PPL Reaffirms 2026 Earnings Forecast After Q2 Results

On Friday, PPL (NYSE: PPL ) discussed second-quarter financial results during its earnings call. The full transcript is provided below. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

98 per share. The company plans approximately $5 billion in capital investments for 2026, with a long-term projection of $23 billion through 2029 to support over 10% average annual rate base growth. PPL achieved regulatory progress in Pennsylvania and Rhode Island rate cases, with new rates set to support future earnings growth. Strong data center demand in Pennsylvania and Kentucky is driving future infrastructure and generation investment discussions, including through the Invidium Energy joint venture.

PPL's financial strategy includes maintaining a strong balance sheet and completing 2026 financing needs with successful debt offerings. The company continues to target 6% to 8% annual EPS growth and 4% to 6% annual dividend growth through at least 2029. Full Transcript OPERATOR Good day and welcome to the PPL Corporation's conference call on second quarter 2026 financial results. All participants will be in listen-only mode.

Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation there will be an opportunity to ask questions. To ask a question, you may press star then one on a touchtone phone. To withdraw your question, please press star then two.

Please note that this event is being recorded. I would now like to turn the conference over to Andy Ludwig, Vice President of Investor Relations. Please go ahead. Andy Ludwig, Vice President of Investor Relations Good morning and thank you for joining PPL Corporation's conference call on second quarter 2026 financial results.

We provided presentation materials on the Investors section of our website. This morning you will hear from Vince Sorgi, PPL President and CEO, and Joe Bergstein, Chief Financial Officer. We'll conclude with a Q&A session following our prepared remarks. Before we get started, please turn to slide two for our cautionary statement.

Today's presentation contains forward-looking statements subject to risks and uncertainties. Actual results may differ materially. Please refer to our SEC filings and the Appendix for additional information. We will also refer to non-GAAP measures including earnings from ongoing operations.

Reconciliations to the corresponding GAAP measures are provided in the Appendix. I'll now turn the call over to Vince. Vincent Sorgi — President and Chief Executive Officer Thank you, Andy, and good morning everyone. Let's begin on slide 4 with an overview of our second quarter performance.

Q2 was another quarter of disciplined execution, supporting our 2026 commitments while strengthening confidence in our long-term outlook. 33 per share. 94 per share. We expect stronger earnings growth in the second half of the year supported by rate case outcomes in both Pennsylvania and Rhode Island, with Pennsylvania rates effective July 1 and Rhode Island rates expected to be effective September 1.

We are on pace to deploy approximately $5 billion of capital investments in 2026 to support the delivery of safe, reliable and affordable energy service. As our investment plan has expanded, our teams have continued to demonstrate the ability to execute these programs safely, efficiently and on schedule. Longer term, we continue to project $23 billion of capital investment needs through 2029, supporting average annual rate base growth of over 10%.

We also reaffirmed our long-term financial targets including 6% to 8% annual EPS growth through at least 2029, with compound annual growth expected to be near the top end of that range, 4% to 6% annual dividend growth, and FFO to debt of 16% to 18%. Importantly, these targets exclude any contribution from Invidium Energy, our joint venture with Blackstone, which represents meaningful long-term earnings and cash flow upside beyond the current plan. Turning to slide 5 for a more comprehensive regulatory update, coming into 2026 we had base rate case proceedings underway in all three of our primary jurisdictions.

These rate case filings were after significant periods of stay-out ranging from five years in Kentucky, eight years in Rhode Island and over 10 years in Pennsylvania. We made excellent progress in these proceedings during the second quarter, continuing to achieve constructive outcomes that de-risk our plan. In Pennsylvania, PPL Electric's rate case settlement became effective July 1 with a positive outcome for both customers and shareowners. The approved increase of $275 million supports critical investments we are making while reflecting less than a 4% increase across all of our rate classes.

Importantly, even after our recent rate adjustment, PPL Electric's delivery rates remained nearly 20% below the latest published state average. This outcome reflects the benefits of our Utility of the Future strategy that prioritizes system hardening, disciplined cost management, strategic use of technology, constructive engagement with stakeholders, and a strong focus on affordability. The settlement also includes a two-year stay-out provision. Through the continued use of the DIS mechanism and disciplined cost management, we will target remaining out of base rate cases beyond that period in Kentucky.

We're awaiting the Commission's decision on our reconsideration request following another thorough and constructive regulatory process. While we believe the original KPSC decision allows us to deliver on our overall plan objectives, we believe there were some flaws in that decision that require reconsideration by the KPSC. We appreciate the Commission's thoughtful review of our filing and continue to believe the investments and mechanisms supporting this filing are important to maintaining safe, reliable, and increasingly resilient service to our customers. We've requested a decision from the KPSC by August 14th.

Turning to Rhode Island, our base rate case proceeding remains on track. Hearings were completed in mid-July, briefs have been filed, and public meetings are scheduled for August 12th to the 20th. New rates are expected to become effective September 1st. As mentioned earlier, this is the first base rate increase Rhode Island Energy has requested in eight years and builds on the significant reliability improvements we've achieved since our acquisition of the utility back in 2022.

The filing supports the continued investment needed to strengthen the system and prepare for frequent and severe weather events and continued distributed renewable deployment in the state. We also continue to make progress with our hold harmless bill credit proposal, which is being considered in parallel with the broader rate case proceeding. As a reminder, we've proposed accelerating customer bill credits associated with the deferred tax hold harmless commitment that we made when we acquired Rhode Island Energy. If approved, the credits would significantly offset the impact of the requested base rate increase for customers.

This is another example of our balanced approach to affordability and investment, proposing creative solutions to help moderate customer bill impacts while continuing to invest in system reliability and resilience. Overall, these proceedings highlight the effectiveness of our regulatory strategy and provide a stronger foundation for continued investment. Moving to Slide 6, against the backdrop of increasing national scrutiny around data center development, our Pennsylvania service territory continues to stand out because of its strong transmission reliability and access, proximity to major demand centers, and disciplined customer protections.

5 gigawatts from last quarter, with over a gigawatt coming from signed electric services agreements, or ESAs. We now have more than 11 gigawatts under ESAs, which carry meaningful financial commitments from the customer, which I'll cover in more detail in a few slides. We also continue to see these projects enter the construction phase with more than six and a half gigawatts now under construction, and during the quarter two of these data centers began taking utility service, which are expected to ramp to about 2 GW of load by 2031.

This continued progression from agreement to construction to taking service is improving our line of sight into future infrastructure and generation needs, including from our Invidium Energy joint venture with Blackstone. Turning to Slide 7, our Invidium joint venture continues to make progress across a number of critical paths. Ratepayer protection pledges and PJM's recent FERC proposal reinforce the need for new generation to serve large load customers, while strong data center activity in PPL Electric Utilities' service territory is expanding the opportunity for long-term energy supply services agreements, or ESAs.

During the quarter, we continued to move the joint venture from concept to execution. We now have strategic land sites capable of supporting between 8 and 14 gigawatts of new generation depending on the technology selected, and we are continuing to build our inventory of viable sites. We have over 5 gigawatts of new CCGT generation that has been accepted in the PJM interconnection queue. We also have over 5 gigawatts of reservation agreements for combined cycle gas turbines.

5 and $15 billion of potential future investment through 2032, of which PPL's share would be 51%. Collectively, these milestones give us increasing confidence that Invidium can support contracted growth and create incremental value for shareowners. While we do not expect the earnings contributions from the JV to be material through 2030, batteries or other shorter lead-time technologies could begin contributing earnings in 2029 or 2030, which could enhance our projected EPS growth rate above the top end of our 6% to 8% range. We would expect more meaningful earnings and cash flows when the CCGTs come online, which could be as early as the 2031—2032 timeframe.

And as we've said, we will not move forward with construction or make material financial commitments until we have executed ESAs with appropriate risk profiles in those contracts or have cost reimbursement agreements in place. Based on progress to date, we expect to have one or more commercial agreements by year-end. Turning to Slide 8, Kentucky also continues to see strong economic development activity. 1 gigawatts.

This is an increase of roughly 800 megawatts from last quarter. 3 gigawatts is now supported by signed reimbursement agreements, up from approximately 900 megawatts in the first quarter. 7 gigawatts of expected new load by 2032, more than double the amount reflected in our 2025 CPCN filing. That demand is making it even more likely that we will need to file a CPCN for additional generation resources by year-end.

Potential resources for the CPCN include the 266-megawatt Lewis Ridge Pumped Storage Project, the 400 megawatts of batteries that were deferred in the 2025 CPCN, and additional natural gas combined cycle generation. 5 to $4 billion of potential investment to be incurred between 2027 and 2032. As you can see, Kentucky is emerging as a significant platform for incremental growth, which is why we've been so focused on large-load tariff protections designed to preserve affordability for our existing customers. Let's turn to Slide 9 for a discussion on how those large-load tariffs are protecting our customers.

The tariffs approved in Pennsylvania and Kentucky are grounded in a simple [principle]: large-load customers pay their own way with enforceable provisions that protect existing customers from cost shifts. First, these tariffs require long contracts with a minimum term of 10 years in Pennsylvania and 15 years in Kentucky. Kentucky's term is longer because of the fully integrated business model with generation resources as well. Second, customers commit to guaranteed payments of at least 80% of the capacity they reserve, whether they use it or not.

Third, we require collateral up front. And finally, although no projects with signed ESAs have been canceled to date, there are material termination fees in the event a developer walks away, even if they walk away pre-COD. So with all of these elements in mind, our existing customers are protected from bearing costs for projects that do not move forward. These financial commitments materially improve project quality and increase our confidence that signed ESAs represent serious, executable demand.

These tariffs also provide tangible customer benefits. Starting in 2027, Pennsylvania's large-load customer class will contribute $11 million annually to low-income assistance, which was previously funded by our existing customers. Our existing Pennsylvania customers could also see about $25 a month come off the transmission component of their bills over time. 8 GW in advanced stages is realized, that would help offset the more than $20 per month our Pennsylvania customers are currently paying as a result of higher PJM capacity prices.

Bottom line, these tariffs provide a disciplined framework to capture growth responsibly while ensuring that growth pays for growth. With that, I'll turn the call over to Joe for the financial update. Joe Bergstein — Executive Vice President and Chief Financial Officer Thank you, Vince, and good morning, everyone. Let's turn to slide 11.

25 per share in Q2 2025. 03 per share during the second quarter, primarily due to IT transformation costs and system integration impacts. 01 per share compared to Q2 2025, which was in line with our expectations. 94 per share.

Base rate case outcomes in both Pennsylvania and Rhode Island support the stronger second half earnings profile embedded in our plan. 3 billion through the end of the second quarter. This is roughly 30% more than what we deployed last year through the first six months as we continue to strengthen the safety and reliability of our networks. This also includes the great progress on our generation projects in Kentucky, which continue to be on budget and on schedule.

Lastly, we continue to maintain a strong balance sheet supported by an improving credit profile with enhanced cash flows following our base rate cases and the settlement of previously priced equity improving our credit metrics over time. That financial strength positions us to deliver our existing capital plan while maintaining flexibility as additional investment opportunities, including those that Vince discussed, emerge across our service territories. We completed our financing needs for 2026 earlier in the second quarter with successful debt offerings at PPL Electric and Rhode Island Energy.

Both transactions were very well subscribed and secured long-dated capital at attractive terms. Turning to the ongoing segment drivers for the second quarter on slide 12, our Kentucky segment results were flat compared to the second quarter of 2025. These results were driven by higher base rate recovery due to higher retail rates that were effective on January 1st. This was offset by lower sales volumes due to less favorable weather than experienced in Q2 2025, higher operating costs, higher depreciation expense, and higher interest expense.

01 lower compared to the same period a year ago. These results were driven by higher depreciation expense and higher interest expense, partially offset by higher transmission revenue from additional capital investments. 02 compared to Q2 2025, driven by higher rider revenue and lower operating costs, partially offset by higher depreciation expense. Lastly, results at Corporate and Other remained flat compared to Q2 of 2025, mainly driven by higher interest expense offset by other factors that were not individually significant.

Overall, our growth drivers are in motion to deliver on our commitments for the year. Our financing plan continues to advance, and we see ongoing opportunities to build on the plan that we've outlined for both our customers and shareowners. This concludes my financial update. I'll now turn the call back over to Vince.

Vincent Sorgi — President and Chief Executive Officer Thanks, Joe.