PPL Corporation Q1 FY2026 earnings call

Overall strong financial and operational results in first quarter. Reaffirmed 2026 ongoing earnings guidance of $1.90 to $1.98 per share. On track to complete approximately $5.1 billion of planned investments in 2026. Longer term, project approximately $23 billion of capital investment through 2029. Rhode Island Energy received approval for over $330 million of critical infrastructure investments. Pennsylvania has significant data center development with 28.3 GW in advanced stages. Kentucky has strong economic development activity with 12.9 GW of potential new load through 2032. Progress with joint venture with Blackstone, including engagement with gas pipeline companies and turbine reservations.

PPL Corporation reported first quarter GAAP earnings of $0.60 per share. Adjusting for special items, ongoing earnings were $0.63 per share. Kentucky segment results increased by $0.03 per share compared to 2025 due to higher base rate recovery from new retail rates, but offset by lower sales volumes, higher operating costs, etc. Pennsylvania regulated segment results were driven by higher transmission revenue from additional capital investments, offset by higher operating costs, etc. Rhode Island segment results were driven by higher rider revenue returns, offset by higher depreciation expense. Corporate and Other results were driven by higher interest expense.

Reaffirmed 2026 ongoing earnings guidance of $1.90 to $1.98 per share. Remain on track to complete approximately $5.1 billion of planned investments in 2026. Project approximately $23 billion of capital investment through 2029. Reaffirmed long-term financial targets including 6% to 8% annual EPS growth through at least 2029.

Regulatory decision uncertainties, risks associated with new investment projects such as economics, regulatory certainty and capital discipline, potential impact of FERC ROE determination refunds on capital allocation.

Q: Hi. Good morning, and thanks. I wanted to start off with the Genco JV, if you could. It seems like there is really good positive momentum happening here. Can you help frame the timeline for when this could come together? Is this weeks, months, or quarters? Any color on how the timeline could unfold?

A: Your question is timing around when we might sign contracts or ESSAs? We have made a lot of progress, certainly over the last year, and we are really encouraged by the most recent momentum. As we have been talking about for months now, hyperscalers are going to need to pay attention to generation. Up until very recently, they were very focused—rightfully so—on getting connected to the grid. That time has come now that they are focused on generation, and we are very pleased that we started this joint venture over a year ago when we did, because we have laid the foundation to be ready to meet the moment when the hyperscalers are taking this seriously. They clearly are, given the ratepayer protection pledge and all of the activity around that. In terms of timing, we are continuing to work through the process of getting ESSAs in place. The trajectory is clearly positive. I would say it is likely that we would have something meaningful to announce this year. These are very complex agreements that have to go through a lot of different parts of the hyperscalers to get to the finish line and then ultimately announce. Based on where we stand today and the momentum we are seeing, I would be surprised if we were not announcing something meaningful this year.

Q: Turning to Slide 7, there is a lot of data on the data center backlog. How much of the data center growth on Slide 7 is incremental to the current earnings and capital plan?

A: In our updated plan that we came out with in February, we had about $1.3 billion for incremental transmission CapEx. When we look at the 28 GW, I would say there is probably another $500 million at least to serve that incremental demand. Some of that would extend beyond the current plan period in 2029, but it is at least another $500 million of upside beyond what is in the current plan.

Q: Lastly, on the RBA, any thoughts on the impact if it goes through as proposed for PPL Corporation, both on the EDC side as well as if the Genco JV might have interest there?

A: We support PJM's conceptual process for focusing on and starting with bilateral contracting. That is why we created the joint venture. But there is quite a bit of work that needs to be done to ensure that the costs related to any backstop auction are borne by the large loads they are intended for, and that our other customers do not end up getting allocated those costs through some unintended consequence or allocation methodology. It is not clear, as proposed, that we would get that result. I am optimistic we can get there, but there is work to do with both PJM and FERC. If the proposal was approved by FERC as is, at PPL Electric Utilities we would need to work with the state to ensure we have protections either contractually or otherwise to ensure the EDC is not shifting the risk or the cost of that auction to our other customers. In terms of participation, it depends on the final rules and whether EDCs are mandated to participate. If it is approved as proposed, we would need to do state-level work to get those protections, and that could impact our desire to participate at the EDC level. For the JV, this could be an opportunity, again depending on the ultimate rules, but our priority continues to be our very active bilateral process. We are not slowing down with the JV. We will see if there is an opportunity to participate in the auction once the rules are finalized.

Q: Good morning, and thank you for the time. I think you said multiple slot reservations in your queue. Any color you want to put around that—is it two, bigger than two? And what is the timing on delivery for those pieces of equipment?

A: Given the competitive nature here, I am not going to get into a lot of detail. I will say confidently that our submittals into the PJM queue are backed by land that is under our control for all of those submittals—multiple generation projects—which positions us very well to be competitive with the joint venture. On turbine reservations, we have sufficient quantity to support what I just said on the interconnection queue.

Q: Shifting to the Pennsylvania electric utility, assuming the settlement is approved, I know you have a stay-out. Any timeframe when you think you need to go back in, or could you rely on the DISC mechanism to stay out for more than a couple years?

A: Embedded in the settlement, we have a two-year stay-out from the date new rates become effective, which we expect to be July 1. We would not need anything between now and two years out. We stayed out for ten years prior through our financial and cost management discipline. We continue to look at ways to drive cost out of the business. AI is a new wave of opportunity. We are embarking on our system consolidation that will drive cost savings over time as well. We are in the middle of that work, so how much of that shows up by mid-2028 when the stay-out expires, we will see. But it will be a focus to stay out as long as we can, similar to last time.

Q: Hey, thanks. Good morning. Curious about your reaction to the contents of the governor's letter—different approaches proposed around ROE, debt and equity ratios, etc. How are you interpreting and reacting to that?

A: In general, we share the same ultimate goals as our governor: delivering safe, reliable, affordable energy for our customers. We have been talking about affordability for several years, before most of the industry was focused on it. It is why we have focused on cost control and made investments around automation and hardening that reduce O&M over time. That has enabled us to stay out of base rate cases for over a decade. We only seek rate increases when it is absolutely necessary to maintain safety and reliability. We will continue to operate in that way to improve service affordably and provide competitive returns to our shareowners. We think we can continue to do that even under the points in the governor's letter. It is evident in our settlement after a decade with only a sub-4% increase for our customers. The governor had some concerns with other EDCs in the state, but we are very well aligned. We will continue stakeholder engagement with him, the PUC, and the special counsel assigned by the governor. I am not concerned that we need to alter our stance in Pennsylvania. It remains a great jurisdiction where we can invest, earn reasonable returns, and deliver for our customers.

Q: Thanks for taking my question. For the Blackstone JV, you highlighted good progress on the gas side—engagement with pipeline companies and reserving turbines. Last earnings, you talked about alternative generation solutions that could come online sooner but did not point to specific technology. Anything you could share now on technology type and progress?

A: It depends on what the hyperscalers ultimately want, since they will be the offtake on the ESSAs. If they need new generation to ramp with their load schedule, most likely we would do that with batteries. Some alternative forms of energy have timelines getting pushed closer to where CCGTs are, so batteries—and maybe fuel cells—are really the technologies we can bring online sooner. Ultimately, the hyperscaler will determine if and how much they want prior to backstopping the larger CCGT. Some want generation to come online in line with their ramps; others are more comfortable relying on the current PJM fleet initially and just want to ensure they get enough when they are at full ramp. We are working those on a one-off basis with customers.

Q: Good morning, team. Thanks for squeezing me in. A couple of easy ones. In PJM for bring-your-own-generation plans, do they have to be located adjacent to the data centers, or can they be located anywhere in PJM?

A: In the backstop auction, they do not necessarily need to be colocated or near the data centers. Obviously, with our Blackstone strategy, they will be proximate to the load.

Q: Lastly, you are unique in pursuing a JV with Blackstone in a wires-only region of Pennsylvania and having a fully integrated utility in Kentucky. When you talk to hyperscalers, is there any preference for one region versus the other, given the different structures?

A: In Pennsylvania, when you draw a radius around where we are, you pick up massive industrial and business populations. If you are worried about latency and need five-nines reliability, you go where the population is. With AI and large learning models, more load can be sited anywhere; Kentucky, with much less population, offers low power prices and we control our destiny across the value chain—subject to commission approval—in an integrated utility. Hyperscalers like that we can control everything, but it is a different type of data center than in Northeast Pennsylvania. We can also offer benefits for those thinking about Boston, given our proximity via Rhode Island.

Q: Thanks for taking my question. Given the new PJM CEO's letter and related report, any thoughts around some of the ideas proposed and the future of the capacity auction?

A: It is good to see PJM recognize the issues we have been talking about for a couple of years and acknowledge that the current market construct will not solve PJM’s supply issues. Several proposed solutions are consistent with our views, including large loads bringing their own generation or being interruptible until they do. We have advocated for that as well. It can enable speed to market while taking pressure off reliability and high capacity costs until BYOG comes online. I do not see anything in that market design report that replaces BYOG; it could provide a bridge to it. On capacity options, I want to see how details shake out. Part of the issue has been the marginal price being paid to all generation in energy and capacity, contributing to current problems. The report hints at approaches to address that. There was mention of possibly moving toward an ERCOT-like model—details matter. At the end of the day, we must ensure generators earn reasonable returns on investments while keeping wholesale prices affordable for customers. The market is moving toward bilateral contracting, and it is good that hyperscalers have signed the ratepayer protection pledge. That will help. PJM still needs to refine the capacity market to balance reasonable generator returns against affordability, and it seems that is the direction, which is good to see.