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What changed in PPL Corporation's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of PPL Corporation's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+445 added−410 removedSource: 10-K (2026-02-20) vs 10-K (2025-02-13)

Top changes in PPL Corporation's 2025 10-K

445 paragraphs added · 410 removed · 316 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

93 edited+21 added−7 removed82 unchanged
Biggest changeLast Resort Service (LRS) RIE is required by the RIPUC and by statute to provide LRS to all customers who have not elected to receive their electric supply from a non-regulated power producer or any customer who, for any reason, has stopped receiving generation service from a non-regulated power producer. 10 Table of Contents The charge for LRS is the sum of the applicable LRS charges in addition to all appropriate Retail Delivery charges as stated in the applicable tariff.
Biggest changeRIE recognizes ARPs with a corresponding offset to a regulatory asset or liability account when the regulatory specified events or conditions have been met, when the amounts are determinable, and are probable of recovery (or payment) through future rate adjustments. 10 Table of Contents LRS RIE is required by the RIPUC and by statute to provide LRS to all customers who have not elected to receive their electric supply from a non-regulated power producer or any customer who, for any reason, has stopped receiving generation service from a non-regulated power producer.
PPL pledges to enable the success of its current and future workforce by cultivating a supportive, empowering and collaborative culture, fostering professional development, encouraging employee engagement, and ensuring a safe and healthy work environment. Matters related to these priorities and corporate culture are overseen by PPL's senior management, which provides updates to the PPL Board of Directors (the Board).
PPL pledges to enable the success of its current and future workforce by ensuring a safe and healthy work environment, cultivating a supportive, empowering and collaborative culture, encouraging employee engagement and fostering professional development. Matters related to these priorities and corporate culture are overseen by PPL's senior management, which provides updates to the PPL Board of Directors (the Board).
Compliance with the NAAQS, CSAPR, Good Neighbor Plan, and related requirements may require installation of additional pollution controls or other compliance actions, inclusive of retirements, the costs of which PPL, LG&E and KU believe would be subject to rate recovery. 12 Table of Contents Modification of Mercury and Air Toxics Standards In 2012, the EPA issued the Mercury and Air Toxics Standards (MATS) rule requiring reductions in mercury and other hazardous air pollutants from fossil fuel-fired power plants.
Compliance with the NAAQS, CSAPR, Good Neighbor Plan, and related requirements may require installation of additional pollution controls or other compliance actions, inclusive of retirements, the costs of which PPL, LG&E and KU believe would be subject to rate recovery. 13 Table of Contents Modification of Mercury and Air Toxics Standards In 2012, the EPA issued the Mercury and Air Toxics Standards (MATS) rule requiring reductions in mercury and other hazardous air pollutants from fossil fuel-fired power plants.
As a result, PPL utilizes PPL Capital Funding as a source of capital in financings, in addition to continued direct financing by certain operating subsidiaries. Unlike those of PPL Services, PPL Capital Funding's costs are not generally charged to PPL subsidiaries. Costs are charged directly to PPL.
As a result, PPL utilizes PPL Capital Funding as a source of capital in financings, in addition to continued direct financing by certain operating subsidiaries. Unlike those of PPL Services, PPL Capital Funding's costs are not generally charged to PPL subsidiaries.
Pursuant to its charter, the People and Compensation Committee of the Board of Directors also periodically reviews and assesses the company's strategy for human capital management.
Pursuant to its charter, the People and Compensation Committee of the Board also periodically reviews and assesses the company's strategy for human capital management.
Natural Gas Distribution Supply To meet the projected annual gas supply requirements of approximately 37 Bcf, RIE has a portfolio of gas supply arrangements of varying contractual terms and durations to provide service to its customers. These natural gas supply arrangements include contracts with natural gas producers and marketers that reflect market price signals.
Natural Gas Distribution Supply To meet the projected annual gas supply requirements of approximately 35 Bcf, RIE has a portfolio of gas supply arrangements of varying contractual terms and durations to provide service to its customers. These natural gas supply arrangements include contracts with natural gas producers and marketers that reflect market price signals.
The information contained on, or available through, PPL's Internet website is not, and shall not be deemed to be, incorporated by reference into this report. Additionally, the Registrants' filings are available at the SEC's website (www.sec.gov). 16 Table of Contents
The information contained on, or available through, PPL's Internet website is not, and shall not be deemed to be, incorporated by reference into this report. Additionally, the Registrants' filings are available at the SEC's website (www.sec.gov). 17 Table of Contents
Power Supply At December 31, 2024, LG&E owned generating capacity of 2,466 MW and KU owned generating capacity of 4,798 MW. See "Item 2. Properties - Kentucky Regulated Segment" for a complete list of generating facilities.
Power Supply At December 31, 2025, LG&E owned generating capacity of 2,466 MW and KU owned generating capacity of 4,798 MW. See "Item 2. Properties - Kentucky Regulated Segment" for a complete list of generating facilities.
Based on analyses to date, resolution of these environmental matters is not expected to have a significant adverse impact on the operations of PPL, PPL Electric, LG&E, KU and RIE. Future cleanup or remediation work at sites not yet identified may result in significant additional costs for the Registrants.
Based on analyses to date, resolution of these environmental matters is not expected to have a significant adverse impact on the operations of PPL, PPL Electric, LG&E, KU and RIE. 15 Table of Contents Future cleanup or remediation work at sites not yet identified may result in significant additional costs for the Registrants.
Insurance policies maintained by LKE may be available to cover certain of the costs or other obligations related to these matters for LG&E or KU, but the amount of insurance coverage or reimbursement cannot be estimated or assured. See “Legal Matters” in Note 12 to the Financial Statements for additional information.
Insurance policies maintained by LKE may be available to cover certain costs or other obligations related to these matters for LG&E or KU, but the amount of insurance coverage or reimbursement cannot be estimated or assured. See "Legal Matters" in Note 12 to the Financial Statements for additional information.
Senior management reviews succession planning with the People and Compensation Committee of the Board on an annual basis. • Comprehensive benefits - In addition to challenging careers and competitive salaries, PPL offers competitive benefits programs to attract and retain talent and support employees' well-being.
Senior management reviews succession planning with the People and Compensation Committee of the Board on an annual basis. 16 Table of Contents • Comprehensive benefits - In addition to challenging careers and competitive salaries, PPL offers competitive benefits programs to attract and retain talent and support employees' well-being.
N onattainment designations for counties in which LG&E and KU generation is located, including Jefferson County, Kentucky, could potentially require additional particulate matter and nitrogen oxide reductions from sources including LG&E’s Mill Creek Station, and more stringent requirements for new generation.
Nonattainment designations for counties in which LG&E and KU generation is located, including Jefferson County, Kentucky, could potentially require additional particulate matter and nitrogen oxide reductions from sources including LG&E's Mill Creek Station, and more stringent requirements for new generation.
KU is subject to regulation as a public utility by the KPSC and the VSCC, and certain of its transmission and wholesale power activities are subject to the jurisdiction 3 Table of Contents of the FERC under the Federal Power Act. KU serves its Kentucky customers under the KU name and its Virginia customers under the Old Dominion Power name.
KU is subject to regulation as a public utility by the KPSC and the VSCC, and certain of its transmission and wholesale power activities are subject to the jurisdiction of the FERC under the Federal Power Act. KU serves its Kentucky customers under the KU name and its Virginia customers under the Old Dominion Power name.
The new Presidential administration has issued various executive orders regarding climate change initiatives and is expected to consider changes in regulations, regulatory guidance, legal interpretations, policy positions and implementation actions, but the Registrants are unable to predict any changes that may ultimately be adopted.
The current Presidential administration has issued various executive orders regarding climate change initiatives and is expected to continue to consider changes in regulations, regulatory guidance, legal interpretations, policy positions and implementation actions, but the Registrants are unable to predict the changes that may ultimately be adopted.
The pattern of this fluctuation may change depending on the type and location of the facilities owned. 14 Table of Contents FINANCIAL CONDITION See "Financial Condition" in "Item 7. Combined Management's Discussion and Analysis of Financial Condition and Results of Operations" for this information.
The pattern of this fluctuation may change depending on the type and location of the facilities owned. FINANCIAL CONDITION See "Financial Condition" in "Item 7. Combined Management's Discussion and Analysis of Financial Condition and Results of Operations" for this information.
Rhode Island Regulated Segment (PPL) The Rhode Island Regulated segment consists primarily of the regulated electricity transmission and distribution operations and regulated distribution and sale of natural gas conducted by RIE. RIE is engaged in the regulated transmission, distribution and sale of electricity and regulated distribution and sale of natural gas in Rhode Island.
Rhode Island Regulated Segment (PPL) The Rhode Island Regulated segment consists primarily of the regulated electricity transmission and distribution operations and regulated distribution and sale of natural gas conducted by RIE. 9 Table of Contents RIE is engaged in the regulated transmission, distribution and sale of electricity and regulated distribution and sale of natural gas in Rhode Island.
CAPITAL EXPENDITURE REQUIREMENTS See "Financial Condition - Liquidity and Capital Resources - Forecasted Uses of Cash - Capital Expenditures" in "Item 7. Combined Management's Discussion and Analysis of Financial Condition and Results of Operations" for information concerning projected capital expenditure requirements for 2025 through 2027. See "Item 1.
CAPITAL EXPENDITURE REQUIREMENTS See "Financial Condition - Liquidity and Capital Resources - Forecasted Uses of Cash - Capital Expenditures" in "Item 7. Combined Management's Discussion and Analysis of Financial Condition and Results of Operations" for information concerning projected capital expenditure requirements for 2026 through 2028. See "Item 1.
The Registrants are monitoring executive orders and other ongoing actions by the new Presidential administration, but are unable to predict changes in regulations, regulatory guidance, legal interpretations, policy positions, and implementation actions that may result. 11 Table of Contents See “Legal Matters” in Note 12 to the Financial Statements for a discussion of environmental commitments and contingencies.
The Registrants are monitoring executive orders and other ongoing actions by the new Presidential administration, but are unable to predict changes in regulations, regulatory guidance, legal interpretations, policy positions, and implementation actions that may result. See "Legal Matters" in Note 12 to the Financial Statements for a discussion of environmental commitments and contingencies.
The KPSC order included approval of the requested retirements of two existing coal-fired generation units at LG&E's Mill Creek Unit 1 (300 MW) in 2024 , which occurred on December 31, 2024, and Mill Creek Unit 2 (297 MW) in 2027, subject to certain conditions, and three small gas-fired units. The order denied approval of the retirement of KU's E.W.
The KPSC order included approval of the requested retirements of two existing coal-fired generation units, LG&E's Mill Creek Unit 1 (300 MW) in 2024 , which occurred on December 31, 2024, and Mill Creek Unit 2 (297 MW) in 2027, subject to certain conditions, and three small gas-fired units.
LG&E is subject to regulation as a public utility by the KPSC, and certain of its transmission activities are subject to the jurisdiction of the FERC under the Federal Power Act. LG&E was incorporated in 1913.
LG&E is subject to regulation as a public utility by the KPSC, and certain of its transmission activities are subject to the jurisdiction of the FERC under the Federal Power Act.
The Clean Air Act has a significant impact on the operation of fossil fuel generation plants. The Clean Air Act requires the EPA periodically to establish and review NAAQS for six pollutants including ozone (contributed to by nitrogen oxide emissions) and particulate matter, which are particularly relevant for fossil fuel generation plants. On February 2, 2024, the D.C.
The Clean Air Act requires the EPA periodically to establish and review NAAQS for six pollutants including ozone (contributed to by nitrogen oxide emissions) and particulate matter, which are particularly relevant for fossil fuel generation plants. On February 2, 2024, the D.C.
All of these developments are preliminary or ongoing in nature and the Registrants cannot predict the final outcome or ultimate impact on operations.
These developments are generally preliminary or ongoing in nature and the Registrants cannot predict the final outcome or ultimate impact on operations.
PPL has adopted a goal of net-zero carbon emissions by 2050, which PPL expects will include continuing to retire coal-fired generation and investing in research and innovation that will help to achieve this goal, while maintaining reliable and affordable energy in our service territories.
PPL has adopted a goal of net-zero carbon emissions by 2050, which PPL expects will include continuing to retire uneconomic generation, deploying newer generation technology and investing in research and innovation that will help to achieve this goal, while maintaining reliable and affordable energy in our service territories.
PPL's principal subsidiaries at December 31, 2024 are shown below (* denotes a Registrant).
PPL's principal subsidiaries at December 31, 2025 are shown below (* denotes a Registrant).
One PPA agreement was terminated by the developer due to land control issues. The second agreement terminated contractually due to a PPA price increase that was not acceptable to LG&E and KU. Further, the order approved the new, adjusted or expanded energy efficiency programs contained in the requested 2024-2030 DSM plan.
The second agreement terminated contractually due to a PPA price increase that was not acceptable to LG&E and KU. Further, the order approved the new, adjusted or expanded energy efficiency programs contained in the requested 2024-2030 DSM plan.
PPL, LG&E, and KU are monitoring ongoing legal and regulatory developments. PPL, LG&E, and KU are unable to predict the ultimate outcome of pending litigation or future emission reductions that may be required by future federal rules or state implementation actions.
PPL, LG&E, and KU are unable to predict the ultimate outcome of pending litigation or future emission reductions that may be required by future federal rules or state implementation actions.
In 2024, the following average percentages of PPL Electric's customer load were provided by competitive suppliers: 43% of residential, 82% of small commercial and industrial and 98% of large commercial and industrial customers. PPL Electric’s electricity generation costs are established based upon the results of a competitive solicitation process.
In 2025, the following average percentages of PPL Electric's customer load were provided by competitive suppliers: 40% of residential, 81% of small commercial and industrial and 98% of large commercial and industrial customers. PPL Electric's electricity generation costs are established based upon the results of a competitive solicitation process.
On March 6, 2024, the EPA finalized revisions to the particulate matter standard that lowers the primary standard for fine particulates. Several states and trade groups challenged the EPA’s finalized revisions to the particulate matter standard in the D.C. Circuit Court.
On March 6, 2024, the EPA finalized revisions to the particulate matter standard that lowers the primary standard for fine particulates. Several states and trade groups challenged the EPA's finalized revisions to the particulate matter standard in the D.C. Circuit Court. In March 2025, the EPA announced that it would reconsider the revised fine particulate standard.
ENVIRONMENTAL MATTERS (All Registrants) The Registrants are subject to certain existing and developing federal, regional, state and local laws and regulations with respect to air and water quality, land use and other environmental matters, and may be subject to different and more stringent laws and regulations enacted in the future.
Costs are charged directly to PPL. 11 Table of Contents ENVIRONMENTAL MATTERS (All Registrants) The Registrants are subject to certain existing and developing federal, regional, state and local laws and regulations with respect to air and water quality, land use and other environmental matters, and may be subject to different and more stringent laws and regulations enacted in the future.
Each of LG&E and KU operates as a single operating and reportable segment. Kentucky Regulated Segment (PPL) The Kentucky Regulated segment consists primarily of the regulated electricity generation, transmission and distribution operations conducted by LG&E and KU, as well as LG&E's regulated distribution and sale of natural gas.
Kentucky Regulated Segment (PPL) The Kentucky Regulated segment consists primarily of the regulated electricity generation, transmission and distribution operations conducted by LG&E and KU, as well as LG&E's regulated distribution and sale of natural gas.
Without this storage capacity, LG&E would need to purchase additional natural gas and pipeline transportation services during winter months when customer demand increases, and the cost of natural gas supply and pipeline transportation services are expected to be higher.
Natural gas is stored during the summer season for withdrawal during the following winter heating season. Without this storage capacity, LG&E would need to purchase additional natural gas and pipeline transportation services during winter months when customer demand increases, and the cost of natural gas supply and pipeline transportation services are expected to be higher.
KU's rates to two municipal customers for wholesale power requirements are calculated based on annual updates to a formula rate that utilizes a return on rate base (net utility plant plus certain regulatory assets and working capital less accumulated deferred income taxes, certain regulatory liabilities and miscellaneous deductions) and include recovery of applicable operations and maintenance expenses.
KU's rates to two municipal customers for wholesale power requirements are calculated based on annual updates to a formula rate that utilizes a return on rate base (net utility plant plus working capital less accumulated deferred income taxes and miscellaneous deductions) and include recovery of applicable operations and maintenance expenses. See "Financial and Operational Developments" in "Item 7.
On November 6, 2023, the KPSC issued an order approving LG&E’s and KU’s December 15, 2022 CPCN requests (i) to construct a 640 MW net summer rating NGCC combustion turbine at LG&E's Mill Creek Generating Station in Jefferson County, Kentucky, (ii) to construct a 120 MWac solar photovoltaic electric generating facility in Mercer County, Kentucky, (iii) to acquire a 120 MWac solar facility to be built by a third-party solar developer in Marion County, Kentucky and (iv) to construct a 125 MW, 4-hour battery energy storage system facility at KU's E.W.
LG&E and KU continue to market the program and are accepting subscriptions for the sixth 500-kilowatt phase. 5 Table of Contents On November 6, 2023, the KPSC issued an order approving LG&E's and KU's December 15, 2022 CPCN requests (i) to construct a 645 MW net summer rating NGCC combustion turbine at LG&E's Mill Creek Generating Station in Jefferson County, Kentucky, (ii) to construct a 120 MWac solar photovoltaic electric generating facility in Mercer County, Kentucky, (iii) to acquire a 120 MWac solar facility to be built by a third-party solar developer in Marion County, Kentucky and (iv) to construct a 125 MW, 4-hour battery energy storage system facility at KU's E.W.
On November 7, 2024, the PAPUC approved PPL Electric's default service plan for the period of June 1, 2025 through May 31, 2029, which includes a total of eight solicitations for electricity supply held semiannually in February and July.
In November 2024, the PAPUC approved PPL Electric's default service plan for the period of June 1, 2025 through May 31, 2029, which included a total of eight solicitations for electricity supply held semiannually in February and July. Through December 31, 2025, two auctions of the plan were completed.
See "Financial and Operational Developments" in "Item 7. Combined Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 7 to the Financial Statements for additional information on current rate proceedings and rate mechanisms.
Combined Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 7 to the Financial Statements for additional information on current rate proceedings, regulatory matters and rate mechanisms.
Brown Generating Station. The order also authorized LG&E's and KU's entry into four potential solar PPAs, subject to certain conditions, but deferred for future proceedings specific decisions on cost recovery treatment or mechanisms. Agreements related to two of the four potential solar 5 Table of Contents PPAs have been terminated.
Brown Generating Station. The order also authorized LG&E's and KU's entry into four potential solar PPAs, subject to certain conditions, but deferred for future proceedings specific decisions on cost recovery treatment or mechanisms. Agreements related to two of the four potential solar PPAs have been terminated. One PPA agreement was terminated by the developer due to land control issues.
PPL offers competitive vacation time, expanded leave for new parents, retirement programs, and internal and external development opportunities, including tuition reimbursement offerings for undergraduate and certain graduate degrees. Senior management conducts annual benchmarking of employee compensation and benefits. • Safety and Compliance - PPL is committed to maintaining an ethical and safe workplace culture.
PPL offers competitive vacation time, expanded leave for new parents, retirement programs, and internal and external development opportunities, including tuition reimbursement offerings for undergraduate and certain graduate degrees. Senior management conducts annual benchmarking of employee compensation and benefits.
KU, headquartered in Lexington, Kentucky, is a wholly-owned subsidiary of LKE and a regulated utility engaged in the generation, transmission, distribution and sale of electricity in Kentucky and Virginia.
LG&E was incorporated in 1913. 3 Table of Contents KU, headquartered in Lexington, Kentucky, is a wholly-owned subsidiary of LKE and a regulated utility engaged in the generation, transmission, distribution and sale of electricity in Kentucky and Virginia.
LG&E has a single contract with a second pipeline with a total capacity of 20,000 MMBtu/day during both the winter and summer seasons that expires in 2030.
LG&E has two contracts with a second pipeline with a total capacity of 40,000 MMBtu/day during both the winter and summer seasons that expire in 2030.
Therefore, customer natural gas purchases from alternative suppliers do not generally impact LG&E's profitability. Some large industrial and commercial customers, however, may physically bypass LG&E's facilities and seek delivery service directly from interstate pipelines or other natural gas distribution systems.
LG&E's natural gas tariffs include gas price pass-through mechanisms relating to its sale of natural gas as a commodity. Therefore, customer natural gas purchases from alternative suppliers do not generally impact LG&E's profitability. Some large industrial and commercial customers, however, may physically bypass LG&E's facilities and seek delivery service directly from interstate pipelines or other natural gas distribution systems.
Fuel inventory is maintained at levels estimated to be necessary to avoid operational disruptions at coal-fired generating units. Reliability of coal deliveries can be affected from time to time by several factors including fluctuations in demand, coal mine production issues, high or low river level events, lock outages and other supplier or transporter operating or financial difficulties.
Reliability of coal deliveries can be affected from time to time by several factors including fluctuations in demand, coal mine production issues, high or low river level events, lock outages and other supplier or transporter operating or financial difficulties.
Therefore, customer natural gas purchases from alternative suppliers do not generally impact RIE's profitability. Some large industrial and commercial customers, however, may physically bypass RIE's facilities and seek delivery service directly from interstate pipelines or other natural gas distribution systems.
RIE's natural gas tariffs include gas price pass-through mechanisms relating to its sale of natural gas as a commodity. Therefore, customer natural gas purchases from alternative suppliers do not generally impact RIE's profitability. Some large industrial and commercial customers, however, may physically bypass RIE's facilities and seek delivery service directly from interstate pipelines or other natural gas distribution systems.
Additional steps to ensure Board oversight in these areas include: • Safety – PPL implements programs focused on health and safety, including emergency preparedness, vehicle safety and accident prevention. Employees receive safety training and are encouraged to share, implement, and follow best practices. Senior management receives monthly safety data updates to determine whether additional safety measures should be implemented.
Additional steps to ensure the Board has oversight in these areas include: • Safety - PPL implements programs focused on health and safety, including emergency preparedness, vehicle safety and accident prevention. Employees receive safety training and are encouraged to share, implement, and follow best practices.
Kentucky Pennsylvania Rhode Island Regulated Regulated Regulated For the year ended December 31, 2024: Operating Revenues (in billions) $ 3.6 $ 2.9 $ 2.0 Net Income (in millions) $ 620 $ 574 $ 109 Electricity delivered (GWh) 30,109 36,611 7,371 Natural gas delivered (Bcf) 42 — 37 At December 31, 2024: Regulatory Asset Base (in billions) (a) $ 12.4 $ 10.2 $ 3.8 Service area (in square miles) 8,000 10,000 1,200 Customers (in millions) 1.4 1.5 0.8 (a) Represents capitalization for Kentucky Regulated and rate base for Pennsylvania Regulated and Rhode Island Regulated.
Kentucky Pennsylvania Rhode Island Regulated Regulated Regulated For the year ended December 31, 2025: Operating Revenues (in billions) $ 3.8 $ 3.1 $ 2.2 Net Income (in millions) $ 674 $ 639 $ 85 Electricity delivered (GWh) 31,368 37,186 7,165 Natural gas delivered (Bcf) 47 — 40 At December 31, 2025: Regulatory Asset Base (in billions) (a) $ 13.6 $ 11.1 $ 4.3 Service area (in square miles) 8,000 10,000 1,200 Customers (in millions) 1.4 1.5 0.8 (a) Represents capitalization for Kentucky Regulated and rate base for Pennsylvania Regulated and Rhode Island Regulated.
Franchises and Licenses RIE provides electricity delivery service and natural gas distribution service in its service territory pursuant to certain franchises, licenses, statutory service areas, easements and other rights or permissions granted by the Rhode Island state legislature, cities or municipalities or other entities. 9 Table of Contents Competition There are currently no other electric or gas public utilities operating within the service area of RIE.
Franchises and Licenses RIE provides electricity delivery service and natural gas distribution service in its service territory pursuant to certain franchises, licenses, statutory service areas, easements and other rights or permissions granted by the Rhode Island state legislature, cities or municipalities or other entities.
KU provides electric service to approximately 549,000 customers in 77 counties in central, southeastern and western Kentucky and approximately 28,000 customers in five counties in southwestern Virginia, covering approximately 4,800 non-contiguous square miles. KU also sells wholesale electricity to two municipalities in Kentucky under load following contracts.
KU provides electric service to approximately 553,000 customers in 77 counties in central, southeastern and western Kentucky and approximately 28,000 customers in five counties in southwestern Virginia, covering approximately 4,800 non-contiguous square miles.
Under this formula, beginning in 2023, rates are put into effect on January 1st of each year based upon actual expenditures from the most recently filed FERC Form 1, forecasted capital additions, and other data based on PPL Electric’s books and records. 2023 was considered a transitional period as the calendar year rate approved by FERC became effective April 1, 2023.
Under this formula, rates are put into effect on January 1st of each year based upon actual expenditures from the most recently filed FERC Form 1, forecasted capital additions, and other data based on PPL Electric's books and records.
As the cost of generation supply is a pass-through cost for RIE, its financial results are not impacted if its customers purchase electricity supply from these alternative suppliers. See Note 7 to the Financial Statements for additional information on rate mechanisms and regulatory matters.
As the cost of generation supply is a pass-through cost for RIE, its financial results are not impacted if its customers purchase electricity supply from these alternative suppliers. See "Financial and Operational Developments" in "Item 7.
PPL Electric also provides electricity to retail customers in this territory as a PLR under the Customer Choice Act. 7 Table of Contents Franchises and Licenses PPL Electric provides electricity delivery service in its service territory pursuant to certain franchises, licenses, statutory service areas, easements and other rights or permissions granted by the Pennsylvania state legislature, cities or municipalities or other entities.
Franchises and Licenses PPL Electric provides electricity delivery service in its service territory pursuant to certain franchises, licenses, statutory service areas, easements and other rights or permissions granted by the Pennsylvania state legislature, cities or municipalities or other entities.
Franchises and Licenses LG&E and KU provide electricity delivery service, and LG&E provides natural gas distribution service, in their respective service territories pursuant to certain franchises, licenses, statutory service areas, easements and other rights or permissions granted by state legislatures, cities or municipalities or other entities. 4 Table of Contents Competition There are currently no other electric public utilities operating within the electric service areas of LG&E and KU.
KU also sells wholesale electricity to two municipalities in Kentucky under load following contracts. 4 Table of Contents Franchises and Licenses LG&E and KU provide electricity delivery service, and LG&E provides natural gas distribution service, in their respective service territories pursuant to certain franchises, licenses, statutory service areas, easements and other rights or permissions granted by state legislatures, cities or municipalities or other entities.
LG&E's and KU's Kentucky base rates are calculated based on a return on capitalization (common equity, long-term debt and short-term debt) including adjustments for certain net investments and costs recovered separately through other means. As such, LG&E and KU generally earn a return on regulatory assets in Kentucky.
Prior to January 1, 2026, LG&E's and KU's Kentucky base rates were calculated based on a return on capitalization (common equity, long-term debt and short-term debt) including adjustments for certain net investments and costs recovered separately through other means.
By limiting water bodies that fall within the jurisdiction of the Clean Water Act, the U.S. Supreme Court's decision could reduce the number of projects or the scope of project activities subject to federal permitting for wetlands.
By limiting water bodies that fall within the jurisdiction of the Clean Water Act, the U.S. Supreme Court's decision could reduce the number of projects or the scope of project activities subject to federal permitting for wetlands. A proposed rule regarding revision of the definition was issued in December 2025. A final rule is expected by the end of 2026.
While the impact of new GHG reduction requirements on operations and financial results of operations could potentially be substantial, the cost of complying with such requirements is expected to be subject to rate recovery.
While the impact of new GHG reduction requirements on operations and financial results of operations could potentially be substantial, the cost of complying with such requirements is expected to be subject to rate recovery. On June 17, 2025, the EPA proposed in the Federal Register two options for repeal of the 2024 standard.
PPL's investment in the success of its workforce is embodied in the following areas with dedicated leadership and Board oversight: • Corporate culture - Foster a supportive, empowering and collaborative workplace culture in which employees with various backgrounds can thrive. Senior management reviews workforce metrics, culture related objectives and associated programs semi-annually.
This information is also reviewed with the Audit Committee of the Board quarterly and with the Board annually. • Corporate culture - Foster a supportive, empowering and collaborative workplace culture in which employees with various backgrounds can thrive. Senior management reviews workforce metrics, culture related objectives and associated programs semi-annually.
The announced rule revises the definition of the "Waters of the United States," including a revision to exclude groundwater from the definition. In April 2020, the U.S. Supreme Court issued a ruling that Clean Water Act jurisdiction may apply to certain discharges to groundwater that result in the functional equivalent of a direct discharge to navigable waters.
Supreme Court issued a ruling that Clean Water Act jurisdiction may apply to certain discharges to groundwater that result in the functional equivalent of a direct discharge to navigable waters.
LG&E and KU have firm contracts for a portion of the natural gas fuel for Cane Run Unit 7 through 2026. The bulk of the natural gas fuel is expected to be purchased on the spot market.
LG&E and KU have firm contracts for a portion of the natural gas fuel for Cane Run Unit 7 through 2027.
"Corporate and Other" primarily includes corporate level financing costs, certain unallocated corporate costs, and certain non-recoverable costs incurred in conjunction with the acquisition of Rhode Island Energy and the financial results of Safari Energy, prior to its sale on November 1, 2022. A comparison of PPL's Regulated segments is shown below.
"Corporate and Other" primarily includes corporate level financing costs, certain unallocated corporate costs, and certain non-recoverable costs incurred in conjunction with the acquisition of RIE. A comparison of PPL's Regulated segments is shown below.
PPL has had the ability to utilize the DSIC recovery mechanism since July 2013. See Note 7 to the Financial Statements for additional information on rate mechanisms and legislative and regulatory matters.
PPL has had the ability to utilize the DSIC recovery mechanism since July 2013. See "Financial and Operational Developments" in "Item 7. Combined Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 7 to the Financial Statements for additional information on current rate proceedings, regulatory matters and rate mechanisms.
LG&E provides electric service to approximately 440,000 customers in Louisville and adjacent areas in Kentucky, covering approximately 700 square miles in nine counties and provides natural gas service to approximately 336,000 customers in its electric service area and eight additional counties in Kentucky.
LG&E provides electric service to approximately 443,000 customers and provides natural gas service to approximately 336,000 customers in Louisville and 16 surrounding counties, covering approximately 700 square miles.
(PPL and LG&E) Natural Gas Distribution Supply Four underground natural gas storage fields in service, with a current working natural gas capacity of approximately 11 Bcf, are used to provide natural gas service to LG&E's firm sales customers. Natural gas is stored during the summer season for withdrawal during the following winter heating season.
The bulk of the natural gas fuel is expected to be purchased on the spot market. 6 Table of Contents (PPL and LG&E) Natural Gas Distribution Supply Four underground natural gas storage fields in service, with a current working natural gas capacity of approximately 11 Bcf, are used to provide natural gas service to LG&E's firm sales customers.
During 2024, LG&E's and KU's power plants generated the following amounts of electricity: GWh Fuel Source LG&E KU Coal 10,046 14,276 Gas 1,586 4,483 Hydro 235 54 Solar 8 12 Total (a) 11,875 18,825 (a) This generation represents a decrease for LG&E of 1% and an increase for KU of 8% from 2023 output.
During 2025, LG&E's and KU's power plants generated the following amounts of electricity: GWh Fuel Source LG&E KU Coal 10,331 14,738 Gas 1,613 4,899 Hydro 220 105 Solar 8 12 Total (a) 12,172 19,754 (a) This generation represents an increase for LG&E of 3% and an increase for KU of 5% from 2024 output.
Under the default service procurement plans approved by the PAPUC, PPL Electric purchases all of the alternative energy generation supply it needs to comply with the AEPS. 8 Table of Contents Act 129 created an energy efficiency and conservation program, a demand side management program, smart metering technology requirements, new PLR generation supply procurement rules, remedies for market misconduct and changes to the existing AEPS.
Act 129 created an energy efficiency and conservation program, a demand side management program, smart metering technology requirements, new PLR generation supply procurement rules, remedies for market misconduct and changes to the existing AEPS.
The Board reviews the company's safety programs and results at least annually. The Board is also immediately engaged in the event of a fatality. • Compliance – The Corporate Compliance Committee, including senior executives, meets quarterly to discuss metrics and other matters related to the compliance and ethics culture.
The Board is also immediately engaged in the event of a fatality. • Compliance - The Corporate Compliance Committee, including senior executives, meets quarterly to discuss metrics and other matters related to the compliance and ethics culture. Among the items discussed are statistics regarding Ethics Helpline reports and employee concerns.
Fuel Supply Coal and natural gas are expected to be the predominant fuels used by LG&E and KU for generation for the foreseeable future. Natural gas used for generation is purchased using contractual arrangements separate from LG&E's natural gas distribution operations. Natural gas and oil are also used for intermediate and peaking capacity and flame stabilization in coal-fired boilers.
Natural gas used for generation is purchased using contractual arrangements separate from LG&E's natural gas distribution operations. Natural gas and oil are also used for intermediate and peaking capacity and flame stabilization in coal-fired boilers. Fuel inventory is maintained at levels estimated to be necessary to avoid operational disruptions at coal-fired generating units.
Pennsylvania's Alternative Energy Portfolio Standard (AEPS) requires electric distribution companies and electricity generation suppliers to obtain from alternative energy resources a portion of the electricity sold to retail customers in Pennsylvania.
Certain operating expenses are also included in PPL Electric's distribution base rates including wages and benefits, other operation and maintenance expenses, depreciation and taxes. Pennsylvania's Alternative Energy Portfolio Standard (AEPS) requires electric distribution companies and electricity generation suppliers to obtain from alternative energy resources a portion of the electricity sold to retail customers in Pennsylvania.
The net-zero goal relates to direct and indirect carbon emissions consistent with Greenhouse Gas Protocol guidance and referenced by the EPA Center for Corporate Climate Leadership. Through 2023, PPL reduced carbon emissions nearly 60% from 2010 levels and is targeting a 70% reduction from 2010 levels by 2035 and an 80% reduction by 2040.
The net-zero goal relates to direct and indirect carbon emissions consistent with Greenhouse Gas Protocol guidance and referenced by the EPA Center for Corporate Climate Leadership.
One contract is for pipeline capacity through 2026 for 60,000 MMBtu/day during both the winter and summer seasons. The other contract is for pipeline capacity through 2028 for 30,000 MMBtu/day during the winter season.
Total winter season capacity under these contracts is 184,900 MMBtu/day and summer season capacity is 60,000 MMBtu/day. LG&E has two additional contracts with this same pipeline. One contract is for pipeline capacity through 2031 for 60,000 MMBtu/day during both the winter and summer seasons. The other contract is for pipeline capacity through 2028 for 30,000 MMBtu/day during the winter season.
Pennsylvania Regulated Segment (PPL) The Pennsylvania Regulated segment consists of PPL Electric, a regulated public utility engaged in the distribution and transmission of electricity. (PPL and PPL Electric) PPL Electric delivers electricity to approximately 1.5 million customers in a 10,000-square mile territory in 29 counties within eastern and central Pennsylvania.
(PPL and PPL Electric) PPL Electric delivers electricity to approximately 1.5 million customers in a 10,000-square mile territory in 29 counties within eastern and central Pennsylvania. PPL Electric also provides electricity to retail customers in this territory as a PLR under the Customer Choice Act.
Distribution PPL Electric's distribution base rates are calculated based on a return on rate base (net utility plant plus a cash working capital allowance less plant-related deferred taxes and other miscellaneous additions and deductions). All regulatory assets and liabilities, except accumulated deferred income taxes, are excluded from the return on rate base.
As a PLR, PPL Electric also purchases transmission services from PJM. See "PLR" below. 8 Table of Contents Distribution PPL Electric's distribution base rates are calculated based on a return on rate base (net utility plant plus a cash working capital allowance less plant-related deferred taxes and other miscellaneous additions and deductions).
Therefore, no return is earned on the related assets unless specifically provided for by the PAPUC. Currently, PPL Electric's Smart Meter rider and the DSIC are the only riders authorized to earn a return. Certain operating expenses are also included in PPL Electric's distribution base rates including wages and benefits, other operation and maintenance expenses, depreciation and taxes.
All regulatory assets and liabilities, except accumulated deferred income taxes, are excluded from the return on rate base. Therefore, no return is earned on the related assets unless specifically provided for by the PAPUC. Currently, PPL Electric's Smart Meter rider and the DSIC are the only riders authorized to earn a return.
Brown 3 Unit (412 MW) and Ghent Unit 2 (486 MW) in 2028 at this time, citing the need for additional clarity regarding environmental compliance regulations.
LG&E subsequently requested for Mill Creek Unit 2 to remain operational past the 2027 date. The order denied approval of the retirement of KU's E.W. Brown 3 Unit (412 MW) and Ghent Unit 2 (486 MW) in 2028 at this time, citing the need for additional clarity regarding environmental compliance regulations.
Water/Waste (PPL, LG&E and KU) Clean Water Act Regulations under the federal Clean Water Act dictate permitting and mitigation requirements for facilities and construction projects that impact "Waters of the United States".
To address these risks, PPL continues to work to advance grid modernization and improve the company's equipment to help mitigate the impacts of extreme weather events and improve reliability. 14 Table of Contents Water/Waste (PPL, LG&E and KU) Clean Water Act Regulations under the federal Clean Water Act dictate permitting and mitigation requirements for facilities and construction projects that impact "Waters of the United States".
The new plan also includes solicitations for alternative energy credits held annually in July with the first solicitation in July 2025 and the final solicitation in July 2029. Pursuant to the plans, PPL Electric contracts for all electricity supply for residential, commercial and industrial customers who elect to take default service from PPL Electric.
Pursuant to the plans, PPL Electric contracts for all electricity supply for residential, commercial and industrial customers who elect to take default service from PPL Electric.
LG&E and KU received approval from the KPSC to develop a 4 MW Solar Share facility to service a Solar Share program. The Solar Share program is a voluntary program that allows customers to subscribe capacity in the Solar Share facility. Construction commences, in 500-kilowatt phases, when subscription is complete.
The Solar Share program is a voluntary program that allows customers to subscribe capacity in the Solar Share facility. Construction commences, in 500-kilowatt phases, when subscription is complete. Through December 31, 2025, construction of five 500-kilowatt phases was completed.
PPL had a turnover rate of 8.25% for the year ended December 31, 2024. Looking forward, PPL will maintain our strong focus on workforce planning to address future talent needs.
PPL will continue to engage with employees and to assess these priorities as we work to best position individuals and the company for future success. PPL had a turnover rate of 10.83% for the year ended December 31, 2025. Looking forward, PPL will maintain a strong focus on workforce planning to address future talent needs.
Due to environmental requirements and energy efficiency measures, as of December 31, 2024, LG&E and KU have retired approximately 1,500 MW of coal-fired generation plants since 2010, including the retirement of a 300 MW coal-fired unit in December 2024 at the Mill Creek plant.
Due to environmental requirements, energy efficiency measures, and the relative cost of replacement resources, as of December 31, 2025, LG&E and KU have retired approximately 1,500 MW of coal-fired generation plants since 2010. LG&E and KU received approval from the KPSC to develop a 4 MW Solar Share facility to service a Solar Share program.
LG&E has a portfolio of supply arrangements of varying terms that provide competitively priced natural gas designed to meet its firm sales obligations. These natural gas supply arrangements include pricing provisions that are market-responsive. In tandem with pipeline transportation services, these natural gas supplies provide the reliability and flexibility necessary to serve LG&E's natural gas customers.
At December 31, 2025, LG&E had 9.7 Bcf of natural gas stored underground with a carrying value of $33 million. LG&E has a portfolio of supply arrangements of varying terms that provide competitively priced natural gas designed to meet its firm sales obligations. These natural gas supply arrangements include pricing provisions that are market-responsive.
The amount for Rhode Island Regulated excludes acquisition-related adjustments for non-earning assets. See Note 2 to the Financial Statements for additional financial information by segment. See Note 3 to the Financial Statements for additional revenue information. (PPL Electric, LG&E and KU) PPL Electric has two operating segments, distribution and transmission, which are aggregated into a single reportable segment.
The amount for Pennsylvania Regulated reflects estimated 2025 year-end rate base for Pennsylvania electric distribution. The amount for Rhode Island Regulated excludes acquisition-related adjustments for non-earning assets. See Note 2 to the Financial Statements for additional financial information by segment. See Note 3 to the Financial Statements for additional revenue information.
Alternative energy sources such as electricity, oil, propane and other fuels indirectly impact RIE's natural gas revenues. Marketers may also compete to sell natural gas to certain large end-users. RIE's natural gas tariffs include gas price pass-through mechanisms relating to its sale of natural gas as a commodity.
Competition There are currently no other electric or gas public utilities operating within the service area of RIE. Alternative energy sources such as electricity, oil, propane and other fuels indirectly impact RIE's natural gas revenues. Marketers may also compete to sell natural gas to certain large end-users.
States that are found to contribute significantly to another state's nonattainment with ozone standards are required to establish "good neighbor" state implementation plans. In addition, for attainment of ozone and fine particulates standards, certain states, including Kentucky, are subject to a regional EPA program known as the Cross-State Air Pollution Rule (CSAPR).
In addition, for attainment of ozone and fine particulates standards, certain states, including Kentucky, are subject to a regional EPA program known as the Cross-State Air Pollution Rule (CSAPR). 12 Table of Contents The Clean Air Act has a significant impact on the operation of fossil fuel generation plants.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAn unfavorable outcome or determination in any of these matters could have a material adverse effect on our financial condition, results of operations or cash flows. We are involved in legal proceedings, claims and litigation and periodically are subject to state and federal investigations arising out of our business operations, the most significant of which are summarized in Item 1.
Biggest changeWe cannot predict the outcome of legal proceedings or investigations related to our businesses in which we are periodically involved. An unfavorable outcome or determination in any of these matters could have a material adverse effect on our financial condition, results of operations or cash flows.
These regulations require, among other things, that pipeline operators take certain measures with respect to pipeline integrity. Depending on the results of integrity tests and other integrity program activities, we could incur significant and unexpected costs to perform remedial activities on our natural gas infrastructure to ensure our continued safe and reliable operation. F.
These regulations require, among other things, that pipeline operators take certain measures with respect to pipeline integrity. Depending on the results of integrity tests and other integrity program activities, we could incur significant and unexpected costs to perform remedial activities on our natural gas infrastructure to ensure our continued safe and reliable operation.
The completion of these projects without delays or cost overruns is subject to risks in many areas, including: • approval, licensing and permitting; • land acquisition and the availability of suitable land; • skilled labor or equipment shortages; • construction problems or delays, including disputes with third-party intervenors; 18 Table of Contents • increases in commodity prices or labor rates; • potential supply chain disruptions or delays; and • contractor performance.
The completion of these projects without delays or cost overruns is subject to risks in many areas, including: • approval, licensing and permitting; • land acquisition and the availability of suitable land; • skilled labor or equipment shortages; • construction problems or delays, including disputes with third-party intervenors; • increases in commodity prices or labor rates; • potential supply chain disruptions or delays; and 19 Table of Contents • contractor performance.
Increases in electricity prices and/or a weak economy can lead to changes in legislative and regulatory policy, including the promotion of energy efficiency, conservation and distributed generation or self-generation, which may adversely impact our business. Energy consumption is significantly impacted by overall levels of economic activity and costs of energy supplies.
Increases in electricity prices and/or a weak economy can lead to changes in legislative and regulatory policy, including the promotion of energy efficiency, conservation and distributed generation or self-generation, which may adversely affect our business. Energy consumption is significantly impacted by overall levels of economic activity and costs of energy supplies.
These assumptions include investment returns, interest rates, health care cost trends, inflation rates, benefit improvements, salary increases and the demographics of plan participants. If our assumptions prove to be inaccurate, our future costs and cash contribution requirements to fund these benefits could increase significantly. We may incur liabilities in connection with divestitures.
These assumptions include investment returns, interest rates, health care cost trends, inflation rates, benefit improvements, salary increases and the demographics of plan participants. If our assumptions prove to be inaccurate, our future costs and cash contribution requirements to fund these benefits could increase significantly. 24 Table of Contents We may incur liabilities in connection with divestitures.
In addition, we may incur increased costs for security, including additional physical plant security and security personnel or increased capability following a terrorist incident. We are subject to counterparty performance, credit or other risk in the provision of goods or services to us, which could adversely affect our ability to operate our facilities or conduct business activities.
In addition, we may incur increased costs for security, including additional physical plant security and security personnel or increased capability following a terrorist incident. 25 Table of Contents We are subject to counterparty performance, credit or other risk in the provision of goods or services to us, which could adversely affect our ability to operate our facilities or conduct business activities.
Recent pipeline incidents in the U.S. have also led to the introduction of proposed rules and possible federal legislative actions which could impose restrictions on LG&E’s operations or require more stringent testing to ensure pipeline integrity. Implementation of these regulations could increase our costs to comply with pipeline integrity and safety regulations. 19 Table of Contents D.
Recent pipeline incidents in the U.S. have also led to the introduction of proposed rules and possible federal legislative actions which could impose restrictions on LG&E's operations or require more stringent testing to ensure pipeline integrity. Implementation of these regulations could increase our costs to comply with pipeline integrity and safety regulations. D.
Although we maintain insurance coverage for certain of these risks, we do not carry insurance for all of these risks and no assurance can be given that such insurance coverage will be sufficient to compensate us in the event losses occur. 23 Table of Contents We are required to obtain, and to comply with, government permits and approvals.
Although we maintain insurance coverage for certain of these risks, we do not carry insurance for all of these risks and no assurance can be given that such insurance coverage will be sufficient to compensate us in the event losses occur. We are required to obtain, and to comply with, government permits and approvals.
As a result, operations could be interrupted, property could be damaged and sensitive customer information lost or stolen, causing us to incur significant losses of revenues, other substantial liabilities and damages, costs to replace or repair damaged equipment 20 Table of Contents and damage to our reputation.
As a result, operations could be interrupted, property could be damaged and sensitive customer information lost or stolen, causing us to incur significant losses of revenues, other substantial liabilities and damages, costs to replace or repair damaged equipment and damage to our reputation.
Economic downturns or periods of high energy supply costs can lead to changes in or the development of legislative and regulatory policy designed to promote reductions in energy consumption and increased energy efficiency, alternative and renewable energy 21 Table of Contents sources, and distributed or self-generation by customers.
Economic downturns or periods of high energy supply costs can lead to changes in or the development of legislative and regulatory policy designed to promote reductions in energy consumption and increased energy efficiency, alternative and renewable energy sources, and distributed or self-generation by customers.
Therefore, PPL's rights and the rights of its creditors, including rights of debt holders, to participate in the assets of any of its subsidiaries, in the event that such a subsidiary is liquidated or reorganized, will be subject to the prior claims of such subsidiary's creditors.
Therefore, PPL's rights and the rights of its creditors, including rights of debt holders, to participate in the assets of any of its subsidiaries, in the event that such a subsidiary is liquidated or reorganized, will be subject to the prior claims of such subsidiary's creditors. ( All Registrants ) B.
For example, in some markets demand for, and market prices of, electricity peak during hot summer months, while in other markets such peaks occur in cold winter months. As a result, our overall operating results may fluctuate substantially on a seasonal basis if weather conditions diverge adversely from seasonal norms.
Our businesses are subject to seasonal demand cycles. For example, in some markets demand for, and market prices of, electricity peak during hot summer months, while in other markets such peaks occur in cold winter months. As a result, our overall operating results may fluctuate substantially on a seasonal basis if weather conditions diverge adversely from seasonal norms.
Natural disasters or operational accidents may adversely affect the Registrants’ operating results. Natural disasters or operational accidents (such as wildfires, earthquakes, hurricanes or natural gas transmission pipeline explosions) could have direct or indirect impacts on the Registrants or key contractors or suppliers.
Natural disasters or operational accidents may adversely affect the Registrants' operating results. 22 Table of Contents Natural disasters or operational accidents (such as wildfires, earthquakes, hurricanes or natural gas transmission pipeline explosions) could have direct or indirect impacts on the Registrants or key contractors or suppliers.
In recent years, the federal government has undertaken various efforts aimed at addressing climate change, some of which remain subject to legal challenge, that may affect these costs. The Registrants are unable to predict changes in regulations, regulatory guidance, legal interpretations, policy positions, and implementation actions that may result from the change in Presidential administrations.
In recent years, the federal government has undertaken various efforts aimed at addressing climate change, some of which remain subject to legal challenge, that may affect these costs. The Registrants are unable to predict changes in regulations, regulatory guidance, legal interpretations, policy positions, and implementation actions that may be initiated by the current Presidential administration.
Any such changes could increase tax expense and could have a significant negative impact on our results of operations and cash flows. We continue to evaluate the application of relevant laws, including the TCJA and the IRA in calculating income tax expense.
Any such changes could increase tax expense and could have a significant negative impact on our results of operations and cash flows. We continue to evaluate the application of relevant laws, including the TCJA, the IRA and the One Big Beautiful Bill Act.
Regulators may not approve the rates we request and existing rates may be challenged. The rates we charge our utility customers must be approved by one or more federal or state regulatory commissions, including the FERC, KPSC, VSCC, PAPUC and RIPUC.
The rates we charge our utility customers must be approved by one or more federal or state regulatory commissions, including the FERC, KPSC, VSCC, PAPUC and RIPUC.
These limitations or failures, or inaccurate results generated as a result of our employees’, contractors’ or vendors’ use or misuse of AI technologies could lead to operational interruptions or otherwise adversely affect our business, reputation or financial results. Developing, testing, and deploying resource-intensive AI systems may require additional investment and increase our costs.
These limitations, failures, or inaccurate results generated as a result of our employees', contractors' or vendors' use or misuse of AI technologies could lead to operational interruptions or otherwise adversely affect our business, reputation, or financial results.
The regulated utility businesses are capital intensive and require significant investments in energy generation (in the case of LG&E and KU) and transmission, distribution and other infrastructure projects, such as projects for environmental compliance and system reliability.
The regulated utility businesses are capital intensive and require significant investments in energy generation (in the case of LG&E and KU) and transmission, distribution and other infrastructure projects, including providing service to new data centers and large load customers, constructing projects for environmental compliance and maintaining system reliability.
Depending on the results of integrity tests and other integrity program activities, we could incur significant and unexpected costs to perform remedial activities on our natural gas infrastructure to ensure our continued safe and reliable operation.
These regulations require, among other things, that pipeline operators take certain measures with respect to pipeline integrity. Depending on the results of integrity tests and other integrity program activities, we could incur significant and unexpected costs to perform remedial activities on our natural gas infrastructure to ensure our continued safe and reliable operation. 21 Table of Contents F.
The PHMSA enforces regulations that govern the design, construction, operation and maintenance of pipeline facilities. Failure to comply with these regulations could result in the assessment of fines or penalties against LG&E. These regulations require, among other things, that pipeline operators take certain measures with respect to pipeline integrity.
( PPL and LG&E ) We are subject to regulatory and other risks regarding natural gas supply infrastructure. The PHMSA enforces regulations that govern the design, construction, operation and maintenance of pipeline facilities. Failure to comply with these regulations could result in the assessment of fines or penalties against LG&E.
Our ability to retire plants we believe are uneconomic is expected to be subject to receipt of regulatory approvals. Market prices for energy and capacity also affect this cost-effectiveness analysis.
Our ability to retire plants we believe are uneconomic is expected to be subject to receipt of regulatory approvals.
Failure to comply with these standards could result in the imposition of fines or civil penalties, and potential exposure to third party claims for alleged violations of the standards. Artificial intelligence (AI) is an emerging area of technology that has the potential to impact various aspects of our business operations and customer interactions.
Failure to comply with these standards could result in the imposition of fines or civil penalties, and potential exposure to third party claims for alleged violations of the standards.
Many of these environmental law considerations are also applicable to the operations of our key suppliers or customers, such as coal producers, power producers and industrial power users, and may impact the costs of their products and demand for our services. ( PPL and LG&E ) We are subject to regulatory and other risks regarding natural gas supply infrastructure.
Market prices for energy and capacity also affect this cost-effectiveness analysis. 20 Table of Contents Many of these environmental law considerations are also applicable to the operations of our key suppliers or customers, such as coal producers, power producers and industrial power users, and may impact the costs of their products and demand for our services.
Our operating revenues could fluctuate on a seasonal basis, especially as a result of extreme weather conditions, including storms, or from changes in average temperatures for extended periods, which may be caused or exacerbated by climate change. Our businesses are subject to seasonal demand cycles.
Combined Management's Discussion and Analysis of Financial Condition and Results of Operations - Financial Condition - Liquidity and Capital Resources - Ratings Triggers" for additional information on the financial impact of a downgrade in our credit ratings. 23 Table of Contents Our operating revenues could fluctuate on a seasonal basis, especially as a result of extreme weather conditions, including storms, or from changes in average temperatures for extended periods, which may be caused or exacerbated by climate change.
At this time, the Registrants cannot predict the ways in which and the extent to which these or other pandemic-related factors may affect their business, earnings or other financial results. Our business operations are continually subject to cyber-based security and data integrity risks from vulnerabilities related to our IT systems, operational technology infrastructure and supply chain relationships.
Risks Related to All Segments ( All Registrants ) Our business operations are continually subject to cyber-based security and data integrity risks from vulnerabilities related to our IT systems, operational technology infrastructure and supply chain relationships.
Also, demand for our energy-related services could be similarly lowered by consumers' preferences or market factors favoring energy efficiency, low-carbon power sources or reduced electricity usage.
Also, demand for our energy-related services could be similarly lowered by consumers' preferences or market factors favoring energy efficiency, low-carbon power sources or reduced electricity usage. The Registrants' responses to such climate-related risks include compliance with evolving governmental policy, which may affect our financial condition, results of operations or cash flows.
While we seek contractual protections with our third-party vendors regarding the use of AI technology, we may not have full awareness of, or control or visibility over, the quality, performance, security or compliance of the products and services that incorporate AI-related technology used by such vendors.
Although we seek contractual protections and conduct due diligence with third-party vendors that incorporate AI technologies into their products or services, we may not have full visibility into, awareness of, or control over, the underlying data, supply chain dependencies, model training practices, performance, security safeguards, or compliance posture of such AI enabled tools.
AI technologies are still in their early stages of development and deployment. Ineffective or inadequate AI development or deployment practices by PPL, its subsidiaries or third-party vendors could result in unintended consequences.
Because AI technologies remain in the early stages of development and industry standards are still emerging, their use, whether by PPL, its subsidiaries or third-party vendors, presents inherent risks.
Business and "Regulatory Matters" in Note 7 to the Financial Statements and in "Legal Matters" and "Regulatory Issues" in Note 12 to the Financial 22 Table of Contents Statements. We cannot predict the ultimate outcome of these matters, nor can we reasonably estimate the costs or liabilities that could potentially result from a negative outcome in each case.
We cannot predict the ultimate outcome of these matters, nor can we reasonably estimate the costs or liabilities that could potentially result from a negative outcome in each case. Significant increases in our operation and maintenance expenses, including health care and pension costs, could adversely affect our future earnings and liquidity.
AI algorithms that we or our third-party vendors use may be flawed or may be based on datasets that are biased or insufficient.
AI algorithms that we or our third-party vendors use may be flawed or may be based on datasets that are biased or insufficient, which may introduce risks involving data quality, data integrity, cybersecurity, adversarial manipulation, intellectual property, regulatory compliance, biased outcomes, or improper handling of sensitive information.
Increased costs of materials and labor may result from general inflation, increased regulatory requirements (especially in respect of environmental regulations), the need for higher-cost expertise in the workforce or other factors. In addition, pursuant to collective bargaining agreements, we are contractually committed to provide specified levels of health care and pension benefits to certain current employees and retirees.
We continually focus on limiting and reducing our operation and maintenance expenses. However, we expect to continue to face increased cost pressures in our operations. Increased costs of materials and labor may result from general inflation, increased regulatory requirements (especially in respect of environmental regulations), the need for higher-cost expertise in the workforce or other factors.
Set forth below are risk factors common to the regulated segments, followed by sections identifying separately the risks specific to each of these segments. Our profitability is highly dependent on our ability to recover the costs of providing energy and utility services to our customers and earn an adequate return on our capital investments.
Our profitability is highly dependent on our ability to recover the costs of providing energy and utility services to our customers and earn an adequate return on our capital investments. Regulators may not approve the rates we request and existing rates may be challenged.
Removed
PPL may not realize the anticipated benefits of the RIE acquisition, which could materially adversely affect PPL's business, financial condition and results of operations. PPL may not realize the anticipated financial and operational benefits from the RIE acquisition. PPL has incurred significant costs in connection with the integration, and additional unanticipated costs may arise.
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Set forth below are risk factors common to the regulated segments, followed by sections identifying separately the risks specific to each of these segments. 18 Table of Contents The business and capital investment plans of PPL depend, in part, on the continued growth and viability of data centers and large load customers in its service territories.
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No assurance can be given that the anticipated long-term benefits from the acquisition will be achieved or, if achieved, the timing of their achievement.
Added
PPL is anticipating increases in load demand, creating a business need for new power generating resources and transmission facilities. Much of this demand is driven by interconnecting with and providing power to data centers and large load customers to serve an increasingly digital economy and to support artificial intelligence.
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These risks and their consequences could result in increased costs or decreases in the amount of expected revenues associated with the 17 Table of Contents Rhode Island Regulated segment and could have a material adverse effect on PPL's business, financial condition and results of operations. ( All Registrants ) B.
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The business and capital investment plans of PPL are focused on meeting these current and projected needs. If these increased demands for electricity do not occur as projected or are not sustained as projected, for any reason, it could affect PPL's financial condition.
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Risks Related to All Segments ( All Registrants ) Pandemic health events and their impact on business and economic conditions could negatively affect our business. A pandemic health event and related remediation efforts could present challenges to businesses, communities, workforces, markets and supply chains.
Added
PPL is anticipating increases in load demand, creating the need for new power generating resources and transmission facilities. A substantial portion of this demand is driven by the current and projected power needs of data centers to serve an increasingly digital economy and to support artificial intelligence.
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In addition, the rapidly evolving nature of AI technologies may cause new laws and regulations to be enacted which could dramatically affect business practices, including the costs to comply with such new laws and regulations. We cannot predict the future development of AI technologies and the nature of any related new laws and regulations, and their costs and consequences.
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Extending service to these facilities necessitates significant capital expenditures, which in turn requires sufficient access to sources of capital. These additional capital needs, the increased concentration of business within a single industry based on emerging technologies, and uncertainties regarding the actual capacity required to satisfy the projected new demands of these new industries creates risks for PPL.
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Combined Management's Discussion and Analysis of Financial Condition and Results of Operations - Financial Condition - Liquidity and Capital Resources - Ratings Triggers" for additional information on the financial impact of a downgrade in our credit ratings.
Added
Ensuring that incremental revenues from these projected new demands cover incremental costs and risks is critical to PPL and its relationship to its existing customers. While contracts with new large load customers typically include provisions for early termination payments, minimum bills, and financial security, these contracts may not fully protect PPL against all risks.
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The Registrants' responses to such climate-related risks include compliance with evolving governmental policy and developing and implementing strategies designed to meet net zero carbon emissions goals, which may affect our financial condition, results of operations or cash flows. We cannot predict the outcome of legal proceedings or investigations related to our businesses in which we are periodically involved.
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Changes in industry practice or advances in the related technologies could reduce the demand for electricity to power data centers or other large load facilities. Additionally, these industries may experience a business downturn, which could cause the loss of current or potential customers or may weaken the financial condition and creditworthiness of existing customers.
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Significant increases in our operation and maintenance expenses, including health care and pension costs, could adversely affect our future earnings and liquidity. We continually focus on limiting and reducing our operation and maintenance expenses. However, we expect to continue to face increased cost pressures in our operations.
Added
If anticipated demand growth does not materialize, PPL could experience unrecovered capital investments. Conversely, if demand grows more rapidly than projected, PPL may face challenges in securing adequate generation and transmission capacity and maintaining service reliability.
Added
Artificial Intelligence (AI) is an evolving area of technology that has the potential to affect multiple aspects of our business operations, grid management, critical infrastructure management, customer interactions, cybersecurity posture, and decision support processes.
Added
In addition, the development, testing, and deployment of AI capabilities may require significant computational resources, specialized personnel, and additional investment, resulting in increased costs. We may not be able to recover these costs through our regulatory proceedings.
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Rapid advances in AI capabilities, as well as the emerging regulatory landscape in the United States and internationally, may also require modifications to our systems, adoption of enhanced governance processes or implementation of new safeguards.
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Future laws, regulations, Executive Orders, or industry standards relating to AI (which may be conflicting), including those addressing transparency, data usage, cybersecurity, accountability, or risk management, could materially affect how we design, procure, or use AI technologies and could increase compliance costs.
Added
In addition, the pace of AI innovation and regulation is unpredictable, and we cannot foresee all potential impacts of AI technologies or future laws and regulations or compliance requirements, and their associated costs and consequences. Any of the risks described above could adversely affect our business operations, reputation, or financial results.
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We are involved in legal proceedings, claims and litigation and periodically are subject to state and federal investigations arising out of our business operations, the most significant of which are summarized in Item 1. Business and "Regulatory Matters" in Note 7 to the Financial Statements and in "Legal Matters" and "Regulatory Issues" in Note 12 to the Financial Statements.
Added
In addition, pursuant to collective bargaining agreements, we are contractually committed to provide specified levels of health care and pension benefits to certain current employees and retirees. These benefits give rise to significant expenses.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changePPL has established an Executive Crisis Team comprised of PPL’s executive leadership, including the Chief Executive Officer, Chief Technology and Innovation Officer, Chief Financial Officer, Chief Human Resources Officer, Chief Legal Officer, Chief Operating Officer, VP – Public Affairs and Sustainability, VP – Corporate Communications, Chief Security Officer and additional officers as circumstances may warrant, to allow the company to respond quickly to a crisis, including a cyber event.
Biggest changePPL has established an Executive Crisis Team comprised of PPL's executive leadership, including the CLC and additional officers as circumstances may warrant, to allow the company to respond quickly to a crisis, including a cyber event. This team governs and manages corporate crisis preparedness across the business lines, operations, and functions.
The Board has directed the CEO and CSO to promptly inform the Board in the event of a material or potentially material cybersecurity event. Each member of the Board has access to management, including the CEO and CSO, to ask questions and engage on the company’s approach to prevent, detect, assess, and mitigate cybersecurity risk.
The Board has directed the CEO and CSO to promptly inform the Board in the event of a material or potentially material cybersecurity event. Each member of the Board has access to management, including the CEO and CSO, to ask questions and engage in the company's approach to prevent, detect, assess, and mitigate cybersecurity risk.
In addition to these enterprise-wide initiatives, PPL's Kentucky, Pennsylvania and Rhode Island operations are subject to extensive and rigorous mandatory cybersecurity requirements that are developed and enforced by NERC and approved by the FERC to protect grid security and reliability.
In addition to these enterprise-wide initiatives, PPL's Kentucky, Pennsylvania and Rhode Island operations are subject to extensive and rigorous mandatory cybersecurity requirements that are developed and enforced by NERC and approved by FERC to protect grid security and reliability.
The CSO has over 25 years of experience leading technology and security organizations, has a degree in computer science, and holds professional certifications in information security, IT auditing, and privacy.
The CSO has over 30 years of experience leading technology and security organizations, has a degree in computer science, and holds professional certifications in information security, IT auditing, and privacy.
Cybersecurity risks are included in PPL’s enterprise risk management process and are reported to the Audit Committee of the Board on a quarterly basis or more frequently, as needed.
Cybersecurity risks are included in PPL's enterprise risk management process and are reported to the Audit Committee of the Board on a quarterly basis or more frequently, as needed. 27 Table of Contents
Risk Factors” for a discussion of cybersecurity risks affecting the Registrants. Oversight of Cybersecurity Risks by the Board of Directors and Management PPL’s Board of Directors oversees the Registrants’ management of cybersecurity risk through various processes identified below.
Oversight of Cybersecurity Risks by the Board of Directors and Management PPL's Board of Directors (the Board) oversees the Registrants' management of cybersecurity risk through various processes identified below.
The teams managed by the CSO are comprised of seasoned experts in cyber and IT security and possess appropriate experience to safeguard the company’s data, networks and systems, mitigate cyber risks and help prevent and combat cyber threats.
The CSO has responsibility for and oversees teams comprised of seasoned experts in cyber and IT security who possess appropriate experience to safeguard the company's data, networks and systems, mitigate cyber risks and help prevent and combat cyber threats. Reporting to the CSO are PPL's Chief Technology Security Officer (CTSO) and the VP of Corporate Security.
In developing their cybersecurity programs, the Registrants are guided by various frameworks including the NIST Cybersecurity Framework, a voluntary framework that consists of standards, guidelines and best practices for managing cybersecurity risk, that is widely used by critical infrastructure industries to help determine and address the highest priority cybersecurity risks.
The Registrants' subject matter specialists from across the enterprise provide input and expertise into risk governance processes, including cybersecurity, information technology, legal, compliance, operations, and enterprise risk management. 26 Table of Contents In developing their cybersecurity programs, the Registrants are guided by various frameworks including the NIST Cybersecurity Framework, a voluntary framework that consists of standards, guidelines and best practices for managing cybersecurity risk, that is widely used by critical infrastructure industries to help determine and address the highest priority cybersecurity risks.
The CSO chairs the Corporate Security Council, which holds regular meetings consisting of senior executive management and reviews and oversees cybersecurity risks.
The CSO chairs the Corporate Security Council, consisting of senior executive management, which convenes regularly to and review and oversee cybersecurity risks.
Also, the Registrants’ workforce undertakes mandatory role-based annual training on identifying, reporting, and escalating cyber and physical security concerns to further assist in the identification of risks as well as the acceptable use of corporate electronic resources. Additionally, all employees and contractors are required to participate in the Registrants’ ethical cyber phishing campaign program.
Material or potentially material risks are escalated to the Executive Crisis Team and other appropriate leadership for review and action. Also, the Registrants' workforce undertakes mandatory role-based annual training on identifying, reporting, and escalating cyber and physical security concerns to further assist in the identification of risks as well as the acceptable use of corporate electronic resources.
While PPL has not determined any cybersecurity incidents have materially affected the Registrants, including their business strategy, results of operations or financial condition, there can be no guarantee that the Registrants will not be the subject of future attacks, threats or incidents, the consequences of which may be material. 25 Table of Contents See “Risks Related to All Segments – Our business operations are continually subject to cyber-based security and data integrity risks from vulnerabilities related to our IT systems, operational technology infrastructure and supply chain relationships” in “Item 1A.
While PPL has not determined that any cybersecurity incidents have materially affected the Registrants, including their business strategy, results of operations or financial condition, there can be no guarantee that the Registrants will not be the subject of future attacks, threats or incidents, the consequences of which may be material.
Removed
The Registrants’ subject matter specialists from across the enterprise provide input and expertise into risk governance processes, including cybersecurity, information technology, legal, compliance, operations, and enterprise risk management.
Added
The CTSO has over 25 years of experience, is a certified information security professional, and manages PPL's cyber security operations overseeing the implementation of security strategies and solutions across the Registrants, threat management, access management, cloud security and artificial intelligence.
Removed
This team governs and manages corporate crisis preparedness across the business lines, operations, and functions. Material or potentially material risks are escalated to the Executive Crisis Team and other appropriate leadership for review and action.
Added
Additionally, all employees and contractors are required to participate in the Registrants' ethical cyber phishing campaign program and complete annual cybersecurity awareness training.
Added
See "Risks Related to All Segments – Our business operations are continually subject to cyber-based security and data integrity risks from vulnerabilities related to our IT systems, operational technology infrastructure and supply chain relationships" in "Item 1A. Risk Factors" for a discussion of cybersecurity risks affecting the Registrants.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAt December 31, 2024, PPL Electric's transmission system includes 52 substations with a total capacity of 32 million kVA and 5,286 circuit miles in service. PPL Electric's distribution system includes 355 substations with a total capacity of 15 million kVA, 36,628 circuit miles of overhead lines and 9,006 underground circuit miles. All of PPL Electric's facilities are located in Pennsylvania.
Biggest changePPL Electric's distribution system includes 355 substations with a total capacity of 15 million kVA, 36,660 circuit miles of overhead lines and 9,102 underground circuit miles. All of PPL Electric's facilities are located in Pennsylvania. Substantially all of PPL Electric's distribution properties and certain transmission properties are subject to the lien of the PPL Electric 2001 Mortgage Indenture.
The electricity generating capacity at December 31, 2024 was: LG&E KU Primary Fuel/Plant Total MW Capacity Summer % Ownership or Other Interest Ownership or Other Interest in MW % Ownership or Other Interest Ownership or Other Interest in MW Coal Ghent - Units 1- 4 1,919 100.00 1,919 Mill Creek - Units 2- 4 1,165 100.00 1,165 E.W.
The electricity generating capacity at December 31, 2025 was: LG&E KU Primary Fuel/Plant Total MW Capacity Summer % Ownership or Other Interest Ownership or Other Interest in MW % Ownership or Other Interest Ownership or Other Interest in MW Coal Ghent - Units 1- 4 1,919 100.00 1,919 Mill Creek - Units 2- 4 1,165 100.00 1,165 E.W.
The 8 MW solar facility summer capacity rating is reflective of an average expected output across the peak hours during the summer period based on average weather conditions at the solar facility. For a description of LG&E's and KU's service areas, see "Item 1.
The 8 MW solar facility summer capacity rating is reflective of an average expected output across the peak hours during the summer period based on average weather conditions at the solar facility. 28 Table of Contents For a description of LG&E's and KU's service areas, see "Item 1.
RIE also has distribution mains for its natural gas system with mileage of 3,223 miles. All of RIE's facilities are located in Rhode Island.
RIE also has distribution mains for its natural gas system with mileage of 3,220 miles. All of RIE's facilities are located in Rhode Island.
Business - General - Segment Information - Rhode Island Regulated Segment." At December 31, 2024, RIE's electric transmission system includes 44 substations with capacity of 33 kVA or higher, 361 circuit miles of overhead lines and 49 underground circuit miles. RIE's electric distribution system includes 59 substations, 6,500 circuit miles of overhead lines and 1,229 underground circuit miles.
Business - General - Segment Information - Rhode Island Regulated Segment." At December 31, 2025, RIE's electric transmission system includes 45 substations with capacity of 33 kVA or higher, 361 circuit miles of overhead lines and 49 underground circuit miles. RIE's electric distribution system includes 59 substations, 6,600 circuit miles of overhead lines and 1,268 underground circuit miles.
Brown Units 8 - 11 (b) 484 100.00 484 Trimble County Units 5 - 6 318 29.00 92 71.00 226 Trimble County Units 7 - 10 636 37.00 235 63.00 401 Paddy's Run Unit 12 23 100.00 23 Paddy's Run Unit 13 147 53.00 78 47.00 69 Haefling - Units 1 - 2 24 100.00 24 Cane Run Unit 7 691 22.00 152 78.00 539 2,745 760 1,985 Hydro Ohio Falls - Units 1-8 64 100.00 64 Dix Dam - Units 1-3 32 100.00 32 96 64 32 26 Table of Contents LG&E KU Primary Fuel/Plant Total MW Capacity Summer % Ownership or Other Interest Ownership or Other Interest in MW % Ownership or Other Interest Ownership or Other Interest in MW Solar E.W.
Brown Units 8 - 11 (b) 484 100.00 484 Trimble County Units 5 - 6 318 29.00 92 71.00 226 Trimble County Units 7 - 10 636 37.00 235 63.00 401 Paddy's Run Unit 12 23 100.00 23 Paddy's Run Unit 13 147 53.00 78 47.00 69 Haefling - Units 1 - 2 24 100.00 24 Cane Run Unit 7 691 22.00 152 78.00 539 2,745 760 1,985 Hydro Ohio Falls - Units 1-8 64 100.00 64 Dix Dam - Units 1-3 32 100.00 32 96 64 32 Solar E.W.
See Note 8 to the Financial Statements for additional information. LG&E and KU continuously reexamine development projects based on market conditions and other factors to determine whether to proceed with the projects, sell, cancel or expand them or pursue other options. See Item 1. Business for a discussion related to LG&E's and KU's Solar Share program and 2022 CPCN filing.
See Note 8 to the Financial Statements for additional information. LG&E and KU continuously reexamine development projects based on market conditions and other factors to determine whether to proceed with the projects, sell, cancel or expand them or pursue other options. See Item 1.
Business - General - Segment Information - Kentucky Regulated Segment." At December 31, 2024, LG&E's and KU's electricity transmission and distribution systems and LG&E's natural gas transmission and distribution systems were: LG&E KU Distribution Transmission Distribution Transmission Electricity System Substations (a) 97 79 461 215 Capacity (in millions of kVA) 6 8 8 16 Overhead lines (circuit miles) 3,887 663 14,093 4,064 Underground lines (circuit miles) 2,876 6 2,840 4 Natural Gas System Distribution mains (miles) 4,463 — — — Transmission pipeline (miles) — 229 — — Transmission storage lines (miles) — 83 — — Combustion turbine lines (miles) — 19 — 11 Storage fields — 4 — — Storage field capacity (Bcf) — 11 — — (a) 195 substations (62 at LG&E and 133 at KU) are shared between the distribution and transmission systems.
Business - General - Segment Information - Kentucky Regulated Segment." At December 31, 2025, LG&E's and KU's electricity transmission and distribution systems and LG&E's natural gas transmission and distribution systems were: LG&E KU Distribution Transmission Distribution Transmission Electricity System Substations (a) 97 79 460 216 Capacity (in millions of kVA) 6 8 8 16 Overhead lines (circuit miles) 3,890 662 14,104 4,064 Underground lines (circuit miles) 2,913 6 2,901 4 Natural Gas System Distribution mains (miles) 4,475 — — — Transmission pipeline (miles) — 230 — — Transmission storage lines (miles) — 83 — — Combustion turbine lines (miles) — 19 — 11 Storage fields — 4 — — Storage field capacity (Bcf) — 11 — — (a) 196 substations (62 at LG&E and 134 at KU) are shared between the distribution and transmission systems.
Substantially all of PPL Electric's distribution properties and certain transmission properties are subject to the lien of the PPL Electric 2001 Mortgage Indenture. See Note 8 to the Financial Statements for additional information. 27 Table of Contents Rhode Island Regulated Segment (PPL) For a description of RIE's service area, see "Item 1.
See Note 8 to the Financial Statements for additional information. Rhode Island Regulated Segment (PPL) For a description of RIE's service area, see "Item 1.
Pennsylvania Regulated Segment (PPL and PPL Electric) For a description of PPL Electric's service area, see "Item 1. Business - General - Segment Information - Pennsylvania Regulated Segment." PPL Electric has electric transmission and distribution lines in public streets and highways pursuant to franchises and rights-of-way secured from property owners.
Business - General - Segment Information - Pennsylvania Regulated Segment." PPL Electric has electric transmission and distribution lines in public streets and highways pursuant to franchises and rights-of-way secured from property owners. At December 31, 2025, PPL Electric's transmission system includes 53 substations with a total capacity of 32 million kVA and 5,301 circuit miles in service.
Added
Business for a discussion related to LG&E's and KU's Solar Share program and 2022 and 2025 CPCN filings. Pennsylvania Regulated Segment (PPL and PPL Electric) For a description of PPL Electric's service area, see "Item 1.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePPL Electric paid common stock dividends to PPL of $375 million in 2024 and $323 million in 2023. Louisville Gas and Electric Company There is no established public trading market for LG&E's common stock, as LKE owns 100% of the outstanding common shares. Dividends paid to LKE on those common shares are determined by LG&E's Board of Directors.
Biggest changePPL Electric paid common stock dividends to PPL of $401 million in 2025 and $375 million in 2024. Louisville Gas and Electric Company There is no established public trading market for LG&E's common stock, as LKE owns 100% of the outstanding common shares. Dividends paid to LKE on those common shares are determined by LG&E's Board of Directors.
There were no purchases by PPL of its common stock during the fourth quarter of 2024. PPL Electric Utilities Corporation There is no established public trading market for PPL Electric's common stock, as PPL owns 100% of the outstanding common shares. Dividends paid to PPL on those common shares are determined by PPL Electric's Board of Directors.
There were no purchases by PPL of its common stock during the fourth quarter of 2025. PPL Electric Utilities Corporation There is no established public trading market for PPL Electric's common stock, as PPL owns 100% of the outstanding common shares. Dividends paid to PPL on those common shares are determined by PPL Electric's Board of Directors.
LG&E paid common stock dividends to LKE of $187 million in 2024 and $166 million in 2023. Kentucky Utilities Company There is no established public trading market for KU's common stock, as LKE owns 100% of the outstanding common shares. Dividends paid to LKE on those common shares are determined by KU's Board of Directors.
LG&E paid common stock dividends to LKE of $200 million in 2025 and $187 million in 2024. Kentucky Utilities Company There is no established public trading market for KU's common stock, as LKE owns 100% of the outstanding common shares. Dividends paid to LKE on those common shares are determined by KU's Board of Directors.
PPL Corporation Additional information for this item is set forth in the sections entitled "Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters" and "Shareowner and Investor Information" of this report. At January 31, 2025 there were 42,122 common stock shareowners of record.
PPL Corporation Additional information for this item is set forth in the sections entitled "Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters" and "Shareowner and Investor Information" of this report. At January 30, 2026 there were 39,811 common stock shareowners of record.
KU paid common stock dividends to LKE of $232 million in 2024 and $190 million in 2023.
KU paid common stock dividends to LKE of $249 million in 2025 and $232 million in 2024.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe changes in the components of the Rhode Island Regulated segment's results between these periods are due to the factors set forth below, which exclude the items that management considers special. 2024 vs. 2023 Operating Revenues $ 183 Energy purchases (124) Other operation and maintenance (50) Depreciation (7) Taxes, other than income 12 Other Income (Expense) - net 6 Interest Expense (13) Income Taxes (4) Earnings from Ongoing Operations 3 Special Items, after-tax 10 Net Income $ 13 • Higher operating revenues in 2024 compared to 2023, primarily due to a $175 million increase due to the effects of conforming the presentation of RIE's net metering charges to that of PPL's other operating utilities beginning in 2024, a $46 million increase in recovery of gas maintenance related expenses, a $29 million increase related to capital investments, a $12 million increase related to recovery of transmission expenses and a $15 million increase of other items that were not individually significant, partially offset by a $51 million decrease in recovery of commodity costs, a $24 million decrease in recovery of pension expenses, a $14 million decrease in recovery of gross earnings taxes and a $10 million decrease related to ISR adjustments. • Higher energy purchases in 2024 compared to 2023, primarily due to a $175 million increase related to the effects of conforming the presentation of RIE's net metering charges to that of PPL's other operating utilities beginning in 2024, partially offset by a $51 million decrease in commodity costs. • Higher operation and maintenance expense in 2024 compared to 2023, primarily due to a $46 million increase in gas maintenance related expenses, an $18 million increase in bad debt expenses and a $12 million increase in transmission expenses, partially offset by a $24 million decrease in pension expenses. • Lower taxes, other than income in 2024 compared to 2023, primarily due to a decrease in gross earnings taxes. • Higher interest expense in 2024 compared to 2023, primarily due to increased borrowings. 40 Table of Contents Reconciliation of Earnings from Ongoing Operations The following tables contain after-tax gains (losses), in total, which management considers special items, that are excluded from Earnings from Ongoing Operations, and a reconciliation to PPL's "Net Income" for the years ended December 31. 2024 KY Regulated PA Regulated RI Regulated Corporate and Other Total Net Income (Loss) $ 620 $ 574 $ 109 $ (415) $ 888 Less: Special Items (expense) benefit: Talen litigation costs, net of tax of $1 (a) — — — (2) (2) Strategic corporate initiatives, net of tax of $0, $2, $2 (b) (1) (5) — (5) (11) Acquisition integration, net of tax of $13, $66 (c) — — (46) (250) (296) PPL Electric billing issue, net of tax of $5 (d) — (13) — — (13) FERC transmission credit refund, net of tax of $0 (e) 1 — — — 1 ECR beneficial reuse transition adjustment, net of tax of $2 (f) (4) — — — (4) DER projects impairment, net of tax of $6 (g) — (15) — — (15) IT transformation, net of tax of $5 (h) — — — (22) (22) Total Special Items (4) (33) (46) (279) (362) Earnings from Ongoing Operations $ 624 $ 607 $ 155 $ (136) $ 1,250 (a) PPL incurred legal expenses related to litigation associated with its former affiliate, Talen Montana, LLC and certain affiliated entities.
Biggest change(g) Certain collection process costs incurred due to the timing and implementation of the customer system integration. 45 Table of Contents 2024 KY Regulated PA Regulated RI Regulated Corporate and Other Total Net Income (Loss) $ 620 $ 574 $ 109 $ (415) $ 888 Less: Special Items (expense) benefit: Talen litigation costs, net of tax of $1 (a) — — — (2) (2) Strategic corporate initiatives, net of tax of $0, $2, $2 (b) (1) (5) — (5) (11) Acquisition integration, net of tax of $13, $66 (c) — — (46) (250) (296) PPL Electric billing issue, net of tax of $5 (d) — (13) — — (13) FERC transmission credit refund, net of tax of $0 (e) 1 — — — 1 ECR beneficial reuse transition adjustment, net of tax of $2 (f) (4) — — — (4) DER projects impairment, net of tax of $6 (g) — (15) — — (15) IT transformation, net of tax of $5 (h) — — — (22) (22) Total Special Items (4) (33) (46) (279) (362) Earnings from Ongoing Operations $ 624 $ 607 $ 155 $ (136) $ 1,250 (a) PPL incurred legal expenses related to litigation associated with its former affiliate, Talen Montana, LLC and certain affiliated entities.
Acquisitions, Development and Divestitures The Registrants from time to time evaluate opportunities for potential acquisitions, divestitures, and development projects. See Note 9 to the Financial Statements for additional information on acquisition and divestiture activity. Development projects are reexamined based on market conditions and other factors to determine whether to proceed with, modify or terminate the projects.
Acquisitions, Development and Divestitures The Registrants from time to time evaluate opportunities for potential acquisitions, divestitures, and development projects. See Note 9 to the Financial Statements for additional information on acquisition, development and divestiture activity. Development projects are reexamined based on market conditions and other factors to determine whether to proceed with, modify or terminate the projects.
This includes expanding and modernizing our generation with natural gas, renewables and battery storage, while supporting research and development of low-carbon solutions. • Driving operational efficiencies to improve customer service and help keep energy affordable. 30 Table of Contents • Utilizing artificial intelligence and other advanced technologies to inform decision making, optimize asset planning and maintenance and better manage supply and demand on the grid. • Empowering customers through expanded digital options and improved service. • Engaging with key stakeholders to strengthen resource adequacy, power economic development, and support the growth and success of the regions we serve.
This includes expanding and modernizing our generation with natural gas, renewables and battery storage, while supporting research and development of low-carbon solutions. • Driving operational efficiencies to improve customer service and help keep energy affordable. 31 Table of Contents • Utilizing artificial intelligence and other advanced technologies to inform decision making, optimize asset planning and maintenance and better manage supply and demand on the grid. • Empowering customers through expanded digital options and improved service. • Engaging with key stakeholders to strengthen resource adequacy, power economic development, and support the growth and success of the regions we serve.
Cybersecurity” for a discussion of cybersecurity risks affecting the Registrants and the related strategies for managing these risks. Competition See "Competition" under each of PPL's reportable segments in "Item 1. Business - General - Segment Information" and "Item 1A. Risk Factors" for a discussion of competitive factors affecting the Registrants.
Cybersecurity" for a discussion of cybersecurity risks affecting the Registrants and the related strategies for managing these risks. Competition See "Competition" under each of PPL's reportable segments in "Item 1. Business - General - Segment Information" and "Item 1A. Risk Factors" for a discussion of competitive factors affecting the Registrants.
These evaluations considered the excess of fair value over the carrying value of each reporting unit that was calculated during step one of the quantitative impairment tests performed in the fourth quarter of 2022, and the relevant events and circumstances that occurred since those tests were performed including: 59 Table of Contents • current year financial performance versus the prior year, • changes in planned capital expenditures, • the consistency of forecasted free cash flows, • earnings quality and sustainability, • changes in market participant discount rates, • changes in long-term growth rates, • changes in PPL's market capitalization, and • the overall economic and regulatory environments in which these regulated entities operate.
These evaluations considered the excess of fair value over the carrying value of each reporting unit that was calculated during step one of the quantitative impairment tests performed in the fourth quarter of 2022, and the relevant events and circumstances that occurred since those tests were performed including: • current year financial performance versus the prior year, • changes in planned capital expenditures, • the consistency of forecasted free cash flows, • earnings quality and sustainability, • changes in market participant discount rates, • changes in long-term growth rates, • changes in PPL's market capitalization, and • the overall economic and regulatory environments in which these regulated entities operate.
A 0.25% decrease in the discount rate would increase these ARO liabilities by $5 million at LG&E and $1 million at KU and a 0.25% increase in the inflation rate would increase these ARO liabilities by $4 million at LG&E.
A 0.25% decrease in the discount rate would increase these ARO liabilities by $4 million at LG&E and $1 million at KU and a 0.25% increase in the inflation rate would increase these ARO liabilities by $4 million at LG&E and $1 million at KU.
"Management's Discussion and Analysis of Financial Condition and Results of Operations" includes the following information: • "Overview" provides a description of each Registrant's business strategy and a discussion of important financial and operational developments. • "Results of Operations" for all Registrants includes a "Statement of Income Analysis," which discusses significant changes in principal line items on the Statements of Income, comparing 2024 with 2023.
"Management's Discussion and Analysis of Financial Condition and Results of Operations" includes the following information: • "Overview" provides a description of each Registrant's business strategy and a discussion of important financial and operational developments. • "Results of Operations" for all Registrants includes a "Statement of Income Analysis," which discusses significant changes in principal line items on the Statements of Income, comparing 2025 with 2024.
Additionally, subject to market conditions, the Registrants and their subsidiaries may access the capital markets, and PPL Electric, LG&E and KU anticipate receiving equity contributions from their parent or member in 2025, which are expected to be used to fund capital expenditures and for other general corporate purposes.
Additionally, subject to market conditions, the Registrants and their subsidiaries may access the capital markets, and PPL Electric, LG&E and KU anticipate receiving equity contributions from their parent or member in 2026, which are expected to be used to fund capital expenditures and for other general corporate purposes.
Subject to certain exceptions, PPL may not declare or pay any cash dividend or distribution on its capital stock during any period in which PPL Capital Funding defers interest payments on its 2007 Series A Junior Subordinated Notes due 2067. At December 31, 2024, no interest payments were deferred.
Subject to certain exceptions, PPL may not declare or pay any cash dividend or distribution on its capital stock during any period in which PPL Capital Funding defers interest payments on its 2007 Series A Junior Subordinated Notes due 2067. At December 31, 2025, no interest payments were deferred.
See Note 16 to the Financial Statements for a discussion of "Credit Risk-Related Contingent Features," including a discussion of the potential additional collateral requirements for derivative contracts in a net liability position at December 31, 2024. Guarantees for Subsidiaries (PPL) PPL guarantees certain consolidated affiliate financing arrangements.
See Note 16 to the Financial Statements for a discussion of "Credit Risk-Related Contingent Features," including a discussion of the potential additional collateral requirements for derivative contracts in a net liability position at December 31, 2025. Guarantees for Subsidiaries (PPL) PPL guarantees certain consolidated affiliate financing arrangements.
The commitments under the credit facilities are provided by a diverse bank group, with no one bank and its affiliates providing an aggregate commitment of more than the following percentages of the total committed capacity: PPL - 9%, PPL Electric - 7%, LG&E - 7% and KU - 7%.
The commitments under the credit facilities are provided by a diverse bank group, with no one bank and its affiliates providing an aggregate commitment of more than the following percentages of the total committed capacity: PPL - 8%, PPL Electric - 7%, LG&E - 7% and KU - 7%.
See "Long-Lived and Intangible Assets - Asset Retirement Obligations" in Note 1, Note 7 and Note 18 to the Financial Statements for additional information on AROs. At December 31, 2024, the total recorded balances and information on the most significant recorded AROs were as follows.
See "Long-Lived and Intangible Assets - Asset Retirement Obligations" in Note 1, Note 7 and Note 18 to the Financial Statements for additional information on AROs. At December 31, 2025, the total recorded balances and information on the most significant recorded AROs were as follows.
Failure to comply with the covenants after applicable grace periods could result in acceleration of repayment of borrowings and/or termination of the agreements. The Registrants monitor compliance with the covenants on a regular basis. At December 31, 2024, the Registrants were in compliance with these covenants.
Failure to comply with the covenants after applicable grace periods could result in acceleration of repayment of borrowings and/or termination of the agreements. The Registrants monitor compliance with the covenants on a regular basis. At December 31, 2025, the Registrants were in compliance with these covenants.
As of December 31, 2024, the Registrants believe that these covenants and other borrowing conditions will not limit access to these funding sources. See Note 8 to the Financial Statements for further discussion of the Registrants' credit facilities.
As of December 31, 2025, the Registrants believe that these covenants and other borrowing conditions will not limit access to these funding sources. See Note 8 to the Financial Statements for further discussion of the Registrants' credit facilities.
Financial Condition The remainder of this Item 7 in this Form 10-K is presented on a combined basis, providing information, as applicable, for all Registrants. Liquidity and Capital Resources (All Registrants) The Registrants' cash flows from operations and access to cost-effective bank and capital markets are subject to risks and uncertainties. See "Item 1A.
Financial Condition The remainder of this Item 7 in this Form 10-K is presented on a combined basis, providing information, as applicable, for all Registrants. 49 Table of Contents Liquidity and Capital Resources (All Registrants) The Registrants' cash flows from operations and access to cost-effective bank and capital markets are subject to risks and uncertainties. See "Item 1A.
Results of Operations (PPL) The "Statement of Income Analysis" discussion below describes significant changes in principal line items on the Statements of Income, comparing 2024 with 2023. The "Segment Earnings" discussions provide a review of results by reportable segment.
Results of Operations (PPL) The "Statement of Income Analysis" discussion below describes significant changes in principal line items on the Statements of Income, comparing 2025 with 2024. The "Segment Earnings" discussions provide a review of results by reportable segment.
As a result of environmental requirements and aging infrastructure, LG&E has sought and obtained approval to retire two older coal-fired units at the Mill Creek Plant. Mill Creek Unit 1, with 300 MW of capacity, was retired in 2024. Mill Creek Unit 2, with 297 MW of capacity, is expected to be retired in 2027, subject to certain conditions.
As a result of environmental requirements and aging infrastructure, LG&E has sought and obtained approval to retire two older coal-fired units at the Mill Creek Plant. Mill Creek Unit 1, with 300 MW of capacity, was retired in 2024. Mill Creek Unit 2, with 297 MW of capacity, was approved to be retired in 2027, subject to certain conditions.
Plan Sponsor PPL PPL Electric LG&E KU PPL Services S P LKE P P Management makes certain assumptions regarding the valuation of benefit obligations and the performance of plan assets. As such, annual net periodic defined benefit costs are recorded in current earnings or regulatory assets and liabilities based on estimated results.
Plan Sponsor PPL PPL Electric LG&E KU PPL Services S P LKE P P 61 Table of Contents Management makes certain assumptions regarding the valuation of benefit obligations and the performance of plan assets. As such, annual net periodic defined benefit costs are recorded in current earnings or regulatory assets and liabilities based on estimated results.
The unbilled revenue 60 Table of Contents estimates reflect consideration of factors including daily load models, estimated usage for each customer class, the effect of current and different rate schedules, the meter read schedule, the billing schedule, actual weather data, and, where applicable, the impact of weather normalization or other regulatory provisions of rate structures.
The unbilled revenue estimates reflect consideration of factors including daily load models, estimated usage for each customer class, the effect of current and different rate schedules, the meter read schedule, the billing schedule, actual weather data, and, where applicable, the impact of weather normalization or other regulatory provisions of rate structures.
The estimated impact of a 10% adverse movement in interest rates on interest expense at December 31, 2024 and 2023 was insignificant for PPL, PPL Electric, LG&E, and KU.
The estimated impact of a 10% adverse movement in interest rates on interest expense at December 31, 2025 and 2024 was insignificant for PPL, PPL Electric, LG&E, and KU.
As of October 1, 2024, PPL, for its reporting units, and individually, LG&E and KU, elected to perform the qualitative step zero evaluation of goodwill.
As of October 1, 2025, PPL, for its reporting units, and individually, LG&E and KU, elected to perform the qualitative step zero evaluation of goodwill.
(e) Each company pays customary fees under its respective syndicated credit facility. Borrowings generally bear interest at applicable SOFR, plus an applicable margin. (f) Commercial paper issued reflects the undiscounted face value of the issuance. In addition to the financial covenants noted in the table above, the credit agreements governing the above credit facilities contain various other covenants.
(c) Each company pays customary fees under its respective syndicated credit facility. Borrowings generally bear interest at applicable SOFR, plus an applicable margin. (d) Commercial paper issued reflects the undiscounted face value of the issuance. In addition to the financial covenants noted in the table above, the credit agreements governing the above credit facilities contain various other covenants.
The amounts involved may be material. 52 Table of Contents Rating Agency Actions Moody's and S&P periodically review the credit ratings of the debt of the Registrants and their subsidiaries. Based on their respective independent reviews, the rating agencies may make certain ratings revisions or ratings affirmations.
The amounts involved may be material. Rating Agency Actions Moody's and S&P periodically review the credit ratings of the debt of the Registrants and their subsidiaries. Based on their respective independent reviews, the rating agencies may make certain ratings revisions or ratings affirmations.
The plan-specific cash flows are matched against the coupons and 57 Table of Contents expected maturity values of Aa-rated non-callable (or callable with make-whole provisions) bonds that could be purchased for a hypothetical settlement portfolio.
The plan-specific cash flows are matched against the coupons and expected maturity values of Aa-rated non-callable (or callable with make-whole provisions) bonds that could be purchased for a hypothetical settlement portfolio.
See Note 12 to the Financial Statements for additional information about guarantees. Other Contingent Obligations (All Registrants) The Registrants have entered into certain agreements that may contingently require payment to a guaranteed or indemnified party.
See Note 12 to the Financial Statements for additional information about guarantees. Other Contingent Obligations (All Registrants) The Registrants have entered into certain agreements that may contingently require payment to a guaranteed or indemnified party. See Note 12 to the Financial Statements for a discussion of these agreements.
Capital expenditure plans are revised periodically to reflect changes in operational, market and regulatory conditions. Contractual Obligations The Registrants have assumed various financial obligations and commitments in the ordinary course of conducting business.
Capital expenditure plans are revised periodically to reflect changes in operational, market and regulatory conditions. 55 Table of Contents Contractual Obligations The Registrants have assumed various financial obligations and commitments in the ordinary course of conducting business.
New Accounting Guidance See Note 1 and Note 20 for a discussion of significant new accounting guidance adopted and pending adoption as of December 31, 2024. Application of Critical Accounting Policies Financial condition and results of operations are impacted by the methods, assumptions and estimates used in the application of critical accounting policies.
New Accounting Guidance See Note 1 and Note 20 to the Financial Statements for a discussion of significant new accounting guidance adopted and pending adoption as of December 31, 2025. Application of Critical Accounting Policies Financial condition and results of operations are impacted by the methods, assumptions and estimates used in the application of critical accounting policies.
Capital Expenditures The table below shows the Registrants' current capital expenditure projections for the years 2025 through 2027. Expenditures for the regulated utilities are expected to be recovered through rates, pending regulatory approval.
Capital Expenditures The table below shows the Registrants' current capital expenditure projections for the years 2026 through 2028. Expenditures for the regulated utilities are expected to be recovered through rates, pending regulatory approval.
Increase (Decrease) Actuarial assumption Discount Rate (0.25 %) Expected Return on Plan Assets (0.25 %) Rate of Compensation Increase 0.25 % Increase (Decrease) (Increase) Decrease (Increase) Decrease Increase (Decrease) Increase (Decrease) Actuarial assumption Defined Benefit Asset Defined Benefit Liabilities AOCI (pre-tax) Net Regulatory Assets Defined Benefit Costs PPL Discount rates $ (19) $ (73) $ 26 $ 66 $ 7 Expected return on plan assets n/a n/a n/a n/a 10 Rate of compensation increase (2) (6) 2 6 1 PPL Electric Discount rates — (31) — 31 2 Expected return on plan assets n/a n/a — n/a 4 Rate of compensation increase — (2) — 2 1 LG&E Discount rates (8) 1 n/a 9 1 Expected return on plan assets n/a n/a n/a n/a 1 Rate of compensation increase (1) — n/a 1 — KU Discount rates (6) 1 n/a 7 1 Expected return on plan assets n/a n/a n/a n/a 1 Rate of compensation increase (1) — n/a 1 — Income Taxes (All Registrants) Significant management judgment is required in developing the Registrants' provision for income taxes, primarily due to valuation allowances on deferred tax assets. 58 Table of Contents The need for valuation allowances to reduce deferred tax assets requires significant management judgment.
Increase (Decrease) Actuarial assumption Discount Rate (0.25 %) Expected Return on Plan Assets (0.25 %) Rate of Compensation Increase 0.25 % 62 Table of Contents Increase (Decrease) (Increase) Decrease (Increase) Decrease Increase (Decrease) Increase (Decrease) Actuarial assumption Defined Benefit Asset Defined Benefit Liabilities AOCI (pre-tax) Net Regulatory Assets Defined Benefit Costs PPL Discount rates $ (17) $ (73) $ 26 $ 64 $ 4 Expected return on plan assets n/a n/a n/a n/a 10 Rate of compensation increase (2) (6) 2 6 1 PPL Electric Discount rates — (31) — 31 1 Expected return on plan assets n/a n/a — n/a 3 Rate of compensation increase — (2) — 2 — LG&E Discount rates (7) 1 n/a 8 1 Expected return on plan assets n/a n/a n/a n/a 1 Rate of compensation increase (1) — n/a 1 — KU Discount rates (6) 1 n/a 7 1 Expected return on plan assets n/a n/a n/a n/a 1 Rate of compensation increase (1) — n/a 1 — Income Taxes (All Registrants) Significant management judgment is required in developing the Registrants' provision for income taxes, primarily due to valuation allowances on deferred tax assets.
PPL is exposed to volumetric risk through its subsidiaries as described below. • PPL Electric, LG&E and KU are exposed to volumetric risk on retail sales, mainly due to weather and other economic conditions for which there is limited mitigation between rate cases. • RIE is exposed to volumetric risk, which is significantly mitigated by regulatory mechanisms.
PPL is exposed to volumetric risk through its subsidiaries as described below. • PPL Electric, LG&E and KU are exposed to volumetric risk on retail sales, mainly due to weather and other economic conditions for which there is limited mitigation between rate cases. • RIE is not materially exposed to volumetric risk.
For comparison of the Registrants’ results of operations and cash flows for the years ended December 31, 2023 to December 31, 2022, refer to “Item 7. Combined Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the 2023 Form 10-K, filed with the SEC on February 16, 2024.
For comparison of the Registrants' results of operations and cash flows for the years ended December 31, 2024 to December 31, 2023, refer to "Item 7. Combined Management's Discussion and Analysis of Financial Condition and Results of Operations" in the 2024 Form 10-K, filed with the SEC on February 13, 2025.
PPL Electric, LG&E and KU plan to obtain the funds to meet their future capital needs from sources similar to those they used in the past, which were primarily from operating cash flows, external securities issuances, borrowings from financial institutions, and equity contributions from PPL.
PPL Electric, LG&E and KU plan to obtain the funds to meet their future capital needs from sources similar to those they used in the past, which were primarily from operating cash flows, external securities issuances, borrowings from financial institutions, and equity contributions from PPL. Operating cash flows provide a substantial portion of these subsidiary Registrants' cash needs.
(d) The syndicated credit facilities and PPL Capital Funding's bilateral facility, each contain a financial covenant requiring debt to total capitalization not to exceed 70% for PPL Capital Funding, RIE, PPL Electric, LG&E and KU, as calculated in accordance with the facility, and other customary covenants.
See Note 8 to the Financial Statements for additional information. (b) The syndicated credit facilities and PPL Capital Funding's bilateral facility, each contain a financial covenant requiring debt to total capitalization not to exceed 70% for PPL Capital Funding, RIE, PPL Electric, LG&E and KU, as calculated in accordance with the facility, and other customary covenants.
PPL and its subsidiaries may request additional credit assurance, in certain circumstances, in the event that the counterparties' credit ratings fall below 55 Table of Contents investment grade, their tangible net worth falls below specified percentages or their exposures exceed an established credit limit.
PPL and its subsidiaries may request additional credit assurance, in certain circumstances, if the counterparties' credit ratings fall below investment grade, their tangible net worth falls below specified percentages or their exposures exceed an established credit limit.
The following interest rate hedges were outstanding at December 31: 2024 2023 Exposure Hedged Fair Value, Net - Asset (Liability) (a) Effect of a 10% Adverse Movement in Rates (b) Maturities Ranging Through Exposure Hedged Fair Value, Net - Asset (Liability) (a) Effect of a 10% Adverse Movement in Rates (b) PPL and LG&E Economic hedges Interest rate swaps (c) $ 64 $ (3) $ (1) 2033 $ 64 $ (7) $ (1) (a) Includes accrued interest, if applicable.
The following interest rate hedges were outstanding at December 31: 2025 2024 Exposure Hedged Fair Value, Net - Asset (Liability) (a) Effect of a 10% Adverse Movement in Rates (b) Maturities Ranging Through Exposure Hedged Fair Value, Net - Asset (Liability) (a) Effect of a 10% Adverse Movement in Rates (b) PPL and LG&E Cash flow hedges Interest rate derivatives $ 20 $ — $ (1) 2026 $ — $ — $ — Economic hedges Interest rate derivatives (c) $ 64 $ (5) $ (1) 2033 $ 64 $ (3) $ (1) (a) Includes accrued interest, if applicable.
RIE’s borrowing sublimit is adjustable, at the borrowers’ option, from $0 to $600 million, with the remaining balance of the $1.25 billion available under the facility allocated to PPL Capital Funding. At December 31, 2024, PPL Capital Funding had $138 million of commercial paper outstanding and RIE had no commercial paper outstanding.
RIE's borrowing sublimit is adjustable, at the borrowers' option, from $0 to $600 million, with the remaining balance of the $1.5 billion available under the facility allocated to PPL Capital Funding. At December 31, 2025, PPL Capital Funding had $355 million of commercial paper outstanding and RIE had $101 million of commercial paper outstanding.
Projected Total 2025 (a) 2026 2027 PPL Generating facilities $ 3,875 $ 975 $ 1,200 $ 1,700 Electric distribution facilities 4,925 1,400 1,825 1,700 Gas distribution facilities 1,125 400 350 375 Transmission facilities 4,475 1,300 1,600 1,575 Other 600 250 225 125 Total Capital Expenditures $ 15,000 $ 4,325 $ 5,200 $ 5,475 PPL Electric Electric distribution facilities $ 2,525 $ 650 $ 975 $ 900 Transmission facilities 2,550 850 875 825 Total Capital Expenditures $ 5,075 $ 1,500 $ 1,850 $ 1,725 50 Table of Contents Projected Total 2025 (a) 2026 2027 LG&E Generating facilities $ 2,275 $ 475 $ 625 $ 1,175 Electric distribution facilities 600 175 200 225 Gas distribution facilities 400 175 100 125 Transmission facilities 275 75 75 125 Other 300 125 125 50 Total Capital Expenditures $ 3,850 $ 1,025 $ 1,125 $ 1,700 KU Generating facilities $ 1,600 $ 500 $ 575 $ 525 Electric distribution facilities 750 225 275 250 Transmission facilities 875 175 350 350 Other 300 125 100 75 Total Capital Expenditures $ 3,525 $ 1,025 $ 1,300 $ 1,200 (a) The 2025 total excludes amounts included in accounts payable as of December 31, 2024.
Projected Total 2026 (a) 2027 2028 PPL Generating facilities $ 4,200 $ 1,100 $ 1,500 $ 1,600 Electric distribution facilities 5,575 1,775 1,950 1,850 Gas distribution facilities 1,225 375 400 450 Transmission facilities 5,875 1,625 2,025 2,225 Other 475 250 150 75 Total Capital Expenditures $ 17,350 $ 5,125 $ 6,025 $ 6,200 PPL Electric Electric distribution facilities $ 2,850 $ 1,000 $ 950 $ 900 Transmission facilities 3,350 975 1,125 1,250 Total Capital Expenditures $ 6,200 $ 1,975 $ 2,075 $ 2,150 LG&E Generating facilities $ 2,500 $ 600 $ 850 $ 1,050 Electric distribution facilities 825 200 325 300 Gas distribution facilities 450 125 150 175 Transmission facilities 450 125 175 150 Other 250 125 75 50 Total Capital Expenditures $ 4,475 $ 1,175 $ 1,575 $ 1,725 KU Generating facilities $ 1,700 $ 500 $ 650 $ 550 Electric distribution facilities 1,075 275 400 400 Transmission facilities 1,350 300 475 575 Other 225 125 75 25 Total Capital Expenditures $ 4,350 $ 1,200 $ 1,600 $ 1,550 (a) The 2026 total excludes amounts included in accounts payable as of December 31, 2025.
Fair value is developed using an expected present value technique based on assumptions of market participants that consider estimated retirement costs in current period dollars, inflated to the anticipated retirement date and discounted back to the date the ARO was incurred.
In determining AROs, management must make significant judgments and estimates to calculate fair value. Fair value is developed using an expected present value technique based on assumptions of market participants that consider estimated retirement costs in current period dollars, inflated to the anticipated retirement date and discounted back to the date the ARO was incurred.
At December 31, 2024, a 10% increase to retirement cost would increase these ARO liabilities by $8 million at LG&E and $8 million at KU.
At December 31, 2025, a 10% increase to retirement cost would increase these ARO liabilities by $6 million at LG&E and $7 million at KU.
Most Significant AROs Total ARO Recorded Amount Recorded % of Total Description LG&E $ 84 $ 63 75 Ponds, landfills and natural gas mains KU 64 35 55 Ponds and landfills The most significant assumptions surrounding AROs are the forecasted retirement costs (including settlement dates and the timing of cash flows), discount and inflation rates.
Most Significant AROs Total ARO Recorded Amount Recorded % of Total Description LG&E $ 75 $ 52 69 Ponds, landfills and natural gas mains KU 57 27 47 Ponds and landfills The most significant assumptions surrounding AROs are the forecasted retirement costs (including settlement dates and the timing of cash flows), discount and inflation rates.
See Note 3 to the Financial Statements for additional information.
(e) See Note 12 to the Financial Statements for additional information.
LG&E and KU cannot predict the ultimate outcome of the proceedings or any other post decision process but do not expect the annual impact to have a material effect on their operations or financial condition.
LG&E and KU cannot predict the ultimate outcome of the proceedings or any other post decision process but do not expect the annual impact to have a material effect on their operations or financial condition. LG&E and KU currently receive recovery of certain waivers and credits primarily through existing base rate levels.
See "Long-term Debt and Equity Securities" below for additional information on current year activity. See "Forecasted Sources of Cash" for a discussion of the Registrants' plans to issue debt and equity securities, as well as a discussion of credit facility capacity available to the Registrants.
See "Forecasted Sources of Cash" for a discussion of the Registrants' plans to issue debt and equity securities, as well as a discussion of credit facility capacity available to the Registrants.
Operating cash flows provide a substantial portion of these subsidiary Registrants' cash needs. 48 Table of Contents The amount, type, and timing of any financings in 2025, as well as in subsequent years, will be contingent on investment opportunities and the Registrants' capital requirements and will depend upon prevailing market conditions, regulatory approvals as applicable for the subsidiary Registrants, and other factors.
The amount, type, and timing of any financings in 2026, as well as in subsequent years, will be contingent on investment opportunities and the Registrants' capital requirements and will depend upon prevailing market conditions, regulatory approvals as applicable for the subsidiary Registrants, and other factors.
Intercompany (LG&E and KU) Committed Capacity Borrowed Commercial Paper Issued Unused Capacity LG&E Money Pool (a) $ 750 $ 43 $ 25 $ 682 KU Money Pool (a) 650 73 140 437 (a) LG&E and KU participate in an intercompany money pool agreement whereby LKE and/or KU make available to LG&E, and LKE and/or LG&E make available to KU funds up to the difference between LG&E's and KU's FERC borrowing limit and LG&E's and KU's commercial paper capacity limit, at an interest rate based on the lower of a market index of commercial paper issues and two additional rate options based on the lower of a market index of commercial paper issues and two additional rate options based on SOFR. 49 Table of Contents See Note 13 to the Financial Statements for further discussion of intercompany credit facilities.
Intercompany (LG&E and KU) Committed Capacity Borrowed Commercial Paper Issued Unused Capacity LG&E Money Pool (a) $ 750 $ — $ — $ 750 KU Money Pool (a) 650 36 — 614 (a) LG&E and KU participate in an intercompany money pool agreement whereby LKE and/or KU make available to LG&E, and LKE and/or LG&E make available to KU funds up to the difference between LG&E's and KU's FERC borrowing limit and LG&E's and KU's commercial paper capacity limit, at an interest rate based on the lower of a market index of commercial paper issues and two additional rate options based on the lower of a market index of commercial paper issues and two additional rate options based on SOFR.
Regulatory assets generally represent incurred costs that have been deferred because such costs are probable of future recovery in regulated customer rates. Regulatory liabilities are recognized for amounts expected to be returned through future regulated customer rates.
Assets and liabilities that result from the regulated ratemaking process may not be recorded under GAAP for non-regulated entities. Regulatory assets generally represent incurred costs that have been deferred because such costs are probable of future recovery in regulated customer rates. Regulatory liabilities are recognized for amounts expected to be returned through future regulated customer rates.
Segment Earnings PPL's Net Income (Loss) by reportable segments was as follows: Change 2024 2023 2024 vs. 2023 Kentucky Regulated $ 620 $ 552 $ 68 Pennsylvania Regulated 574 519 55 Rhode Island Regulated 109 96 13 Corporate and Other (a) (415) (427) 12 Net Income (Loss) $ 888 $ 740 $ 148 (a) Primarily represents financing and certain other costs incurred at the corporate level that have not been allocated or assigned to the segments, which are presented to reconcile segment information to PPL's consolidated results.
Segment Earnings PPL's Net Income (Loss) by reportable segments was as follows: Change 2025 2024 2025 vs. 2024 Kentucky Regulated $ 674 $ 620 $ 54 Pennsylvania Regulated 639 574 65 Rhode Island Regulated 85 109 (24) Corporate and Other (a) (217) (415) 198 Net Income (Loss) $ 1,181 $ 888 $ 293 (a) Primarily represents financing and certain other costs incurred at the corporate level that have not been allocated or assigned to the segments, which are presented to reconcile segment information to PPL's consolidated results.
Long-term Debt and Equity Securities Long-term debt and equity securities activity for 2024 included: Debt Stock Issuances (a) Retirements Issuances (b) Repurchases Cash Flow Impact: PPL $ 1,894 $ — $ 9 $ — PPL Electric 649 — — — LG&E — — — — KU — — — — (a) Issuances are net of pricing discounts, where applicable, and exclude the impact of debt issuance costs.
Long-term Debt and Equity Securities Long-term debt and equity securities activity for 2025 included: Debt Stock Issuances (a) Retirements Issuances (b) Repurchases Cash Flow Impact: PPL (c) $ 3,045 $ 616 $ 401 $ — PPL Electric 496 — — — LG&E 700 300 — — KU 700 250 — — (a) Issuances are net of pricing discounts, where applicable, and exclude the impact of debt issuance costs.
See Note 7 to the Financial Statements for additional information on the Mill Creek Unit 1 RAR rider application. 31 Table of Contents FERC Transmission Rate Filing In 2018, LG&E and KU applied to the FERC requesting elimination of certain on-going waivers and credits to a sub-set of transmission customers relating to the 1998 merger of LG&E's and KU's parent entities and the 2006 withdrawal of LG&E and KU from the Midcontinent Independent System Operator, Inc.
FERC Transmission Rate Filing In 2018, LG&E and KU applied to the FERC requesting elimination of certain on-going waivers and credits to a sub-set of transmission customers relating to the 1998 merger of LG&E's and KU's parent entities and the 2006 withdrawal of LG&E and KU from the Midcontinent Independent System Operator, Inc.
PPL cannot predict the final legal requirements or when the requirements will be effective. As has been PPL’s practice, to the extent sustainability issues have or may have a material impact on the Registrants’ financial condition or results of operation, PPL discloses such matters in accordance with applicable securities law and SEC regulations.
To the extent sustainability issues have or may have a material impact on the Registrants' financial condition or results of operation, PPL discloses such matters in accordance with applicable securities law and SEC regulations.
The payments herein are subject to change, as payments for debt that is or becomes variable-rate debt have been estimated.
(b) Assumes interest payments through stated maturity or earlier put dates. The payments herein are subject to change, as payments for debt that is or becomes variable-rate debt have been estimated.
See "Long-Lived and Intangible Assets - Asset Impairment (Excluding Investments)" in Note 1 to the Financial Statements for further discussion of goodwill impairment tests. See Note 17 to the Financial Statements for information on goodwill balances by reportable segment at December 31, 2024.
See "Long-Lived and Intangible Assets - Asset Impairment (Excluding Investments)" in Note 1 to the Financial Statements for further discussion of goodwill impairment tests.
See Note 7 to the Financial Statements for additional information. (e) Prior period impact related to a FERC refund order. (f) Prior period impact for an ECR mechanism revenue adjustment related to a KPSC order. (g) Impairment of DER project costs associated with a pilot solar program for which PPL will not seek regulatory recovery.
(e) Prior period impact related to a FERC refund order. (f) Prior period impact for an ECR mechanism revenue adjustment related to a KPSC order. (g) Impairment of DER project costs associated with a pilot solar program for which PPL will not seek regulatory recovery. (h) Costs associated with PPL's restructuring and rebuilding of its IT infrastructure, organization and systems.
Senior Unsecured Senior Secured Commercial Paper Issuer Moody's S&P Moody's S&P Moody's S&P PPL PPL Capital Funding Baa1 BBB+ P-2 A-2 Rhode Island Energy A3 A- P-2 A-2 PPL and PPL Electric PPL Electric A1 A+ P-2 A-1 PPL, LG&E and KU LG&E A1 A P-2 A-2 KU A1 A P-2 A-2 Since June 2023, the rating agencies have not taken rating actions related to the Registrants and their subsidiaries.
The following table sets forth the Registrants' and their subsidiaries' credit ratings for outstanding debt securities or commercial paper programs as of December 31, 2025. 57 Table of Contents Senior Unsecured Senior Secured Commercial Paper Issuer Moody's S&P Moody's S&P Moody's S&P PPL PPL Capital Funding Baa1 BBB+ P-2 A-2 Rhode Island Energy A3 A- P-2 A-2 PPL and PPL Electric PPL Electric A1 A+ P-2 A-1 PPL, LG&E and KU LG&E A1 A P-2 A-2 KU A1 A P-2 A-2 Since June 2023, the rating agencies have not taken rating actions related to the Registrants and their subsidiaries.
Additionally, the regulatory agencies can provide flexibility in the manner and timing of recovery of regulatory assets. See Note 7 to the Financial Statements for regulatory assets and regulatory liabilities recorded at December 31, 2024 and 2023, as well as additional information on those regulatory assets and liabilities.
See Note 7 to the Financial Statements for regulatory assets and regulatory liabilities recorded at December 31, 2025 and 2024, as well as additional information on those regulatory assets and liabilities.
Volumetric Risk Volumetric risk is the risk related to the changes in volume of retail sales due to weather, economic conditions or other factors.
See Note 16 to the Financial Statements for further discussion of these risks. Volumetric Risk Volumetric risk is the risk related to the changes in volume of retail sales due to weather, economic conditions or other factors.
The Registrants can provide no assurances as to the ultimate outcome of future environmental or rate proceedings before regulatory authorities. See "Legal Matters" in Note 12 to the Financial Statements for a discussion of the more significant environmental claims. See "Financial Condition - Liquidity and Capital Resources - Forecasted Uses of Cash - Capital Expenditures" in "Item 7.
The Registrants can provide no assurances as to the ultimate outcome of future environmental or rate proceedings before regulatory authorities. See "Legal Matters" in Note 12 to the Financial Statements for a discussion of the more significant environmental claims. See Note 18 to the Financial Statements for information related to the impacts of CCRs on AROs. See "Item 1.
On October 4, 2024, LG&E submitted an application related to the retirement of Mill Creek Unit 1, which occurred on December 31, 2024, requesting recovery of associated costs under the RAR rider. On October 28, 2024, the KPSC issued an order to establish a procedural schedule regarding its investigation of the reasonableness of the proposed tariff.
On October 4, 2024, LG&E submitted an application related to the retirement of Mill Creek Unit 1, which occurred on December 31, 2024, requesting recovery of associated costs under the RAR.
PPL also participates in efforts by the Edison Electric Institute and American Gas Association to provide the appropriate subset of sustainability information that can be applied consistently across the electric and gas utility industries. Additionally, PPL consults widely used reporting frameworks for discrete sustainability topics, including corporate political contributions and climate-related issues.
PPL also participates in efforts by the Edison Electric Institute and American Gas Association to provide the appropriate subset of sustainability information that can be applied consistently across the electric and gas utility industries.
(e) Represents future minimum payments under OVEC power purchase agreements through June 2040. See Note 12 to the Financial Statements for additional information. (f) Represents construction commitments, which are also reflected in the Capital Expenditures table presented above.
(e) Represents future minimum payments under OVEC power purchase agreements through June 2040. See Note 12 to the Financial Statements for additional information.
The following commercial paper programs were in place at: December 31, 2024 Capacity Commercial Paper Issuances (b) Unused Capacity PPL Capital Funding (a) $ 1,350 $ 138 $ 1,212 Rhode Island Energy (a) 250 — 250 PPL Electric 650 — 650 LG&E 500 25 475 KU 400 140 260 Total PPL $ 3,150 $ 303 $ 2,847 (a) Issuances under the PPL Capital Funding and RIE commercial paper programs are supported by the PPL Capital Funding syndicated credit facility, which at December 31, 2024, had a total capacity of $1.25 billion, with a $250 million borrowing sublimit for RIE and a $1 billion sublimit for PPL Capital Funding at December 31, 2024.
The following commercial paper programs were in place at: December 31, 2025 Capacity Commercial Paper Issuances (b) Unused Capacity PPL Capital Funding (a) $ 1,600 $ 355 $ 1,245 Rhode Island Energy (a) 400 101 299 PPL Electric 750 — 750 LG&E 600 — 600 KU 600 — 600 Total PPL $ 3,950 $ 456 $ 3,494 54 Table of Contents (a) Issuances under the PPL Capital Funding and RIE commercial paper programs are supported by the PPL Capital Funding syndicated credit facility, which at December 31, 2025, had a total capacity of $1.5 billion, with a $400 million borrowing sublimit for RIE and a $1.1 billion sublimit for PPL Capital Funding.
The Registrants and their subsidiaries have no credit rating triggers that would result in the reduction of access to capital markets or the acceleration of maturity dates of outstanding debt. The following table sets forth the Registrants' and their subsidiaries' credit ratings for outstanding debt securities or commercial paper programs as of December 31, 2024.
The Registrants and their subsidiaries have no credit rating triggers that would result in the reduction of access to capital markets or the acceleration of maturity dates of outstanding debt.
An equivalent amount is recorded as an increase in the value of the capitalized asset and amortized to expense, regulatory assets or regulatory liabilities over the asset's useful life. In determining AROs, management must make significant judgments and estimates to calculate fair value.
An ARO must be recognized when incurred if the fair value of the ARO can be reasonably estimated. An equivalent amount is recorded as an increase in the value of the capitalized asset and amortized to expense, regulatory assets or regulatory liabilities over the asset's useful life.
Net Income and Earnings from Ongoing Operations include the following results: Change 2024 2023 2024 vs. 2023 Operating Revenues $ 2,876 $ 3,008 $ (132) Energy purchases 721 992 (271) Other operation and maintenance 705 605 100 Depreciation 401 397 4 Taxes, other than income 131 143 (12) Total Operating Expenses 1,958 2,137 (179) Other Income (Expense) - net 45 39 6 Interest Income from Affiliate 33 — 33 Interest Expense 246 223 23 Income Taxes 176 168 8 Net Income 574 519 55 Less: Special Items (33) (29) (4) Earnings from Ongoing Operations $ 607 $ 548 $ 59 The following after-tax gains (losses), which management considers special items, impacted the Pennsylvania Regulated segment's results and are excluded from Earnings from Ongoing Operations: Income Statement Line Item 2024 2023 PPL Electric billing issue, net of tax of $5, $10 (a) Other operation and maintenance $ (13) $ (23) PPL Electric billing issue, net of tax of $0 (a) Other Income (Expense) - net — (1) Strategic corporate initiatives, net of tax of $2, $1 (b) Other operation and maintenance (5) (2) Other non-recurring charges, net of tax of $1 (c) Other operation and maintenance — (3) DER projects impairment, net of tax of $6 (d) Other operation and maintenance (15) — Total $ (33) $ (29) (a) Certain expenses related to billing issues.
Net Income and Earnings from Ongoing Operations include the following results: Change 2025 2024 2025 vs. 2024 Operating Revenues $ 3,113 $ 2,876 $ 237 Energy purchases 876 721 155 Other operation and maintenance 630 705 (75) Depreciation 413 401 12 Taxes, other than income 151 131 20 Total Operating Expenses 2,070 1,958 112 Other Income (Expense) - net 48 45 3 Interest Income from Affiliate 9 33 (24) Interest Expense 257 246 11 Income Taxes 204 176 28 Net Income 639 574 65 Less: Special Items (1) (33) 32 Earnings from Ongoing Operations $ 640 $ 607 $ 33 42 Table of Contents The following after-tax gains (losses), which management considers special items, impacted the Pennsylvania Regulated segment's results and are excluded from Earnings from Ongoing Operations: Income Statement Line Item 2025 2024 PPL Electric billing issue, net of tax of $5 (a) Other operation and maintenance $ — $ (13) Strategic corporate initiatives, net of tax of $2 (b) Other operation and maintenance — (5) DER projects impairment, net of tax of $6 (c) Other operation and maintenance — (15) Office relocation and related costs, net of tax of $0 (d) Other operation and maintenance (2) — Office relocation and related costs (e) Income Taxes 5 — IT transformation, net of tax of $1 (f) Other operation and maintenance (4) — Total $ (1) $ (33) (a) Certain expenses related to billing issues.
See Note 7 to the Financial Statements for additional information. 38 Table of Contents (b) Costs incurred related to PPL's corporate centralization efforts. (c) Certain expenses associated with a litigation settlement. (d) Impairment of DER project costs associated with a pilot solar program for which PPL will not seek regulatory recovery.
(b) Costs incurred related to PPL's corporate centralization efforts. (c) Impairment of DER project costs associated with a pilot solar program for which PPL will not seek regulatory recovery. (d) Certain costs related to the relocation of corporate offices. (e) Tax benefit related to the sale of a corporate office.
(b) The increase was primarily due to weather. Fuel Fuel expense increased $29 million in 2024 compared with 2023, primarily due to a $37 million increase in volumes due to weather, partially offset by an $8 million decrease in commodity costs.
(b) The increase was primarily due to weather. (c) The increase was primarily due to higher volumes. Fuel Fuel expense increased $30 million in 2025 compared with 2024, primarily due to an increase in commodity costs.
For PPL Electric, the changes in "Notes receivable from affiliate" activity resulted from payments received on the short-term note between affiliates in 2022, issued to support general corporate purposes.
See "Forecasted Uses of Cash" for detail regarding projected capital expenditures for the years 2026 through 2028. For PPL Electric, the changes in "Notes receivable from affiliate" activity resulted from payments received in 2025 on the short-term note between affiliates, issued in 2024 to support general corporate purposes.
Net Income and Earnings from Ongoing Operations include the following results: Change 2024 2023 2024 vs. 2023 Operating Revenues $ 2,024 $ 1,851 $ 173 Energy purchases 782 658 124 Other operation and maintenance 731 705 26 Depreciation 165 156 9 Taxes, other than income 144 156 (12) Total Operating Expenses 1,822 1,675 147 Other Income (Expense) - net 24 19 5 Interest Expense 95 83 12 Income Taxes 22 16 6 Net Income 109 96 13 Less: Special Items (46) (56) 10 Earnings from Ongoing Operations $ 155 $ 152 $ 3 39 Table of Contents The following after-tax gains (losses), which management considers special items, impacted the Rhode Island Regulated segment's results and are excluded from Earnings from Ongoing Operations: Income Statement Line Item 2024 2023 Acquisition integration, net of tax of $13, $17 (a) Other operation and maintenance $ (45) $ (65) Acquisition integration, net of tax of $0 Other Income (Expense) - net (1) — Acquisition integration, net of tax of ($2) (b) Operating Revenues — 8 Acquisition integration, net of tax of ($1) Depreciation — 2 Acquisition integration, net of tax of $0 Interest Expense — (1) Total $ (46) $ (56) (a) Primarily includes certain transition services agreement costs for IT systems that will not be part of PPL's ongoing operations.
Rhode Island Regulated Segment The Rhode Island Regulated segment consists primarily of the regulated electricity transmission and distribution operations and regulated distribution and sale of natural gas conducted by RIE. 43 Table of Contents Net Income and Earnings from Ongoing Operations include the following results: Change 2025 2024 2025 vs. 2024 Operating Revenues $ 2,168 $ 2,024 $ 144 Energy purchases 802 782 20 Other operation and maintenance 851 731 120 Depreciation 177 165 12 Taxes, other than income 170 144 26 Total Operating Expenses 2,000 1,822 178 Other Income (Expense) - net 33 20 13 Interest Income from Affiliate 3 4 (1) Interest Expense 111 95 16 Income Taxes 8 22 (14) Net Income 85 109 (24) Less: Special Items (57) (46) (11) Earnings from Ongoing Operations $ 142 $ 155 $ (13) The following after-tax gains (losses), which management considers special items, impacted the Rhode Island Regulated segment's results and are excluded from Earnings from Ongoing Operations: Income Statement Line Item 2025 2024 Acquisition integration, net of tax of $1 (a) Operating Revenues $ (4) $ — Post TSA adjustments, net of tax of $3 (b) Operating Revenues (12) — Acquisition integration, net of tax of $0, $13 (a) Other operation and maintenance (1) (45) IT transformation, net of tax of $2 (c) Other operation and maintenance (8) — Post TSA adjustments, net of tax of $1 (b) Other operation and maintenance (4) — Customer system integration impacts, net of tax of $4 (d) Other operation and maintenance (15) — Acquisition integration, net of tax of ($2), $0 (a) Other Income (Expense) - net 7 (1) Energy efficiency programs settlement, net of tax of $2 (e) Other Income (Expense) - net (6) — Post TSA adjustments, net of tax of $2 (b) Other Income (Expense) - net (9) — Post TSA adjustments, net of tax of $1 (b) Interest Expense (5) — Total $ (57) $ (46) (a) 2025 primarily includes a final transition services agreement settlement and certain other acquisition related items. 2024 primarily includes certain transition services agreement costs for IT systems that will not be part of PPL's ongoing operations.
Investing Activities (All Registrants) The components of the change in cash provided by (used in) investing activities were as follows: PPL PPL Electric LG&E KU 2024 vs. 2023 Change - Cash Provided (Used): Expenditures for PP&E $ (415) $ (273) $ (66) $ (71) Notes receivable from affiliate — (222) — — Other investing activities (20) (2) — (6) Total $ (435) $ (497) $ (66) $ (77) For PPL, the increase in expenditures for PP&E was primarily due to an increase in project expenditures at PPL Electric, LG&E and KU.
Investing Activities (All Registrants) The components of the change in cash provided by (used in) investing activities were as follows: PPL PPL Electric LG&E KU 2025 vs. 2024 Change - Cash Provided (Used): Expenditures for PP&E $ (1,225) $ (379) $ (323) $ (340) Notes receivable from affiliate — 301 (36) — Other investing activities 39 30 — (3) Total $ (1,186) $ (48) $ (359) $ (343) For PPL, the increase in expenditures for PP&E was primarily due to an increase in project expenditures at PPL Electric, LG&E, KU and RIE.
(d) Prior period impact for an ECR mechanism revenue adjustment related to a KPSC order. 37 Table of Contents The changes in the components of the Kentucky Regulated segment's results between these periods were due to the factors set forth below, which exclude the items that management considers special. 2024 vs. 2023 Operating Revenues $ 107 Fuel (50) Energy purchases 16 Other operation and maintenance 16 Depreciation (14) Taxes, other than income (6) Other Income (Expense) - net 17 Interest Expense (5) Income Taxes (21) Earnings from Ongoing Operations 60 Special Items, after-tax 8 Net Income $ 68 • Higher operating revenues in 2024 compared to 2023, primarily due to a $74 million increase in sales volumes due to weather and a $29 million increase in recoveries of fuel and energy purchases. • Higher fuel expense in 2024 compared to 2023, primarily due to a $34 million increase in volumes primarily due to weather and a $16 million increase in commodity costs.
(e) Certain costs related to the relocation of corporate offices. 41 Table of Contents The changes in the components of the Kentucky Regulated segment's results between these periods were due to the factors set forth below, which exclude the items that management considers special. 2025 vs. 2024 Operating Revenues $ 194 Fuel (72) Energy purchases (38) Other operation and maintenance 9 Depreciation (7) Taxes, other than income (3) Other Income (Expense) - net 24 Interest Expense (24) Income Taxes (14) Earnings from Ongoing Operations 69 Special Items, after-tax (15) Net Income $ 54 • Higher operating revenues in 2025 compared to 2024 primarily due to a $98 million increase in recoveries of fuel and energy purchases, a $50 million increase in sales volumes due to weather and a $29 million increase in off-system sales. • Higher fuel expense in 2025 compared to 2024 primarily due to a $40 million increase in commodity costs and a $32 million increase in volumes due to weather. • Higher energy purchases in 2025 compared to 2024 primarily due to a $24 million increase in volumes primarily due to weather and a $14 million increase in commodity costs.
At December 31, 2024, the total committed borrowing capacity under credit facilities and the borrowings under these facilities were: External Committed Capacity Borrowed Letters of Credit and Commercial Paper Issued (f) Unused Capacity PPL Capital Funding Credit Facilities (a) $ 1,350 $ — $ 138 $ 1,212 PPL Electric Credit Facilities (b) 650 — 1 649 LG&E Credit Facilities (c) 500 — 25 475 KU Credit Facilities (c) 400 — 140 260 Total Credit Facilities (d) (e) $ 2,900 $ — $ 304 $ 2,596 (a) Includes a $1.25 billion syndicated credit facility with a $250 million borrowing sublimit for RIE and a $1 billion sublimit for PPL Capital Funding at December 31, 2024.
At December 31, 2025, the total committed borrowing capacity under credit facilities and the borrowings under these facilities were: 53 Table of Contents External Committed Capacity Borrowed Letters of Credit and Commercial Paper Issued (d) Unused Capacity PPL Capital Funding Credit Facilities (a) $ 1,600 $ — $ 456 $ 1,144 PPL Electric Credit Facilities 750 — 6 744 LG&E Credit Facilities 600 — — 600 KU Credit Facilities 600 — — 600 Total Credit Facilities (b)(c) $ 3,550 $ — $ 462 $ 3,088 (a) Includes a $1.5 billion syndicated credit facility with a $400 million borrowing sublimit for RIE and a $1.1 billion sublimit for PPL Capital Funding.
Corporate and Other primarily includes certain expenses related to distributed energy investments. 41 Table of Contents PPL Electric: Statement of Income Analysis Net income for the years ended December 31 includes the following results: Change 2024 2023 2024 vs. 2023 Operating Revenues $ 2,876 $ 3,008 $ (132) Operating Expenses Operation Energy purchases 721 992 (271) Other operation and maintenance 705 605 100 Depreciation 401 397 4 Taxes, other than income 131 143 (12) Total Operating Expenses 1,958 2,137 (179) Operating Income 918 871 47 Other Income (Expense) - net 45 39 6 Interest Income from Affiliate 33 — 33 Interest Expense 246 223 23 Income Before Income Taxes 750 687 63 Income Taxes 176 168 8 Net Income $ 574 $ 519 $ 55 Operating Revenues The increase (decrease) in operating revenues was due to: 2024 vs. 2023 Distribution price (a) $ 69 Distribution volume (b) 39 PLR (c) (291) Transmission formula rate (d) 48 Other 3 Total $ (132) (a) The increase was primarily due to reconcilable cost recovery mechanisms approved by the PAPUC.
PPL Electric: Statement of Income Analysis Net income for the years ended December 31 includes the following results: Change 2025 2024 2025 vs. 2024 Operating Revenues $ 3,113 $ 2,876 $ 237 Operating Expenses Operation Energy purchases 876 721 155 Other operation and maintenance 630 705 (75) Depreciation 413 401 12 Taxes, other than income 151 131 20 Total Operating Expenses 2,070 1,958 112 Operating Income 1,043 918 125 Other Income (Expense) - net 48 45 3 Interest Income from Affiliate 9 33 (24) Interest Expense 257 246 11 Income Before Income Taxes 843 750 93 Income Taxes 204 176 28 Net Income $ 639 $ 574 $ 65 46 Table of Contents Operating Revenues The increase (decrease) in operating revenues was due to: 2025 vs. 2024 Distribution price (a) $ (14) Distribution volume (b) 34 PLR (c) 174 Transmission formula rate (d) 45 Other (2) Total $ 237 (a) The decrease was primarily due to reconcilable cost recovery mechanisms approved by the PAPUC.
Net Income and Earnings from Ongoing Operations include the following results: Change 2024 2023 2024 vs. 2023 Operating Revenues $ 3,562 $ 3,452 $ 110 Fuel 783 733 50 Energy purchases 176 192 (16) Other operation and maintenance 803 826 (23) Depreciation 710 696 14 Taxes, other than income 99 93 6 Total Operating Expenses 2,571 2,540 31 Other Income (Expense) - net 29 12 17 Interest Expense 240 235 5 Income Taxes 160 137 23 Net Income 620 552 68 Less: Special Items (4) (12) 8 Earnings from Ongoing Operations $ 624 $ 564 $ 60 The following after-tax gains (losses), which management considers special items, impacted the Kentucky Regulated segment's results and are excluded from Earnings from Ongoing Operations: Income Statement Line Item 2024 2023 Strategic corporate initiatives, net of tax of $0, $0 (a) Other operation and maintenance $ (1) $ (1) FERC transmission credit refund, net of tax of $2 (b) Other operation and maintenance — (6) FERC transmission credit refund, net of tax of $0 (b) Operating Revenues 1 — Unbilled revenue estimate adjustment, net of tax of $2 (c) Operating Revenues — (5) ECR beneficial reuse transition adjustment, net of tax of $2 (d) Operating Revenues (4) — Total $ (4) $ (12) (a) Costs incurred related to PPL's corporate centralization efforts.
Net Income and Earnings from Ongoing Operations include the following results: Change 2025 2024 2025 vs. 2024 Operating Revenues $ 3,760 $ 3,562 $ 198 Fuel 855 783 72 Energy purchases 214 176 38 Other operation and maintenance 818 803 15 Depreciation 717 710 7 Taxes, other than income 102 99 3 Total Operating Expenses 2,706 2,571 135 Other Income (Expense) - net 53 29 24 Interest Expense 264 240 24 Income Taxes 169 160 9 Net Income 674 620 54 Less: Special Items (19) (4) (15) Earnings from Ongoing Operations $ 693 $ 624 $ 69 The following after-tax gains (losses), which management considers special items, impacted the Kentucky Regulated segment's results and are excluded from Earnings from Ongoing Operations: Income Statement Line Item 2025 2024 FERC transmission credit refund, net of tax of $0 (a) Operating Revenues $ — $ 1 ECR beneficial reuse transition adjustment, net of tax of $2 (b) Operating Revenues — (4) Strategic corporate initiatives, net of tax of $0 (c) Other operation and maintenance — (1) IT transformation, net of tax of $5 (d) Other operation and maintenance (16) — Office relocation and related costs, net of tax of $1 (e) Other operation and maintenance (3) — Total $ (19) $ (4) (a) Prior period impact related to a FERC refund order.
In certain cases, regulatory liabilities are recorded based on an understanding or agreement with the regulator that rates have been set to recover costs that are expected to be incurred in the future, and the regulated entity is accountable for any amounts charged pursuant to such rates and not yet expended for the intended purpose.
In certain cases, regulatory liabilities are recorded based on an understanding or agreement with the regulator that rates have been set to recover costs that are expected to be incurred in the future, and the regulated entity is accountable for any amounts charged pursuant to such rates and not yet expended for the intended purpose. 63 Table of Contents Management continually assesses whether the regulatory assets are probable of future recovery by considering factors such as changes in the applicable regulatory and political environments, the ability to recover costs through regulated rates, recent rate orders to the Registrants and other regulated entities, and the status of any pending or potential deregulation legislation.
The amount of deferred tax assets ultimately realized may differ materially from the estimates utilized in the computation of valuation allowances and may materially impact the financial statements in the future. See Note 6 to the Financial Statements for income tax disclosures. Regulatory Assets and Liabilities (All Registrants) PPL Electric, LG&E, KU and RIE are subject to cost-based rate regulation.
See Note 6 to the Financial Statements for income tax disclosures. Regulatory Assets and Liabilities (All Registrants) PPL Electric, LG&E, KU and RIE are subject to cost-based rate regulation. As a result, the effects of regulatory actions are required to be reflected in the financial statements.
The Plan also includes proposed spending on curb-to-curb paving of $22 million. A decision from the RIPUC on the Plan is expected by March 31, 2025. RIE cannot predict the outcome of this matter.
A decision from the RIPUC is expected by March 31, 2026. RIE cannot predict the outcome of this matter.
See Note 8 to the Financial Statements for a discussion of variable-rate remarketable bonds issued on behalf of LG&E and KU. The Registrants do not have any significant finance lease obligations. (b) Assumes interest payments through stated maturity or earlier put dates.
See Note 8 to the Financial Statements for a discussion of variable-rate remarketable bonds issued on behalf of LG&E and KU. The Registrants do not have any significant finance lease obligations. For PPL, reduced by $84 million of repurchased affiliate bonds as of December 31, 2025. See Note 8 to the Financial Statements for more information.
The estimated impact of a 10% adverse movement in interest rates on the fair value of debt at December 31 is shown below. 10% Adverse Movement in Rates on Fair Value of Debt 2024 2023 PPL $ 622 $ 593 PPL Electric 262 250 LG&E 89 95 KU 131 137 Commodity Price Risk PPL is exposed to commodity price risk through its subsidiaries as described below. • PPL Electric is required to purchase electricity to fulfill its obligation as a PLR.
The estimated impact of a 10% adverse movement in interest rates on the fair value of debt at December 31 is shown below. 10% Adverse Movement in Rates on Fair Value of Debt 2025 2024 PPL $ 720 $ 622 PPL Electric 284 262 LG&E 135 89 KU 175 131 Commodity Price Risk PPL is exposed to commodity price risk through its subsidiaries primarily from the purchases of electricity, natural gas and fuel but has cost recovery mechanisms to mitigate that risk.
Valuation allowances are initially recorded and reevaluated each reporting period by assessing the likelihood of the ultimate realization of a deferred tax asset. Management considers numerous factors in assessing the expected realization of a deferred tax asset, including the reversal of temporary differences, future taxable income and ongoing prudent and feasible tax planning strategies.
Management considers numerous factors in assessing the expected realization of a deferred tax asset, including the reversal of temporary differences, future taxable income and ongoing prudent and feasible tax planning strategies. Any tax planning strategy considered in this assessment must meet the recognition and measurement criteria for the valuation of a deferred tax asset.
(b) The increase was primarily due to weather. (c) The decrease was primarily due to lower ECR expenses. Fuel Fuel expense increased $22 million in 2024 compared with 2023, primarily due to an increase in commodity costs. Energy Purchases Energy purchases decreased $17 million in 2024 compared with 2023, primarily due to a decrease in commodity costs.
(b) The increase was primarily due to weather. (c) The increase was primarily due to higher volumes. Fuel Fuel expense increased $41 million in 2025 compared with 2024, primarily due to a $24 million increase in volumes due to weather and an $18 million increase in commodity costs.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeWe identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management in continually assessing whether the regulatory assets and liabilities are probable of future recovery or refund by considering factors such as changes in the applicable regulatory environments, the ability to recover costs through regulated rates, and recent rate orders.
Biggest changeWhile LG&E has indicated that it expects to recover costs from customers through regulated rates, there is a risk that the regulators will not approve full recovery of and return on such costs or approve recovery on a timely basis in future regulatory decisions. 70 Table of Contents We identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management in continually assessing whether the regulatory assets and regulatory liabilities are probable of future recovery or refund by considering factors such as changes in the applicable regulatory environments, the ability to recover costs through regulated rates, and recent rate orders.
We identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management in continually assessing whether the regulatory assets and liabilities are probable of future recovery or refund by considering factors such as changes in the applicable regulatory environments, the ability to recover costs through regulated rates, and recent rate orders.
We identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management in continually assessing whether the regulatory assets and regulatory liabilities are probable of future recovery or refund by considering factors such as changes in the applicable regulatory environments, the ability to recover costs through regulated rates, and recent rate orders.
How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the uncertainty of future decisions by regulatory commissions included the following, among others: • We tested the effectiveness of management’s internal controls over evaluating the likelihood of recovery or refund in future rates of costs deferred as regulatory assets and liabilities.
How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the uncertainty of future decisions by regulatory commissions included the following, among others: • We tested the effectiveness of management's internal controls over evaluating the likelihood of recovery or refund in future rates of costs deferred as regulatory assets and regulatory liabilities.
Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits.
Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits.
Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.
Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.
The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
As a result, the financial statements are subject to the accounting for certain types of regulation as prescribed by generally accepted accounting principles and reflect the effects of regulatory actions. Regulatory assets are recognized for the effect of transactions or events where future recovery of underlying costs is probable in regulated customer rates.
As a result, the financial statements are subject to the accounting for certain types of regulation as prescribed by generally accepted accounting principles and reflect the effects of regulatory actions. Regulatory assets are recognized for the effect of transactions or events where future recovery of underlying costs is probable in regulated customer rates.
We identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management in continually assessing whether the regulatory assets and liabilities are probable of future recovery or refund by considering factors such as changes in the applicable regulatory environments, the ability to recover costs through regulated rates, and recent rate orders.
We identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management in continually assessing whether the regulatory assets and regulatory liabilities are probable of future recovery or refund by considering factors such as changes in the applicable regulatory environments, the ability to recover costs through regulated rates, and recent rate orders.
Auditing these judgments required specialized knowledge of accounting for rate regulation due to its inherent complexities.
Auditing these judgments required specialized knowledge of accounting for rate regulation due to its inherent complexities.
How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the uncertainty of future decisions by regulatory commissions included the following, among others: • We tested the effectiveness of management’s internal controls over evaluating the likelihood of recovery or refund in future rates of costs deferred as regulatory assets and liabilities.
How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the uncertainty of future decisions by regulatory commissions included the following, among others: • We tested the effectiveness of management's internal controls over evaluating the likelihood of recovery or refund in future rates of costs deferred as regulatory assets and regulatory liabilities.
Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits.
Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits.
We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.
The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.
Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.
Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.
The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Auditing these judgments required specialized knowledge of accounting for rate regulation due to its inherent complexities.
Auditing these judgments required specialized knowledge of accounting for rate regulation due to its inherent complexities.
How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the uncertainty of future decisions by regulatory commissions included the following, among others: • We tested the effectiveness of management’s internal controls over evaluating the likelihood of recovery or refund in future rates of costs deferred as regulatory assets and liabilities.
How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the uncertainty of future decisions by regulatory commissions included the following, among others: • We tested the effectiveness of management's internal controls over evaluating the likelihood of recovery or refund in future rates of costs deferred as regulatory assets and regulatory liabilities.
Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits.
Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits.
We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.
The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.
Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.
Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.
The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Auditing these judgments required specialized knowledge of accounting for rate regulation due to its inherent complexities.
Auditing these judgments required specialized knowledge of accounting for rate regulation due to its inherent complexities.
How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the uncertainty of future decisions by regulatory commissions included the following, among others: • We tested the effectiveness of management’s internal controls over evaluating the likelihood of recovery or refund in future rates of costs deferred as regulatory assets and liabilities.
How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the uncertainty of future decisions by regulatory commissions included the following, among others: • We tested the effectiveness of management's internal controls over evaluating the likelihood of recovery or refund in future rates of costs deferred as regulatory assets and regulatory liabilities.
Regulatory Assets and Liabilities– Impact of Rate-Regulation on Regulatory Assets and Liabilities and Related Disclosures – Refer to Notes 1 and 7 to the financial statements Critical Audit Matter Description As discussed in Note 1 to the financial statements, the Company owns and operates four cost-based rate-regulated utilities for which rates are set by regulatory commissions to enable the regulated utility to recover the costs of providing electric or gas service, as applicable, and to provide a reasonable return to shareholders.
Regulatory Assets and Regulatory Liabilities – Impact of Rate-Regulation on Regulatory Assets and Regulatory Liabilities and Related Disclosures – Refer to Notes 1 and 7 to the financial statements Critical Audit Matter Description As discussed in Note 1 to the financial statements, the Company owns and operates four cost-based rate-regulated utilities for which rates are set by regulators to enable the regulated utility to recover the costs of providing electric or gas service, as applicable, and to provide a reasonable return to shareholders.
Regulatory Assets and Liabilities– Impact of Rate-Regulation on Regulatory Assets and Liabilities and Related Disclosures – Refer to Notes 1 and 7 to the financial statements Critical Audit Matter Description As discussed in Note 1 to the financial statements, Kentucky Utilities Company (KU) is a cost-based rate-regulated utility for which rates are set by regulatory commissions to enable the regulated utility to recover the costs of providing electric service and to provide a reasonable return to shareholders.
Regulatory Assets and Regulatory Liabilities – Impact of Rate-Regulation on Regulatory Assets and Regulatory Liabilities and Related Disclosures – Refer to Notes 1 and 7 to the financial statements Critical Audit Matter Description As discussed in Note 1 to the financial statements, Kentucky Utilities Company (KU) is a cost-based rate-regulated utility for which rates are set by regulators to enable the regulated utility to recover the costs of providing electric service and to provide a reasonable return to shareholders.
Regulatory Assets and Liabilities– Impact of Rate-Regulation on Regulatory Assets and Liabilities and Related Disclosures – Refer to Notes 1 and 7 to the financial statements Critical Audit Matter Description As discussed in Note 1 to the financial statements, PPL Electric Utilities Company (PPL Electric) is a cost-based rate-regulated utility for which rates are set by regulatory commissions to enable the regulated utility to recover the costs of providing electric service and to provide a reasonable return to shareholders.
Regulatory Assets and Regulatory Liabilities – Impact of Rate-Regulation on Regulatory Assets and Regulatory Liabilities and Related Disclosures – Refer to Notes 1 and 7 to the financial statements Critical Audit Matter Description As discussed in Note 1 to the financial statements, PPL Electric Utilities Company (PPL Electric) is a cost-based rate-regulated utility for which rates are set by regulators to enable the regulated utility to recover the costs of providing electric service and to provide a reasonable return to shareholders.
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.
We tested the effectiveness of management’s internal controls over the recognition of amounts as regulatory assets or liabilities and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates or of a future reduction in rates. • We obtained and read relevant regulatory orders issued by the regulatory commissions for the Company and other publicly available information to assess the likelihood of recovery in future rates or of a future reduction in rates based on precedents of the treatment of similar costs under similar circumstances. • We evaluated the Company’s disclosures related to the impacts of rate-regulation, including the balances recorded and regulatory developments. /s/ Deloitte & Touche LLP Morristown, New Jersey February 13, 2025 We have served as the Company's auditor since 2015. 63 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareowner and the Board of Directors of PPL Electric Utilities Corporation Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of PPL Electric Utilities Corporation and subsidiaries (the "Company") as of December 31, 2024 and 2023, the related consolidated statements of income, equity, and cash flows, for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the "financial statements").
We tested the effectiveness of management's internal controls over the recognition of amounts as regulatory assets or regulatory liabilities and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates or of a future reduction in rates. • We obtained and read relevant regulatory orders issued by the regulatory commissions for the Company and other publicly available information to assess the likelihood of recovery in future rates or of a future reduction in rates based on precedents of the treatment of similar costs under similar circumstances. • We evaluated the Company's disclosures related to the impacts of rate-regulation, including the balances recorded and regulatory developments. /s/ Deloitte & Touche LLP Morristown, New Jersey February 20, 2026 We have served as the Company's auditor since 2015. 67 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareowner and the Board of Directors of PPL Electric Utilities Corporation Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of PPL Electric Utilities Corporation and subsidiaries (the "Company") as of December 31, 2025 and 2024, the related consolidated statements of income, equity, and cash flows, for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the "financial statements").
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.
We tested the effectiveness of management’s internal controls over the recognition of amounts as regulatory assets or liabilities and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates or of a future reduction in rates. • We obtained and read relevant regulatory orders issued by the regulatory commissions for PPL Electric and other publicly available information to assess the likelihood of recovery in future rates or of a future reduction in rates based on precedents of the treatment of similar costs under similar circumstances. • We evaluated PPL Electric’s disclosures related to the impacts of rate-regulation, including the balances recorded and regulatory developments. /s/ Deloitte & Touche LLP Morristown, New Jersey February 13, 2025 We have served as the Company's auditor since 2015. 65 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholder and the Board of Directors of Louisville Gas and Electric Company Opinion on the Financial Statements We have audited the accompanying balance sheets of Louisville Gas and Electric Company (the "Company") as of December 31, 2024 and 2023, the related statements of income, equity, and cash flows, for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the "financial statements").
We tested the effectiveness of management's internal controls over the recognition of amounts as regulatory assets or regulatory liabilities and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates or of a future reduction in rates. • We obtained and read relevant regulatory orders issued by the regulatory commissions for PPL Electric and other publicly available information to assess the likelihood of recovery in future rates or of a future reduction in rates based on precedents of the treatment of similar costs under similar circumstances. • We evaluated PPL Electric's disclosures related to the impacts of rate-regulation, including the balances recorded and regulatory developments. /s/ Deloitte & Touche LLP Morristown, New Jersey February 20, 2026 We have served as the Company's auditor since 2015. 69 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholder and the Board of Directors of Louisville Gas and Electric Company Opinion on the Financial Statements We have audited the accompanying balance sheets of Louisville Gas and Electric Company (the "Company") as of December 31, 2025 and 2024, the related statements of income, equity, and cash flows, for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the "financial statements").
While PPL Electric has indicated that it expects to recover costs from customers through regulated rates, there is a risk that the regulatory commissions will not approve full recovery of and return on such costs or approve recovery on a timely basis in future regulatory decisions.
While PPL Electric has indicated that it expects to recover costs from customers through regulated rates, there is a risk that the regulators will not approve full recovery of and return on such costs or approve recovery on a timely basis in future regulatory decisions.
We tested the effectiveness of management’s internal controls over the recognition of amounts as regulatory assets or liabilities and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates or of a future reduction in rates. • We obtained and read relevant regulatory orders issued by the regulatory commissions for LG&E and other publicly available information to assess the likelihood of recovery in future rates or of a future reduction in rates based on precedents of the treatment of similar costs under similar circumstances. • We evaluated LG&E’s disclosures related to the impacts of rate-regulation, including the balances recorded and regulatory developments. /s/ Deloitte & Touche LLP Louisville, Kentucky February 13, 2025 We have served as the Company’s auditor since 2015. 67 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholder and the Board of Directors of Kentucky Utilities Company Opinion on the Financial Statements We have audited the accompanying balance sheets of Kentucky Utilities Company (the "Company") as of December 31, 2024 and 2023, the related statements of income, equity, and cash flows, for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the "financial statements").
We tested the effectiveness of management's internal controls over the recognition of amounts as regulatory assets or regulatory liabilities and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates or of a future reduction in rates. • We obtained and read relevant regulatory orders issued by the regulatory commissions for LG&E and other publicly available information to assess the likelihood of recovery in future rates or of a future reduction in rates based on precedents of the treatment of similar costs under similar circumstances. • We evaluated LG&E's disclosures related to the impacts of rate-regulation, including the balances recorded and regulatory developments. /s/ Deloitte & Touche LLP Louisville, Kentucky February 20, 2026 We have served as the Company's auditor since 2015. 71 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholder and the Board of Directors of Kentucky Utilities Company Opinion on the Financial Statements We have audited the accompanying balance sheets of Kentucky Utilities Company (the "Company") as of December 31, 2025 and 2024, the related statements of income, equity, and cash flows, for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the "financial statements").
While the Company has indicated that it expects to recover costs from customers through regulated rates, there is a risk that the regulatory commissions will not approve full recovery of and return on such costs or approve recovery on a timely basis in future regulatory decisions.
While the Company has indicated that it expects to recover costs from customers through regulated rates, there is a risk that the regulators will not approve full recovery of and return on such costs or approve recovery on a timely basis in future regulatory decisions.
While KU has indicated that it expects to recover costs from customers through regulated rates, there is a risk that the regulatory commissions will not approve full recovery of and return on such costs or approve recovery on a timely basis in future regulatory decisions. 68 Table of Contents We identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management in continually assessing whether the regulatory assets and liabilities are probable of future recovery or refund by considering factors such as changes in the applicable regulatory environments, the ability to recover costs through regulated rates, and recent rate orders.
While KU has indicated that it expects to recover costs from customers through regulated rates, there is a risk that the regulators will not approve full recovery of and return on such costs or approve recovery on a timely basis in future regulatory decisions. 72 Table of Contents We identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management in continually assessing whether the regulatory assets and regulatory liabilities are probable of future recovery or refund by considering factors such as changes in the applicable regulatory environments, the ability to recover costs through regulated rates, and recent rate orders.
Combined Management's Discussion and Analysis of Financial Condition and Results of Operations." 61 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareowners and the Board of Directors of PPL Corporation Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of PPL Corporation and subsidiaries (the "Company") as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, equity, and cash flows, for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the "financial statements").
Combined Management's Discussion and Analysis of Financial Condition and Results of Operations." 65 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareowners and the Board of Directors of PPL Corporation Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of PPL Corporation and subsidiaries (the "Company") as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, equity, and cash flows, for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the "financial statements").
As a result, the financial statements are subject to the accounting for certain types of regulation as prescribed by generally accepted accounting principles and reflect the effects of regulatory actions. Regulatory assets are recognized for the effect of transactions or events where future recovery of underlying costs is probable in regulated customer rates.
As a result, the financial statements are subject to the accounting for certain types of regulation as prescribed by generally accepted accounting principles and reflect the effects of regulatory actions. 66 Table of Contents Regulatory assets are recognized for the effect of transactions or events where future recovery of underlying costs is probable in regulated customer rates.
As a result, the financial statements are subject to the accounting for certain types of regulation as prescribed by generally accepted accounting principles and reflect the effects of regulatory actions. Regulatory assets are recognized for the effect of transactions or events where future recovery of underlying costs is probable in regulated customer rates.
As a result, the financial statements are subject to the accounting for certain types of regulation as prescribed by generally accepted accounting principles and reflect the effects of regulatory actions. 68 Table of Contents Regulatory assets are recognized for the effect of transactions or events where future recovery of underlying costs is probable in regulated customer rates.
Regulatory Assets and Liabilities– Impact of Rate-Regulation on Regulatory Assets and Liabilities and Related Disclosures – Refer to Notes 1 and 7 to the financial statements Critical Audit Matter Description As discussed in Note 1 to the financial statements, Louisville Gas & Electric Company (LG&E) is a cost-based rate-regulated utility for which rates are set by regulatory commissions to enable the regulated utility to recover the costs of providing electric or gas services, as applicable, and to provide a reasonable return to shareholders.
Regulatory Assets and Regulatory Liabilities – Impact of Rate-Regulation on Regulatory Assets and Regulatory Liabilities and Related Disclosures – Refer to Notes 1 and 7 to the financial statements Critical Audit Matter Description As discussed in Note 1 to the financial statements, Louisville Gas and Electric Company (LG&E) is a cost-based rate-regulated utility for which rates are set by regulators to enable the regulated utility to recover the costs of providing electric or gas service, as applicable, and to provide a reasonable return to shareholders.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 13, 2025, expressed an unqualified opinion on the Company's internal control over financial reporting.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 20, 2026 expressed an unqualified opinion on the Company's internal control over financial reporting.
We tested the effectiveness of management’s internal controls over the recognition of amounts as regulatory assets or liabilities and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates or of a future reduction in rates. • We obtained and read relevant regulatory orders issued by the regulatory commissions for KU and other publicly available information to assess the likelihood of recovery in future rates or of a future reduction in rates based on precedents of the treatment of similar costs under similar circumstances. • We evaluated KU’s disclosures related to the impacts of rate-regulation, including the balances recorded and regulatory developments. /s/ Deloitte & Touche LLP Louisville, Kentucky February 13, 2025 We have served as the Company’s auditor since 2015. 69 Table of Contents (THIS PAGE LEFT BLANK INTENTIONALLY.) 70 Table of Contents
We tested the effectiveness of management's internal controls over the recognition of amounts as regulatory assets or regulatory liabilities and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates or of a future reduction in rates. • We obtained and read relevant regulatory orders issued by the regulatory commissions for KU and other publicly available information to assess the likelihood of recovery in future rates or of a future reduction in rates based on precedents of the treatment of similar costs under similar circumstances. • We evaluated KU's disclosures related to the impacts of rate-regulation, including the balances recorded and regulatory developments. /s/ Deloitte & Touche LLP Louisville, Kentucky February 20, 2026 We have served as the Company's auditor since 2015. 73 Table of Contents (THIS PAGE LEFT BLANK INTENTIONALLY.) 74 Table of Contents
The effect of such accounting is to defer certain or qualifying costs that would otherwise currently be charged to expense. Regulatory liabilities are recognized for amounts expected to be returned through future regulated customer rates. The accounting for regulatory assets and regulatory liabilities is based on specific rate orders or, in certain cases, regulatory commission precedent for transactions or events.
The effect of such accounting is to defer certain or qualifying costs that would otherwise currently be charged to expense. Regulatory liabilities are recognized for amounts expected to be returned through future regulated customer rates. The accounting for regulatory assets and regulatory liabilities is based on specific ratemaking decisions or precedent for each transaction or event.
The effect of such accounting is to defer certain or qualifying costs that would otherwise currently be charged to expense. Regulatory liabilities are recognized for amounts expected to be returned through future regulated customer rates.
The effect of such accounting is to defer certain or qualifying costs that would otherwise currently be charged to expense. Regulatory liabilities are recognized for amounts expected to be returned through future regulated customer rates. The accounting for regulatory assets and regulatory liabilities is based on specific ratemaking decisions or precedent for each transaction or event.
The effect of such accounting is to defer certain or qualifying costs that would otherwise currently be charged to expense. Regulatory liabilities are recognized for amounts expected to be returned through future regulated customer rates.
The effect of such accounting is to defer certain or qualifying costs that would otherwise currently be charged to expense. Regulatory liabilities are recognized for amounts expected to be returned through future regulated customer rates. The accounting for regulatory assets and regulatory liabilities is based on specific ratemaking decisions or precedent for each transaction or event.
The effect of such accounting is to defer certain or qualifying costs that would otherwise currently be charged to expense. Regulatory liabilities are recognized for amounts expected to be returned through future regulated customer rates.
The effect of such accounting is to defer certain or qualifying costs that would otherwise currently be charged to expense. Regulatory liabilities are recognized for amounts expected to be returned through future regulated customer rates. The accounting for regulatory assets and regulatory liabilities is based on specific ratemaking decisions or precedent for each transaction or event.
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The accounting for regulatory assets and regulatory liabilities is based on specific rate orders or, in certain 62 Table of Contents cases, regulatory commission precedent for transactions or events.
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The accounting for regulatory assets and regulatory liabilities is based on specific rate orders or, in certain 64 Table of Contents cases, regulatory commission precedent for transactions or events.
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The accounting for regulatory assets and regulatory liabilities is based on specific rate orders or, in certain 66 Table of Contents cases, regulatory commission precedent for transactions or events.
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While LG&E has indicated that it expects to recover costs from customers through regulated rates, there is a risk that the regulatory commissions will not approve full recovery of and return on such costs or approve recovery on a timely basis in future regulatory decisions.

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