PPL Corporation

Good day and welcome to the PPL Corporation Fourth Quarter Earnings Conference Call. All participants will be in listen-only mode. Since you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on any touch-tone phone. To withdraw your question, please press star then two. Please note today's event is being recorded. I would now like to turn the conference over to Andy Ludwig, Vice President, Investor Relations. Please go ahead, sir.

Thank you. Good morning, everyone, and thank you for joining the PPL conference call on fourth quarter and full year 2020 financial results. We have provided slides for this presentation and our earnings release issued this morning on the investor section of our website. Our presentation and earnings release, which we will discuss during today's call, contain forward-looking statements about future operating results or other future events. Actual results may differ materially from these forward-looking statements. Please refer to the appendix of this presentation, PPL's SEC Filings, for a discussion of the factors that could cause actual results to differ from the forward-looking statements. We will also refer to non-GAAP measures, including earnings from ongoing operations and adjusted gross margins on this call. For reconciliations to the comparable gap measures, you should refer to the appendix of this presentation. I'll now turn the call over to Vince Sorgi, PPL president and CEO.

Thank you, Andy, and good morning, everyone. We appreciate you joining us for our 2020 year-end earnings call today. With me, as usual, are Joe Bergstein, our chief financial officer, Greg Dudkin, the head of our Pennsylvania utility business, Paul Thompson, the head of our Kentucky utility business, and Phil Swift, who heads up our UK utility business. Moving to slide three, I'll begin this morning with a brief overview of our 2020 performance as we overcame the difficult challenges of COVID-19. I'll also share a few updates on regulatory and ESG matters. Later, Joe will provide a more detailed overview of year-end and fourth quarter financial results. I'll then share some closing thoughts on our key focus areas for 2021. And as always, we'll leave ample time to answer your questions. Turning to slide four, I'm incredibly proud of how PPL performed in 2020, a year unlike any we've seen in our lifetimes. It was a year that tested our resolve, our resilience, and our ability to adapt very quickly to dynamic conditions. Importantly, We provided electricity and natural gas safely and reliably to more than 10 and a half million customers when it mattered the most. This included the hospital workers and the first responders who were on the front lines. And it included customers whose homes became offices, whose kitchens and bedrooms became classrooms, and who are counting on us to deliver without fail. We're extremely honored that our continued operational excellence resulted in further recognition from these very same customers in 2020. In the U.S., we earned three new J.D. Power awards for customer satisfaction, bringing our total to 54 since J.D. Power surveys began. This included topping all large utilities in the East for the ninth straight year for residential customer satisfaction and all midsize utilities in the Midwest for both residential and business customer satisfaction. In the U.K., At the end of 2020, we again finished with scores of over 9 out of 10 in all four of our D&Os and are on track to receive the maximum incentive reward under Ofgem's broad measure of customer satisfaction. We also received the UK's Customer Service Excellence Award for the 28th time since 1992. As we focused on our commitment to provide a superior customer experience, we also recognized the need to support our local communities. and assist customers struggling with COVID-19. With that in mind, we continue to offer payment assistance programs, flexible payment options, and referral services to help customers manage their energy bills. Shifting to our financial performance, we achieved financial results that are within our original earnings guidance range despite the challenges of COVID-19. This achievement included overcoming a 12 cent per share unfavorable impact from COVID, due primarily to low sales volumes in the UK and lower commercial and industrial demand in Kentucky, as well as a $0.05 per share unfavorable impact due to mild weather compared to normal conditions. We were able to offset some of the impact through effective cost management and several other factors without negatively impacting the long-term strength of the business. And as we've discussed previously, the UK regulatory construct provides recovery, for any under-collected revenues from lower sales volumes, which was a significant portion of the 2020 impact. We also maintained a strong financial position and delivered on our commitment to return capital to share owners, something PPL has done each quarter for 75 consecutive years. Turning to slide five, as we dealt with the challenges of COVID-19 during the year, we also remained very focused on the future. Building on the $27 billion we had invested over the prior decade to improve service to our customers, during 2020 we completed more than $3 billion in infrastructure improvement, in line with the original expectations we outlined for you at the beginning of the year. The vast majority of this investment, nearly 90%, was focused on transmission and distribution infrastructure to strengthen grid resilience, incorporate new technology, and advance our clean energy strategy. Shifting to a few sustainability highlights, we continued to advance our clean energy strategy in 2020. At the outset of the year, we set a more aggressive carbon reduction goal, and throughout the remainder of the year, we invested in our networks to enable increased electrification and large-scale additions of distributed energy resources in the future. In Kentucky, we secured regulatory approval for a 100 megawatt solar power purchase agreement to meet increasing customer demand for clean energy solutions. We also continue to expand customer participation in our solar share program, securing full subscription for two additional phases of solar share construction that will begin this spring. In addition, our Safari Energy business also added more than 90 megawatts of solar capacity to its portfolio, increasing its own capacity to 110 megawatts. This new capacity is all contracted via long-term power purchase agreements. And in August, we joined a five-year industry initiative to accelerate the development of low-carbon energy technology and advance affordable pathways to economy-wide decarbonization. We recognize that going even further, faster than the goals that we've set to address climate change requires new ideas, technology, and systems that can be delivered safely, reliably, and affordably. That's why we're partnering with EPRI and GTI on their new low-carbon resources initiative. As part of our sustainability efforts, we also remain focused on advancing a culture of diversity, equity, and inclusion across PPL in supporting meaningful change and progress in the communities we serve. To build on PPL's prior momentum in this area, the company adopted a new enterprise-wide DEI strategy with five supporting DEI commitments. In the wake of the killings of George Floyd, Breonna Taylor, and others in 2020, PPL led focused discussions with our employees and in our communities on race and social justice that will continue to guide our efforts moving forward. In addition, we provided initial contributions to support local organizations focused on DEI initiatives and launched a new scholarship program that aims to award a million dollars over the next decade to support minorities and females pursuing careers in engineering, IT, technical, and trade roles. As a reflection of PPL's continuous focus on embracing diversity, inclusion, and advancing equity for all, we were named a best place to work for LGBTQ equality by the Human Rights Campaign Foundation, once again, earning a perfect score. Lastly, on this slide, I would note that we continue to enhance our ESG disclosures in 2020, demonstrating our ongoing commitment to transparency, and to keeping stakeholders informed. This included our disclosures around political spending, an area in which the Center for Political Accountability and the Ziklin Center for Business Ethics Research gave PPL their trendsetter ranking on the CPA Ziklin Index. Returning to slide six for some regulatory updates. In November, we took steps at our Louisville Gas and Electric and Kentucky Utilities businesses to support continued infrastructure investments that benefit our customers. LG&E and KU filed rate requests with the Kentucky Public Service Commission on November 25, seeking approval for a combined revenue increase of about $331 million in electricity and gas base rates. The requested increases will support continued modernization of the grid to strengthen grid resilience, as well as upgrades to LG&E's natural gas system to enhance safety and reliability. In addition, we are seeking approval for full deployment of advanced metering infrastructure, faster electric vehicle charging stations, and an updated net metering tariff. If approved by the Commission, LG&E and KU's requested revenue increases would take effect July 1, 2021. Given the COVID pandemic and in an effort to reduce the near-term impact of the rate adjustment for our customers, we sought to minimize the size of the requested increase and have included in our request for approval a $53 million economic relief sur credit to help mitigate the impact of the rate adjustment until mid-2022. In addition, we have proposed to implement AMI in a manner which, based on current projections, will not require an increase in the combined revenue of LG&E and KU in this rate case or in the future as operating cost savings are projected to more than offset the incremental capital costs of the project. Additionally, pending the outcome of the proceeding, it's our goal not to request another base rate adjustment for several years. A detailed procedural schedule for the rate case is available in the appendix of today's presentation. In other notable Kentucky updates, LG&E and KU on January 7th issued a request for a proposal for generation capacity to meet a potential energy shortfall that may be created by the anticipated retirements of 1,000 megawatts of coal-fired generation during this decade. LG&E&KU's Mill Creek Unit 1 is expected to retire in 2024, while Mill Creek Unit 2 and E.W. Brown Unit 3 are expected to be retired by 2028 as they reach the end of their economic useful lives. We've also included in the appendix a slide that details the projected economic lives of our baseload generation plant. The utilities are seeking 300 to 900 megawatts of capacity beginning in 2025 to 2028. Additionally, we're asking for proposals for at least 100 megawatts of battery storage. Proposals are due March 31st, and we anticipate making a decision by mid-2021 and potentially filing for regulatory approvals in early 2022. Lastly, in the UK, Ofgem issued its Rio ED2 sector-specific methodology decision in mid-December. The decision was largely in line with our expectations. and underscores the vital role DNOs will play in supporting decarbonization in the UK to achieve a net zero economy. In January, WPD became the first DNO to issue a draft business plan for Rio ED2. That draft plan proposes 6 billion pounds in new investments to support decarbonization, digitalization, and enhanced network utilization. Turning to slide seven and the 2021 to 2025 capital plan, We've outlined more than $14 billion from 2021 to 2025 to support continued modernization of our transmission and distribution networks and to advance a cleaner energy future. This forecast spending represents a billion dollars of incremental CapEx from 2021 to 2024 compared to our prior plan. Those increases include $400 million in Kentucky to support full deployment of advanced metering infrastructure. $300 million in Pennsylvania for additional transmission investments, as well as incremental funding for IT initiatives focused on digital transformation investments in work optimization, smart grid technology, and the customer experience. And $200 million in the UK due to a shift of certain investments from 2020 to 2021 as a result of COVID-19, additional funding for telecommunications projects, and updates to our Rio ED2 capital plan. At this point, I'll now turn the call over to Joe for a more detailed review of our fourth quarter and year-end financial results. Joe?