PPL Corporation

Good day, and welcome to the PPL Corporation first quarter 2025 earnings conference call. All participants will be in listening mode. If 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 your telephone keypad, and to answer 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 Narrations. 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 investor section of our website. We begin today's call with updates from Vince Sorge, PPL President and CEO, and Joe Bergstein, Chief Financial Officer. And we'll conclude with a Q&A session following our prepared remarks. Before we get started, I'll draw your attention to slide two and a brief cautionary statement. Our presentation today contains 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 and PPL's SEC filings for discussion of some 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 or ongoing earnings on this call. For reconciliations to the comparable gap measures, please refer to the appendix. I'll now turn the call over to Vince.

Thank you, Andy, and good morning, everyone. Welcome to our first quarter investor update. Turning to slide four. I'm pleased to share that we're off to a strong start this year as we continue to make progress on our utility the future strategy. Today we reported first quarter gap earnings of 56 cents per share. Adjusting for special items, first quarter earnings from ongoing operations were 60 cents per share or an 11% increase over ongoing earnings of 54 cents per share a year ago. This increase was supported by additional returns on capital investments to improve service to our customers. as well as higher sales volumes, which reflect more favorable weather this year compared to last year. 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. 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. We continue to project $20 billion in capital investment needs from 2025 to 2028, resulting in average annual rate-based growth of 9.8%. 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. 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. On the dividend, we continue to target annual growth in the 6% to 8% range. We also expect to maintain strong credit metrics throughout the plan period, maintaining a 16% to 18% FFO to debt ratio and a holding company to total debt ratio below 25%. Moving to slide five for operational and regulatory highlights. On February 28th, we filed the CPCN request with the Kentucky Public Service Commission to address near-term generation needs identified in LG&E and KU's latest integrated resource plan and reinforced by recent increases in demand for electricity in our Kentucky service territories. The plan includes the construction of two new highly efficient 645-megawatt natural gas combined cycle units with 2030 and 2031 in service dates, the addition of 400 megawatts of battery storage by 2028, and upgrades to environmental controls on Unit 2 at our generating station. To date, the CPCN process has proceeded as expected. The KPSC has set a hearing date of August 4th. and we anticipate a decision on our request by November. Also in late February, LG&E and KU receives regulatory approval to recover $125 million in costs associated with the retirement of Mill Creek Unit 1 through the retired asset recovery rider. Recall that this rider allows for a recovery of and a return on certain generation retirement costs. The approved costs will be recovered over 10 years through the rider. Finally, Construction continues to advance on several new, previously approved generation resources in Kentucky. We recently began construction on both the 120 megawatt Mercer solar facility and the 125 megawatt battery storage system at our Brown station. 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. We expect completion of these projects in 2027 and early 2028. 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. Our generation strategy directly supports this economic development. Turning to slide six. Just as we've done in Kentucky, we've continued to advance key initiatives in Pennsylvania and Rhode Island that support safe, reliable, and efficient energy service to our customers. In February, we secured Pennsylvania PUC approval to increase PPL Electric Utilities' disk revenue cap to 7.5%, up from the prior cap of 5%. 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. In Rhode Island, we received approval for nearly $400 million in infrastructure investments and select operating costs in connection with our latest electric and gas infrastructure safety and reliability plans. The Rhode Island ISR is a very constructive capital recovery mechanism, and we appreciate the PUC's continued support in approving these critical investments via this mechanism. The ISR plans for gas and electric are submitted annually and outline proposed capital investments and related operating costs to strengthen the safety, reliability, and resiliency of our electric and gas distribution networks. The latest plans address Rhode Island Energy's proposed spending from April 1st, 2025 to March 31st, 2026. Included in the nearly $400 million approval is approximately $220 million in capital investments for electric, which includes $88 million for advanced metering infrastructure, and approximately $145 million for capital investments in gas, including $108 million for gas main replacements. The PUC also authorized recovery of approximately $35 million in operating costs for vegetation management and restoration paving tied to gas main replacement projects. We look forward to executing on these plans and continuing our delivery of exceptional service to the residents of Rhode Island. Moving to slide 7. We continue to see increased interest from data center developers in our Pennsylvania and Kentucky service territories. In Pennsylvania, We now have nearly 11 gigawatts of projects in the advanced stages of planning, up from nearly 9 gigawatts as we shared last quarter. Keep in mind, for a project to be in the advanced stages of planning, 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. The developer in turn is obligated to reimburse us for those costs. 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. The potential capital investment related to these data centers in advanced stages in Pennsylvania ranges from $700 million to $850 million, of which we have $400 million in the plan. And within this category of projects, we now have load that has progressed to fully executed contracts. 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. In addition to the projects in advanced stages, we now have more than 50 gigawatts of other interconnection requests in our queue, demonstrating continued interest in our Pennsylvania service territory. And as we've shared previously, Connecting 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. Turning to Kentucky, we remain very excited to support our first 400-megawatt data center customer, which we highlighted on our year-end earnings call. In addition, we continue to manage nearly 6 gigawatts of active data center requests in our Kentucky queue. And the Kentucky legislature recently expanded the sales tax incentive program for data center projects across the entire Commonwealth and not just in Jefferson County. We expect this will further attract data centers to Kentucky, including across our broader service territories. Turning to slide eight and several items on the horizon. On April 4th, we notified the Kentucky Public Service Commission of our intent to file a base rate case on or after May 30th. As background, LG&E and KU's last base rate increase occurred in July 2021, at which time we agreed to a four-year stay-out provision. Our intent with the expected filing will be to seek new rates effective January 1, 2026, to support continued infrastructure investments that improve reliability, enhance the customer experience, enable long-term grid resilience, and support projected low growth. Our application will be supported by a fully forecasted test period ending December 31st, 2026. Turning to Pennsylvania, we continue to advocate for legislative changes to incentivize construction of new generation in the Commonwealth and help address both rising electricity prices for consumers and potential energy shortfalls. 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. 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. We're absolutely convinced the time to act is now, and we're encouraged by the recent introduction of legislation, House Bill 1272, that supports allowing regulated utilities to build and own generation in the state. A co-sponsor memo was also filed in the Senate, and we expect companion legislation later this spring. Finally, PPL is very well positioned to manage through the recently proposed trade tariffs, and we do not expect a significant impact on our plan. Our team has done an excellent job managing supply chain disruptions and constraints for several years now. I'd highlight that about 70% to 80% of our capital projects and nearly 90% of our O&M is labor. On top of that, most of our materials are sourced domestically, so the size of the potential impact from tariffs shrinks very quickly. 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 share owners. That concludes my strategic and operational update. I'll now turn the call over to Joe for the financial update.