PPL Corporation Corporate Unit Q2 FY2026 earnings call

Core Q2 2026 Execution

• Delivered solid ongoing earnings of $0.33 per share, in line with management expectations; $2.3 billion in capital deployed through the first half of 2026, ~30% higher than the same period in 2025, on track to hit the full-year 2026 target of ~$5 billion.
• Completed 2026 financing needs earlier in Q2 via successful, oversubscribed long-dated debt offerings at PPL Electric and Rhode Island Energy at attractive terms, supporting a strengthening credit profile and strong balance sheet.

Regulatory Update

• Pennsylvania: PPL Electric's base rate case settlement took effect July 1, 2026, with an approved $275 million rate increase (less than 4% across all rate classes). Delivery rates remain nearly 20% below the latest published state average, and the settlement includes a 2-year base rate stay-out provision through July 2028.
• Kentucky: Awaiting a Kentucky Public Service Commission (KPSC) decision on the company's reconsideration request by August 14, 2026, following a constructive regulatory process for the base rate case.
• Rhode Island: Base rate case proceedings remain on track, with new rates expected to go into effect September 1, 2026 (the first base rate increase requested in 8 years). A Hold Harmless Bill Credit proposal to accelerate customer bill credits from deferred tax commitments is under parallel review, which would offset base rate increase impacts for customers.

Large Load (Data Center) Growth

• Pennsylvania: Signed data center agreements grew for the 10th consecutive quarter to ~32 GW, an increase of 3.5 GW from Q1 2026. Over 11 GW are under binding Electric Service Agreements (ESAs), with 6.5 GW currently under construction; two data centers began taking service in Q2, expected to ramp to ~2 GW of load by 2031.
• Kentucky: The economic development pipeline expanded to 13.7 GW of potential load growth (11.6 GW from data centers, 2.1 GW from manufacturing/other), an 800 MW increase quarter-over-quarter. Approximately 1.3 GW is backed by signed reimbursement agreements, and probability-weighted projections now forecast 3.7 GW of new load by 2032, double the projection in the 2025 CPCN filing.
• Approved large-load tariffs in both states protect existing customers via 10-15 year minimum contract terms, 80% minimum guaranteed capacity payments regardless of usage, upfront collateral, and material termination fees. Starting in 2027, Pennsylvania large-load customers will contribute $11 million annually to low-income assistance, and existing customers could see ~$25 per month in transmission bill reductions over time if planned growth is realized, offsetting higher PJM capacity costs.

Invitium Energy Joint Venture (with Blackstone)

• Secured strategic land sites capable of supporting 8-14 GW of new generation (depending on technology), with over 5 GW of CCGT generation accepted in the PJM interconnection queue and over 5 GW of CCGT turbine reservation agreements. Total potential investment through 2032 is $12.5-$15 billion, with PPL holding a 51% share.
• No material earnings contributions are expected through 2030, but shorter-lead-time technologies (e.g., batteries) could contribute earnings as early as 2029-2030, which could push annual EPS growth above the top end of the long-term 6-8% target range. Meaningful earnings from CCGTs are expected to begin in 2031-2032. No construction or material financial commitments will be made before executing risk-appropriate Energy Supply Services Agreements (ESSAs) or cost reimbursement agreements. Management expects to secure one or more commercial agreements by the end of 2026.

Kentucky Generation Growth

• Strong load growth makes an additional CPCN filing for new generation resources by the end of 2026 increasingly likely. Potential resources include the 266 MW Lewis Ridge pumped storage project, 400 MW of deferred battery projects, and additional CCGT generation, representing $3.5-$4 billion in incremental potential investment between 2027 and 2032.

PPL reported Q2 2026 GAAP earnings of $0.30 per share, compared to $0.25 per share in Q2 2025. Adjusted for special items ($0.03 per share primarily from IT transformation costs), ongoing earnings from operations were $0.33 per share, a $0.01 per share increase year-over-year. Segment performance breakdown:

• Kentucky Segment: Results were flat compared to Q2 2025. Higher base rate recovery from January 2024 retail rate increases was fully offset by lower sales volumes from less favorable weather, higher operating costs, higher depreciation, and higher interest expense.
• Pennsylvania Regulated Segment: Results were $0.01 per share lower year-over-year. Higher transmission revenue from new capital investments was offset by higher depreciation and interest expense.
• Rhode Island Segment: Results increased by $0.02 per share compared to Q2 2025, driven by higher rider revenue and lower operating costs, partially offset by higher depreciation expense.
• Corporate and Other: Results were flat year-over-year, with higher interest expense offset by other small, non-material factors.

• Management reaffirmed the 2026 ongoing earnings guidance range of $1.90 to $1.98 per share, with a midpoint of $1.94 per share, and expects the company to reach at least the midpoint of this range. Stronger earnings growth is projected for the second half of 2026, supported by recently approved rate changes in Pennsylvania and expected rate implementation in Rhode Island.
• Long-term targets through at least 2029 were reaffirmed: 6% to 8% annual EPS growth (compound annual growth expected to land near the top end of this range), 4% to 6% annual dividend growth, and 16% to 18% FFO to debt. These targets exclude any earnings contribution from Invitium Energy.
• Long-term capital investment needs through 2029 are projected at $23 billion, supporting average annual rate base growth of over 10%. Incremental potential capital investment of $10 to $12 billion through 2032 from Kentucky generation expansion and Invitium Energy exists beyond the current base plan.

• Final regulatory outcomes for pending rate cases in Kentucky and Rhode Island are uncertain, specifically the KPSC's upcoming decision on the reconsideration request in Kentucky.
• Negotiations for commercial ESSAs for Invitium Energy are complex and require agreement from both parties, so timing and final terms are not guaranteed.
• The outcome of PJM's capacity market and RBP procurement process, and the final terms of new ERIS and connect and manage rules, could impact development timing and economics for new generation projects.
• Local and state legislative and regulatory changes around data center development could slow growth or change project economics, even if no broad moratorium on development is currently expected.
• Large-load customer projects may be canceled or delayed, though current tariff structures include protections to limit cost exposure for existing customers.

Q: How does the Invitium JV's bilateral contracting process interact with PJM's RBP procurement, and when could agreements be announced?

A: Invitium’s bilateral negotiations predate the PJM RBP process, so reaching agreement on bilateral contracts is independent of PJM’s timeline. PPL submitted proposals to the RBP matchmaking process to expand customer outreach, but does not plan to wait for PJM’s process to close agreements. While the RBP process has impacted some counterparty timing, PPL expects one or more agreements by year-end (potentially sooner), and will announce material agreements immediately upon signing rather than waiting for a scheduled earnings update. No details on near-term agreement size are available at this stage.

Q: What triggers a CPCN filing for additional generation in Kentucky by year-end, and how does the governor’s new data center executive order impact procurement plans?

A: Strong growth in the signed load pipeline (already doubled from the 2025 CPCN projection) is already a trigger; conversion of developer agreements to hyperscaler contracts would be the final prompt to file by year-end. The executive order reinforces customer protection principles PPL already uses in its approved tariff structure, does not ban data center development, and aligns with PPL’s existing approach. PPL is well-positioned to comply and does not expect it to slow development or change procurement plans.

Q: How will Invitium JV earnings be disclosed, and what is the planned financing structure for projects?

A: Invitium uses equity method accounting, but PPL will separately disclose JV earnings distinct from the base utility business once contributions become material, and will update aggregate long-term CAGR guidance to reflect JV contributions. During construction, projects will use off-balance-sheet construction financing to avoid near-term equity dilution; permanent financing will be put in place after commercial operation. PPL will maintain its strong investment-grade credit profile when structuring permanent capital.

Q: After the 2-year base rate stay-out in Pennsylvania, will PPL use the DSIC mechanism to delay future rate cases?

A: PPL will continue to maximize time between rate cases (it went 10 years between the prior base rate case and the 2026 settlement) and will use DSIC as it has done effectively in the past. The Pennsylvania PUC is considering reforms to DSIC to add formula-based ROE and performance bands that would enable longer base rate stay-outs, and PPL is engaging constructively on these changes. Current planning suggests PPL will likely be able to extend the period before the next base rate case well beyond the mandatory 2-year stay-out.}