
Speaker Change: A potential project in Oldham County called project Lincoln.
Speaker Change: Obviously, there's been some media.
Speaker Change: Attention on that we don't have a lot more to share.
Speaker Change: At this point, but clearly we are working with the developer theyre excited to provide them with whatever needs they have to.
Speaker Change: To get that project over the goal line at this point not much more to share, but yes, obviously, it's a good.
Speaker Change: The indicator of the continued interest that we're seeing down there that is in our six gigawatts.
Speaker Change: In the Q. So it's part of that that we're working through.
Speaker Change: Certainly provide more information at the appropriate time when that becomes available.
Speaker Change: Yeah.
Speaker Change: I appreciate it thanks I'll leave it there.
Moderator: Thank you and our next question comes from Paul Zimbardo with Jefferies. Please go ahead.
Paul Zimbardo: Hi, good morning, Thank you.
Moderator: Good morning.
Speaker Change: I was just going to stay in Kentucky for a little bit longer just could you share any perspective or thoughts on that.
Speaker Change: Nicole Executive order and if that could change the timing or potential of the I think it's roughly 300 megawatts of retirements that you have planned.
Speaker Change: Sure So I don't expect that.
Speaker Change: Would have.
Speaker Change: Necessarily an immediate impact on our generation planning you did reference are.
Speaker Change: Really the only plant that we have in the near term that is scheduled to retire which is mill Creek two 300 megawatt unit.
Speaker Change: That's scheduled to retire in the 2027 timeframe commensurate with Mill Creek, five which is the combined cycle unit that we are currently constructing.
Paul Zimbardo: At this point Paul the the air permit for Bell Creek, five depends on US retiring Mill Creek too.
Paul Zimbardo: But that is something that we will certainly be.
Speaker Change: Analyzing and discussing with.
Speaker Change: Stakeholders as part of the CPC on approval process, especially if we continue to see the interest in Kentucky around data centers and some of that load comes to fruition.
Speaker Change: We may want to delay the.
Speaker Change: The retirement of Mill Creek.
Speaker Change: Two at least for a period of time, perhaps when mill Creek, six which is the one that would come on in 2031.
Speaker Change: Comes online so.
Speaker Change: I think analyzed and discussed theyre not necessarily.
Speaker Change: The executive order I think thats driving that it's more just the demand and how we want to best meet that demand, which we will again go through with the CPC and process that we're actively engaged with right now with the commission.
Speaker Change: Okay.
Speaker Change: And then I guess, just overall holistically as it relates to that and elsewhere I don't want to put words in your mouth, but you feel comfortable on the overall capital plan there could be some changes potentially but you feel good on capital and the overall outlook it sounds like.
Speaker Change: Yes, yes, we do we don't have a lot of.
Speaker Change: Environmental Capex in the plan we have.
Speaker Change: Less than $400 million total.
Speaker Change: The two big components of that are the SCR at Gen. Two that's obviously in the CP CN filing that we're working through right now we would expect at this time to continue to install that SCR that would enable us to really ensure that we can run that unit.
Speaker Change: In the long term during the ozone season. So there is a real strategic need to have gen. Two available that's about $150 million project and then the remaining 250 and there is for the affluent limitation guideline goals.
Speaker Change: Again based on what we're seeing from the administration, we could see some modification to those rules.
Speaker Change: I'm not sure exactly where we'll land on that and if and how much of that 250 will need to do but again, that's not a material amount to our $20 billion capital plan.
Speaker Change: Okay.
Speaker Change: Thank you very much.
Speaker Change: Sure.
Speaker Change: Thank you and our next question comes from energy storage with Seaport. Please go ahead.
Speaker Change: So I have two questions about Pennsylvania and so.
Speaker Change: We haven't seen any announcements at least public announcements about.
Speaker Change: The 11 gigs or even the original nine gigs are.
Speaker Change: Low growth and yours down in Pennsylvania, and I'm just wondering if.
Speaker Change: And we are waiting for something is this.
Speaker Change: Are we waiting for some.
Speaker Change: In our guidelines E. Therefore from FERC.
Speaker Change: From the Pennsylvania Utilities Commission.
Speaker Change: So that's one and number two.
Speaker Change: Speaking of the.
Speaker Change: Pennsylvania PUC the.
Speaker Change: Thursday hearing on the interconnection of large loads.
Speaker Change: Very interesting overall.
Speaker Change: I Wonder if I can.
Speaker Change: Mission is clearly considering a potential model Paris for large loads.
Speaker Change:
Speaker Change: Representatives didn't seem that interested in that and.
Speaker Change: That option and I'm just wondering if you have a view overall you know what it takes to her.
Speaker Change: Haven't.
Speaker Change: This DC load the finalized any adult.
Speaker Change: Sure. So I think there there's somewhat related those questions Angie.
Speaker Change: Maybe I'll, maybe I'll start with.
Speaker Change: Just the lack of announcements so not anything I am concerned about we are making excellent progress on a number of the projects that are in there. We don't really control the timing of when the data centers want to make those announcements theres, obviously a lot of competitive.
Speaker Change: Turning that theyre, taking into account when they make those announcements so where we're just not going to get in front of them on that but no concerns there.
Speaker Change: The reason I feel the way I do and again a proof point in in our materials is the fact that we have signed energy services agreement. So even beyond just the authorization to spend money, we've got to the point, where we signed agreements and so.
Speaker Change: It'll just be a matter of time before.
Speaker Change: Those counterparties may make their public announcements, what we've been able to do within those Esa agreements is really.
Speaker Change: Protect our existing customers from.
Speaker Change: From stranded asset risk, which we know is an area that that has been a concern.
Speaker Change: Commissions across the country.
Speaker Change: What we've done there is right. There is really two components that make up the cost of connecting a data center. There is that the costs that are specific to the data center.
Speaker Change: Those we get reimbursed under contributions in aid of construction. So those are direct reimbursements from data center, but then there's the other upgrades that may be required to the grid.
Speaker Change: All customers benefit from and so those costs end up going into the FERC formula rate and they get socialized across all of our customer groups, what we've done with the Esa agreements.
Speaker Change: We've obligated the datacenter customers to pay a minimum revenue based on their peak load regardless of their actual electric usage until the cost of that socialized upgrades. So the piece that's being charged to all customers is paid off and then we also have.
Speaker Change: Letters of credit and termination fees included in those agreements so that structure essentially is protecting our customers against.
Speaker Change: Stranded asset risk that's why we in the in the hearing we said, we don't necessarily need a model tariff to be able to achieve the same objective because we're already achieving those objectives with our PSA contracts and so are our testimony was to ensure that we can maintain.
Speaker Change: The flexibility required to.
Speaker Change: Balance getting these large loads connected to the grid, but at the same time protecting our customers. So if there is ultimately a large a large load model tariff, we would just want to make sure that that flexibility is preserved.
Speaker Change: Did I answer your.
Speaker Change: To your question, but I was just wondering does that but you are not waiting, but you are not waiting for that model tariffs to be.
Speaker Change: Established before basically finalizing these data center deals.
Speaker Change: No no no we are entering into Esa as we speak.
Speaker Change: And those are not insignificant I mean, we're talking to multiple gigawatts that we're signing up.
Speaker Change: And just one more so.
Speaker Change: Again back to that hearing.
Speaker Change: Lots of comments there from some hyperscale is about how long a.
Speaker Change: Load studies take.
Speaker Change: It didn't sound like that was Higgins.
Speaker Change: At all but there was there were some other utilities, especially in eastern Pennsylvania that was saying that they need to rerun. Some of their load studies. There is load being added to adjacent zones, which I took as the PPL zone. So so is it do you still have this enormous.
Speaker Change: Serial benefits.
Speaker Change: The time to power benefits and is that.
Speaker Change: It in essence.
Speaker Change: Fortunately benefiting as owner attracting the load growth in Pennsylvania.
Speaker Change: Absolutely we continue to respond very quickly and nimbly to our large load customers again, we're getting back to them with initial quotes and study results of our studies in weeks not months.
Speaker Change: And we consistently here.
Speaker Change: From our datacenter customers that it is a different experience dealing with PPL Ben.
Speaker Change: Some of our peers.
Speaker Change: Alright, thank you.
Speaker Change: Sure.
Speaker Change: As a reminder, please first I was wondering if you have a question.
Speaker Change: Our next question today comes from Anthony <unk> with Mizuho. Please go ahead.
Hey, good morning, Vince Good morning, Joe.
Speaker Change: Good morning, Anthony.
Speaker Change: Thanks for squeezing me in if I could just stay on the.
Pat that Andrew you brought up I am curious if youre able to tell us what would you tell us when we look at the chart on slide seven on the data center request in advanced stages, how much of that is.
Speaker Change: Yes.
Speaker Change: Yes. So those terms are confidential at this point, but as I just said at the end of my comments to Angie.
Speaker Change: We're talking multiple gigawatts, so not insignificant Anthony.
Speaker Change: Great and then if I could just.
Speaker Change: Pivot.
Speaker Change: Can you talk about on the.
Speaker Change: See I'm, sorry C P C and in Kentucky.
Speaker Change: And you may have disclosed on the last call and I apologize if I missed it.
Speaker Change: In the filing have you disclosed what the prices for the CCG teas and all that.
Speaker Change: Not already locked in the price does that you think that becomes a issue one approval of the unit.
Speaker Change: I mean, we do have our cost estimates in.
Speaker Change: In the in the CPC and filing we're kind of around that 2000 per kw as we're seeing.
Speaker Change: Kind of across the spectrum.
Speaker Change:
Speaker Change: At this point.
Speaker Change: Just on where we are with <unk>.
Speaker Change: Our vendors and EPC contractors et cetera, we feel pretty good about those amounts, but obviously, we are always in engaging with the commission and updating them on cost estimates if they moved significantly between the time, we filed the CPC N. In the time that we would ultimately get approval for that and then once that gets approved.
Speaker Change: If there's like a 5% buffer that we kind of have to manage within before we'd have to go back to the commission and update those numbers further, but that's kind of how the process works.
Speaker Change: Great.
Speaker Change: Is there existing load.
Speaker Change: I apologize again as their existing load that this <unk> is it going to.
Speaker Change: You know supply for or is it more on the prospective load that you see coming into the system and Kentucky as you highlight with the some of the data set of requests there.
Speaker Change: Yes, so what's what's currently been approved was the retirement of Mill Creek, one, which we retired at the end of last year again about a 300 megawatt coal plant and then they will create two is scheduled to retire in 2027. So obviously some of that new generation is replacing those retirements.
Speaker Change: And then the new CPC and it's also too.
Speaker Change: Really handle new do load requirements that we're seeing.
Speaker Change: From data centers and just other large economic development activity that's occurring in the state.
Speaker Change: Great. Thanks for taking my questions really appreciate it congrats on a good quarter.
Speaker Change: Thank you Mike.
Speaker Change: And our next question comes from David Paz with Wolfe. Please go ahead.
David Paz: Alright, great. Thanks.
Speaker Change: Good morning, guys.
Chris to answer your questions are essentially where I was going to ask but just maybe following up on the data center announcements I think in the past you. Vince you suggested that once you get one or two announcements.
Speaker Change: Usually prompt others to follow suit. Shortly thereafter is that still kind of a mindset I understand you have something that stays in place.
Speaker Change: But you still have that kind of can we can see these come pretty fast once you get the first few.
Speaker Change: Yes, it really it really depends I mean, I think those comments, we're probably more relevant to Kentucky. When we saw that initial announcement drew basically a doubling of the of the queue and just a couple of months. When we went from three to six gigawatts of interest in Kentucky, I mean, we're already.
Speaker Change: Dealing with 50 or 60 gigawatts of interest in Ta. So there is.
Speaker Change: There's a lot of interest I think not only because we can connect them very quickly mid 2026.
Speaker Change: To the grid and then like I said before where we're.
Speaker Change: <unk> easier to work with than your traditional utility and they find that the speed to market is.
Speaker Change: Is better when they're dealing with us than others. So.
Speaker Change: And then obviously, we've talked a lot in the past just about the the natural qualities.
Speaker Change: Pennsylvania is a land water.
Speaker Change: And then of course, our our transmission capacity so.
Speaker Change: Lots of interest I think in.
Speaker Change: NPA irrespective of those announcements I don't know that if we get one announcement that will necessarily trigger many others, but theres just a lot of activity all trying to get to the goal line of getting connected as soon as they can in 2026.
Speaker Change: That makes sense.
Speaker Change: Socialized costs that you were talking about when you broke down those two pieces.
Speaker Change: Regarding Pennsylvania, what is the remind me what what.
Speaker Change: How should we think about the earned return that socialized cause is that just through a formulaic rate and what is that alright.
Speaker Change: So adders or anything.
Speaker Change: Yes. So those are the Roes that are embedded in the formula rate, which is basically 10% right now.
Speaker Change: Okay.
Speaker Change: Great and maybe one quick squeeze one of them the 2000 per kilowatt.
Speaker Change: Number and is that inclusive of ADC and transmission to the Ccs in Kentucky.
Speaker Change: I think that is.
Speaker Change: It's very close to that David I don't think its materially different between the two.
Speaker Change: Okay. Thank you so much.
Speaker Change: Sure.
Speaker Change: And our next question today comes from Ian Ryave Bank of America. Please go ahead.
Ian Ryave: Hey, guys. Thanks for taking my question I think the bulk of my questions have been answered, but maybe just focusing a little bit more on the data center tariff structure relative to the Kentucky rate case filing and I know you haven't made a determination for Pennsylvania.
But just curious whether there are any contemplated tariff structure changes or anything related.
Ian Ryave: We would expect to see in those rate cases.
Speaker Change: Yes, so obviously, we haven't filed those yet so it would be more appropriate to discuss that once we make those filings, but I would say in both jurisdictions. Ian we are looking at whether it makes sense to have a.
Ian Ryave: A data center or a large low tariffs not just data center.
Speaker Change: Okay got it we'll stay tuned there that's pretty much all of that again and thanks for taking my questions.
Ian Ryave: Great. Thanks again.
Vince Sorgi: Thank you and this concludes our question and answer session I would like to turn the conference back over to Vince <unk> for closing remarks.
Vince Sorgi: Great. Thanks, everybody for joining us again off to a good start for the year.
Vince Sorgi: Continue the momentum as we go through the year, we have a few marketing events coming up later this week and into next week in New York. So look forward to seeing some of you then and again I appreciate you joining the call.
Vince Sorgi: Thank you. This concludes today's conference call. We thank you all for attending today's presentation you may now.
Vince Sorgi: Now disconnect your lines and have a wonderful day.
Vince Sorgi: [music].