eei financial conferenceeei... · 2017. 11. 5. · eei financial conference november 5-8, ......

Delivering today for a brighter tomorrow

EEI Financial Conference November 5-8, 2017 ♦ Lake Buena Vista, Florida

© P© PPL Corporation 2017 ♦ EEI Financial Conference 2

Any statements made in this presentation about future operating results or

other future events are forward-looking statements under the Safe Harbor

Provisions of the Private Securities Litigation Reform Act of 1995. Actual

results may differ materially from such forward-looking statements. A

discussion of factors that could cause actual results or events to vary is

contained in the Appendix to this presentation and in the Company’s SEC

filings.

Cautionary Statements and Factors

That May Affect Future Results


Pure-play

regulated business

with seven high-

performing utilities

Diverse assets

in constructive

regulatory

jurisdictions

Solid financial

position with strong

investment-grade

credit ratings

Competitive earnings and dividend growth from 2017 through 2020

EPS CAGR

5-6%

Rate Base CAGR

5.6%

Dividend increase

about 4% annually

Annual Total Return 9-10%

PPL Investment Proposition

(1) Projections based on the midpoint of the original 2017 ongoing earnings guidance range of $2.05 - $2.25 per share.

(2) Subject to approval by the Board of Directors.

(3) Annual total return is the combination of projected annual EPS growth and dividend yield.

(1)

(3)

(2)


PPL Overview

(1) Actual as of 12/31/2016. Represents Regulatory Asset Value (RAV) for the U.K. and utility capitalization for Kentucky.

(2) U.K. Rate Base translated at $1.30/£.

(3) % of EPS based on $2.18 midpoint of revised 2017 earnings forecast. Corporate and Other, not shown, accounts for -5% of 2017 EPS forecast.

A diverse family of pure-play regulated utilities with scale

Kentucky Pennsylvania United Kingdom Aggregate PPL

$23.5B Rate Base

10.5M Customers

100% Rate

Regulated

Electric Dist.

Electric Trans.

Regulated Gen.

Gas Dist.

Rate Base

Customers

% of EPS

Business:

(2)

$6.1B

1.4M

23%

$8.9B

1.0M Electric; 0.3M Gas

25%

$8.5B

7.8M

57% (3)

(1)


Commitment to Creating

Shareholder Value

Evolution of PPL

2010 (1) 2012 (2) 2013 (3) PPL Corporation (4)

Market Cap ($bn) $12.8 $16.4 $18.8 $25.4

Enterprise Value ($bn) $17.2 $35.1 $37.8 $45.5

Business Profile (5)

Regulatory Asset Base (6)

($bn)

$12.2 $18.8 $21.3 2017 = $24.9 +

(5.5% CAGR from 2017 – 2021)

Carbon Footprint

(U.S. Tons)

63.9m 62.5m 64.2m 33.4m

84%

16%

Source: FactSet, Company Filings.

(1) As of December 31, 2010.



(4) As of October 31, 2017.

(5) Proportion of earnings from ongoing operations.

(6) Regulatory Asset Value (RAV) for WPD. Represents utility capitalization for LKE.

2008 2009 2010 2011 2012 2014 2015 and beyond

% Utility

% Competitive Energy 100%

2013

27%

73% 72%

28%


Operate high-performing utilities in

premium jurisdictions

Provide industry-leading customer service

and reliability

Invest responsibly in the future, while

effectively managing costs

Earn ROEs near authorized levels and

recover investments in a timely manner

Maintain strong financial metrics

Deliver best-in-class returns for our

shareholders

Developing and Maintaining

Sustainable Energy Infrastructure

Delivering extraordinary value to our customers and shareholders


Pennsylvania Kentucky United Kingdom

Seven High-Performing Utilities in

Premium Regulatory Jurisdictions

Most recent rates effective

July 1, 2017 at 9.7% ROE

Environmental Cost Recovery

(ECR) Mechanism

Forward Test Year for base

rate cases

Fuel Adjustment Clause

FERC Formula Transmission

Rates

11.68% allowed ROE

DSIC Mechanism

Smart Meter Rider

~$500M project 2017-2019

Storm Cost Recovery

Forward Test Year for

Distribution rate cases

Base revenues set for 8 years;

through March 2023

Real-time recovery of CAPEX

Incentive revenues available

for strong performance and

innovation

Accelerated depreciation

recovery

(1) DSIC – Distribution System Improvement Charge: an automatic adjustment charge that enables companies to recover certain infrastructure improvement costs

between base rate cases.

(2) Kentucky ECR provides near real-time recovery for approved environmental projects on the coal fleet.

(3) RIIO-ED1 Price Control extends through 3/31/2023.

(4) RAV balance as of 3/31/2015 recovered over 20 years. RAV additions over RIIO-ED1 recovered over an average of 35 years.

(1) (2)

(3)

(4)

PPL Electric Utilities Louisville Gas & Electric (LG&E) and

Kentucky Utilities (KU)

WPD East and West Midlands,

South West and South Wales


Track Record of Delivering Results for

Shareholders and Customers Operational Excellence

Long history of achieving fair outcomes in all jurisdictions Including successful transition of multiple price controls in the U.K.

WPD was the only electric distribution company to be fast-tracked in RIIO-ED1

WPD top performers in Quality of Service and Customer Satisfaction metrics

PA & KY utilities have earned over 45 J.D. Power Awards combined

Prudent Capital Deployment

Substantial improvements in network reliability and environmental stewardship

Delivered significant projects such as the Susquehanna-Roseland Transmission Project

in PA, Smart Grid deployment in PA & the U.K. and construction of first combined-cycle

gas plant and utility-scale solar project in Kentucky

Financial Stability

Increased dividend 15 out of the last 16 years

Consistently achieve/exceed annual earnings projections

Strategic Execution

Low premium utility acquisitions in 2010 and 2011

Successful spinoff of competitive supply business in 2015


$1.12 $1.01 $1.02 $1.06 $1.07

$0.33 $0.44$0.21 $0.22 $0.24

$0.75 $0.80$0.93 $0.75 $0.73

$0.77 $0.74$0.68

$0.70$0.40

$0.43 $0.39$0.39

$0.35

$0.35

2017E 2018E 2019E 2020E 2021E

U.K. KY ECR KY base PA Transmission PA Distribution

Low-Risk Investment Plan Designed to

Advance Our Electricity Infrastructure

Expanding, reinforcing and

modernizing the grid

Strengthening physical and cyber

security

Adding smart grid technology and

automation

Connecting more renewable energy

Expanding solar offerings to

customers

Piloting new technologies

Improving environmental footprint

of Kentucky coal fleet

Investing ~$3 billion annually to develop more resilient electricity networks

$3.40 $3.38 $3.23

$3.08

$2.79

$16 billion of investments over 5-year period

(1) Based on assumed exchange rate of $1.30/£ for all years.

(2) Expect between 80% and 90% to receive timely returns via ECR mechanism based on historical experience and future projections.

(1) (2)


$2.15

$2.49

$2.56

2017E 2020E

($ in billions)

Prudent Investments, Timely Recovery

Drive Growth Opportunity

Timely Real-time

CAPEX Recovery

Strong Regulated

Rate Base Growth

70%

9%

21%

0-6 Months 7-12 Months > 1 Year

~80% CAPEX recovery

within one year

Significant investment opportunities and constructive regulatory recovery

mechanisms support 5-6% annual EPS growth target through 2020

$9.4 $10.9

$9.3 $10.6

$3.3

$3.6 $2.9

$4.2

2017E

Rate Base

2020E

Rate Base


(2) Represents Regulatory Asset Value (RAV) for U.K. Represents utility capitalization for KY.

(3) Based on the midpoint of the original 2017 ongoing earnings guidance range of $2.05 - $2.25 per share.

(4) Does not represent earnings forecast or guidance for 2020.

(1) (2) (2)

Support 5-6% EPS CAGR

+

$24.9

$29.3

5.6%

CAGR

U.K. KY

PA Distribution PA Transmission

5-6%

EPS Growth

(3) (4)


99% 100%

15%

Note: GBP forecast range and median sourced from Bloomberg as of 09/30/2017. Forecast range reflects views from up to 16 financial institutions

and does not represent PPL’s internal forecast. Not all institutions provide forecasts for all periods.

(1) Budgeted FX rate on open positions of $1.30/£ for all years.

Managing Foreign Currency Risk

Forward FX Rates vs. Hedged Rates

Based on current exchange rates the EPS growth rate would be at the high end of our 5-6%

growth range Additional value available to mitigate risk beyond 2020

Even if the market rate for the GBP would hit parity with the USD, we have the ability to achieve

the low end of our EPS growth rate through 2020 due to the value of our hedges above the

budgeted rate of $1.30/£

PPL’s FX Hedge Status as of 10/18/17 (1)

Year 2018 2019 2020

Hedged Rate

(GBP/USD) 1.32 1.39 1.47

Currency hedging strategy positions PPL to achieve 5-6% EPS growth target

Substantially

hedged

through 2019

at rates above

the $1.30/£

budgeted rate 1.33

1.451.50

1.32

1.39

1.47

1.10

1.20

1.30

1.40

1.50

1.60

2018 2019 2020

($/£) FX Forecast Range Forecast MedianCurrent Hedge Rate Budget FX Rate


4.4% 4.2%

4.0% 3.8%

3.7%

3.3% 3.2% 3.2%

2.9% 2.8% 2.7%

2.5%

Comp

1

PPL Comp

2

Comp

3

Comp

4

Comp

5

Comp

6

Comp

7

Comp

8

Comp

9

Comp

10

Comp

11

$1.47 $1.49 $1.51 $1.52$1.58

2013 2014 2015 2016 2017 2020E

PPL Offers an Established, Growing

Dividend at an Above-Average Yield

(1) Dividend yield calculated based on share prices and annualized dividends as of 10/31/2017.

(2) Annualized dividend based on 02/01/2017 announced increase. Actual dividends to be determined by Board of Directors.

5-Year Dividend History & Future Outlook PPL Dividend Yield vs. Large Cap Utilities

Dividend yield is well above average comparable

PPL has a long standing history of paying dividends to shareholders

October 2nd dividend represents the 287th consecutive dividend paid

(2)

~+4%

Targeting ~4% annual growth through 2020

Large Cap

Utility Average

($ per share)

The dividend is a key component to PPL’s investment proposition

(1)


Pure-play regulated business operating in premium jurisdictions

Competitive projected earnings growth of 5-6% through 2020

Top-quartile dividend yield among large-cap utilities

Targeting ~4% annual dividend growth through 2020

Investing responsibly in our networks and improving efficiency

Proven track record of delivering commitments to shareowners and

customers

(1) Total annual return is the combination of annual EPS growth and dividend yield.

(2) EPS growth rate based on the midpoint of the original 2017 ongoing earnings guidance range of $2.05 - $2.25 per share.

PPL Investment Summary

A proven, large-cap regulated utility targeting 9-10% total annual returns (1)

(2)


Appendix


CORPORATE DATA

Ticker symbol and stock exchange PPL-NYSE

At October 31, 2017

Average daily trading volume (3 mos.) 2.91 million shares

Closing price $37.56

52-week price range $32.46 – $40.20

Annualized dividend per share $1.58 ($0.395/qtr)

Enterprise value ~$45.5 billion

Market cap ~$25.4 billion

At September 30, 2017

2016 earnings from ongoing operations per

share (Non-GAAP)(1)

$2.45 per share

Total assets $40.8 billion

Common shares O/S 688.133 million

Book value per share(2) $15.54

Capitalization: ($ millions)

Total debt $20,769 67%

Common equity $10,129 33%

Total Capitalization $30,898 100%

Employees ~12,700

Long-term debt $19,558 million

Short-term debt $ 1,211 million

Letters of Credit $ 221 million

ANALYST CONTACT:

Joe Bergstein – Vice President-Investor

Relations & Treasurer

610-774-5609

Andy Ludwig – Director-Investor Relations

610-774-3389

Lisa Pammer – Investor Relations Manager

610-774-3316

[email protected]

WEB SITE: www.pplweb.com

(1) See Appendix for the reconciliation of reported earnings to earnings from ongoing operations.

(2) Based on 688.133 million shares of common stock outstanding.

PPL Fact Sheet

http://www.pplweb.com/


Delivering today for a brighter tomorrow

PPL CORPORATION

SUSTAINABILITY OVERVIEW

Learn more about PPL’s sustainability efforts

Visit www.pplsustainability.com


The following

sustainability

commitments provide

a framework for PPL to

grow and innovate in a

responsible, reliable

way

that benefits

customers,

shareowners,

employees

and society as a whole.

Sustainability Strategy and Commitments


63.9 65.6 62.5 64.2

56.2

35.1

33.4

-

10.0

20.0

30.0

40.0

50.0

60.0

70.0

2010 2011 2012 2013 2014 2015 2016

(Millions of U.S. Tons)

Significantly reduced coal intensity and carbon emissions via the strategic

spin-off of our competitive generation and coal retirements in Kentucky

PPL’s CO2 Emissions from 2010-2016 PPL’s Power Generation Capacity

~50% Reduction

PPL’s Environmental Stewardship

(MW)

-

2,000

4,000

6,000

8,000

10,000

12,000

Coal Natural Gas/Oil Hydro Nuclear

2010 2012 2014 2016

Coal

- 46%

(1) Megawatt (MW) capacity represents PPL’s ownership interest

0 MW

Nuclear

Gas/Oil

- 55%

(1)


20,000

40,000

60,000

80,000

100,000

120,000

140,000

20,000

25,000

30,000

35,000

40,000

2010 2011 2012 2013 2014 2015 2016

Generation (GWh) Emissions (Tons)

Note: Emissions include sum of Particulates, SO2, NOX and Mercury

(1) Excludes PPL Energy Supply, LLC for periods prior to its June 2015 spin-off.

Advancing a Cleaner Energy Future

Meaningful Water Conservation in Kentucky Power Generation vs. Total Tons Emitted

PPL’s Kentucky operations have made important investments that have

significantly reduced emissions and water consumption

Consumed 61% less water in 2016 than 2012

(1)

~70% Reduction

(Tons) (GWh)

~70% reduction in emissions from 2010 to 2016

(1)


2017 Ongoing Earnings Forecast

Note: See Appendix for the reconciliation of reported earnings to earnings from ongoing operations.

(1) Represents an average exchange rate of $1.45/£ for 2016 earnings per share and $1.20/£ for the original and revised 2017 forecasts.

Segment

2016A

Earnings from

Ongoing Operations

Q2 Revised

2017E Earnings from

Ongoing Operations

(Midpoint)

Q3 Revised

2017E Earnings from

Ongoing Operations

(Midpoint)

U.K. Regulated (1) $1.49 $1.20 $1.24

Kentucky Regulated 0.58 0.56 0.55

Pennsylvania Regulated 0.50 0.50 0.50

Corporate and Other (0.12) (0.11) (0.11)

Total $2.45 $2.15 $2.18

$2.05 $2.10

$2.25 $2.25

Original 2017E

Forecast Range

Revised 2017E

Forecast Range

Increased the 2017E

midpoint to $2.18 from

$2.15 by raising the

lower end of the

forecast range


(1) Growth rates off of midpoint of original 2017 ongoing earnings forecast of $2.15 per share.

(2) Subject to approval by the Board of Directors.

(3) Based on 2017-2020 U.K. Regulated Segment earnings projections. Capital structure adjusted to include debt of $750 million that is

allocated to U.K. Regulated Segment for reporting purposes.

Assumptions to Achieve 5-6% EPS

Growth 2017 Through 2020 (1)

Key Corporate-level Assumptions:

Annual dividend growth target of approximately 4% through 2020

Equity issuances of approximately $350 million annually

Domestic Growth Assumptions:

Net income growth of 5-7%

Domestic rate base CAGR of 5.9%

PA transmission CAPEX of $2.1 billion at 11.68% base ROE; Project Compass not in plan

KY investment of $3.3 billion at 9.7% ROE

U.K. Growth Assumptions:

Net income growth of 8-10%

$1.30/£ foreign currency rate assumed for all unhedged positions

Expected rate base (RAV) CAGR of 5.1%

Average expected segment ROEs of 13-15%

Incentive revenue assumptions: $85M (2017); $100M (2018); $90-$110M (2019); $95-$115M (2020)

RPI (inflation rate): 3.0% (2017); 3.2% (2018); 3.0% (2019 and 2020)

Annual repatriation between $100 – $200M

Effective tax rate of approximately 11% (2017); Approximately 17% thereafter

(1)

(1)

(1)

(3)

(2)

(1)


$9.4 $9.9 $10.4 $10.9 $11.6

$9.3$9.9 $10.2 $10.6

$10.9

$2.9$3.3

$3.7$4.2

$4.6$3.3

$3.4$3.5

$3.6$3.8

2017E 2018E 2019E 2020E 2021E

U.K. KY PA Transmission PA Distribution

($ in billions)


(2) Represents Regulatory Asset Value (RAV) for U.K. Represents utility capitalization for KY.

(1) (2) (2)

Projected Rate Base Growth

~5.5% CAGR

$24.9 $26.5

$27.8 $29.3

$30.9

~5.5% CAGR Breakdown

5.4%

4.1%

12.2%

3.6%

2017E-2021E

Rate Base

CAGR


Equity

Ratio(1) Allowed ROE

PPL Electric Utilities 54.50%

D: N/A

T: 11.68%(2)

LG&E 53.27%

9.70%

Kentucky Utilities 53.28% 9.70%

EU LG&E KU

Environmental Cost Recovery

DSIC

Forward test year methodology

CWIP included in rate base (3)(4)

Gas Line Tracker

Pass through of Purchased Power

Fuel and Gas Supply Adj. Clause

Storm Recovery (5)

Smart Meter Rider

Tracker/Mechanism

Transmission Formula Rate

Transmission Incentive Adder(2)

Energy Efficiency/DSM

(1) As filed in most recent completed filings and rate cases.

(2) Allowed ROE of 12.93% for Susquehanna-Roseland project.

(3) CWIP included in forward test year rate base for LG&E and KU.

(4) For PPL EU Transmission, return on CWIP for approved projects.

(5) LG&E and KU have historically been able to recover costs from extraordinary storms, but no formal tracker is in place.

Constructive U.S. Regulatory Framework


Pennsylvania Regulated Overview

Pennsylvania Transmission Pennsylvania Distribution

Projected 3.6% CAGR in

distribution rate base through

2021

Constructive jurisdiction reduces

regulatory lag; supportive of

longer rate case cycles

~$500 million Smart Meter

replacement project (<6 months lag

on qualifying investments)

~50% of distribution gross margin

subject to minimal or no volumetric

risk

Projected 12.2% CAGR in

transmission rate base through

2021

Base ROE of 11.68%

FERC Formula Rate based on

historical test year

Regulatory mechanism to

minimize volumetric risk


$125 $62 $71 $104 $75

$254

$179 $165 $157

$44

$390 $494

$439 $443

$281

2017E 2018E 2019E 2020E 2021E

System Total 2005 2010 2015 2020E

Total System Line Mileage 5,007 5,019 5,171 5,179

Rebuilt/New Line Mileage N/A 36 279 1,467

Average System Age (yrs) 45 49 51 40

Line Miles >75 Years 856 (17%) 927 (19%) 902 (17%) 254 (5%)

Line Miles >50 Years 1,694 (34%) 1,861 (37%) 1,936 (37%) 969 (19%)

Line Miles >25 Years 4,344 (87%) 4,534 (90%) 4,486 (87%) 3,227 (62%)

Wood/Total Structures 57% 55% 47% 29%

Steel/Total Structures 43% 45% 53% 71%

Transmission Reliability 5 Year Historical Average 2016 Actual

IEEE SAIFI - Transmission 0.084 0.067

IEEE MAIFI - Transmission 0.853 0.449

Regional Electric System Enhancements (138kV, 115kV, & 69kV)

New / Existing Substation Enhancements (All Voltages)

Bulk Electric System Enhancements (230kV & 500kV)

Compliance with NERC and PJM Criteria

Security Improvements

Increase System Reliability

Sustainability and Survivability

Pennsylvania Transmission Strategy

Provide reliable, resilient, safe and cost-effective service to customers

Four Key Focus Areas

Total of $3.3 Billion in Infrastructure Investment ($ in millions)


(1) Project subject to regulatory approvals and change until final development.

Pennsylvania Transmission:

Project Compass

Proposed First Segment

95-mile initial segment from

Lackawanna, PA to Ramapo, NY Interconnection request filed with NYISO in

October 2015

Estimated cost of $500 - $600 million

Estimated in-service date in 2023

Benefits as proposed include: Increased access to renewables

Substantial annual savings for NY

customers

Economic development benefits

Grid reliability

Future Project Plan

Approximately 475-mile transmission lines in PA and extending to NY

Estimated cost of $3 – $4 billion

(1)


Tree falls on line, cutting power to 561 customers

13:23:40 Breaker trips

13:23:56 Recloser locks out

13:23:58 System locates fault

13:24:18 FISR starts to solve

13:25:43 Solution found

13:25:50 First switch opened

13:26:00 Second switch closed

543 customers restored in 2 minutes, 20 seconds

Pennsylvania Distribution:

Smart Grid Delivering Real Benefits

PPL Smart Grid Overview

PPL among U.S. leaders

in distribution automation

Technology capable of sensing

and responding to outages

Installed on 100%

of PPL Electric circuits

Prevented 100,000 outages

in 2016, alone

Distribution Automation Example


Kentucky Regulated Overview

Low-Carbon & Distributed Generation Kentucky Regulatory Summary

Constructive jurisdiction provides a timely

return on planned CAPEX

Revenue increase of $116 million with a

9.7% ROE, with new rates effective July

1, 2017

Projected 4.1% CAGR in rate base through

2021

Environmental Cost Recovery (ECR): $1.4

billion estimated spend with a 9.7% ROE

on projects approved – virtually no

regulatory lag

Other supportive recovery mechanisms

Return mechanisms include CWIP for ECR

and Gas Line Tracker

Pass through clauses include Purchased

Power, Fuel and Gas Supply Adjustment

and Energy Efficiency/Demand Side

Management recovery

CAPEX plans exclude spending that may

be required under the Clean Power Plan

Solar

Universal Solar – 10 MW facility at E.W.

Brown

Industrial / Large Commercial Solar

Community Solar – LKE owns and operates

Electric Vehicle Charging Station Program

Three programs offered – LKE owns and

operates in all cases

Green Energy Program

Voluntary program for customers to

purchase REC’s


Kentucky Regulated:

Multi-Year Focus on Closing Ash Ponds

Making prudent investments to reduce our impact on the environment

Investing nearly $1.4 billion to

comply with EPA rules

Cap and close ash ponds

Build process water treatment

facilities

Complete additional phase

of dry-ash landfill project

Expected completion: 2023

Waste/water treatment

Trimble County Generating Station


Note: Based on assumed exchange rate of $1.30/£ for all years.

(1) Based on 2017-2020 U.K. Regulated Segment earnings projections. Capital structure adjusted to include debt of $750 million that is allocated to U.K.

Regulated Segment for reporting purposes.

(2) RAV balance as of 3/31/15 recovered over 20 years. RAV additions over RIIO-ED1 recovered over an average of 35 years.

(3) 2007/08 – 2016/17 regulatory years.

U.K. Regulated Overview

Premium Regulatory Mechanisms U.K. Regulatory Summary

Base revenues set for 8 years:

Commencing April 2015 through March

2023

Offers real-time returns and provides

certainty and visibility

Regulation requires funding to support

investment-grade credit ratings

No equity needed from PPL to fund U.K.

operations, annually repatriates $100 -

$200 million in a tax-efficient manner

Expected earned U.K. Regulated

Segment ROE’s in the 13% -- 15%

range from 2017 through 2020,

including holding company leverage

Annual financial adjustments to base

revenues covering inflation, tax, pension

and cost of debt

Accelerated recovery of depreciation

Fast-track incentive adds $35 million

annually in revenue

WPD companies able to retain 70% of

cost efficiencies throughout RIIO-ED1

period due to fast-track status

Significant incentive revenues available

for strong performance and innovation

WPD has been consistent top-tier

performer and has earned about $725

million in performance awards over the

past decade

(3)

(1)

(2)


U.K. Regulated:

Innovation – Electric Vehicle (EV) Project

WPD conducting largest EV trial undertaken in the U.K.

Targeting 700 EVs; currently 500

participants

First phase began in 2016

WPD provides customers with

chargers

WPD can control time and speed of

charging

Goal is to help WPD reliably

manage future EV load

Enables proactive planning by

monitoring the usage of various

battery sizes and charging speeds


(1) Represents October 2017 forecast. Source: U.K. HM Treasury RPI forecast: https://www.gov.uk/government/collections/data-forecasts

(2) Sensitivities include the net effect on revenue, O&M and interest expense on index-linked debt.

Current RPI forecasts above our planning assumptions

U.K. Regulated:

RPI Update and Sensitivity

RPI affects 3 primary financial drivers for WPD: Revenue, O&M and Interest Expense

Revenue: In November 2017, tariffs will be set for the 2019/20 regulatory year using forecasted

RPI for that period. Differences between actual and forecasted RPI are trued-up in future regulatory

year tariffs. Each November, one additional year of tariffs will be set.

O&M: RPI primarily impacts adjustments to wages, including contract labor with a compounding

effect realized in future periods

Interest Expense: Approximately 15% of total U.K. debt is RPI index-linked debt (~$1B). The lower

the RPI, the lower the interest expense and vice versa.

RPI Update and Sensitivity

RPI (Regulatory Year) 2017/18 2018/19 2019/20

Budget RPI assumption 3.4% 3.1% 3.0%

Current RPI forecast (1)

3.8% 3.2% 3.0%

RPI (Calendar Year) 2017 2018 2019

Budget RPI assumption 3.0% 3.2% 3.0%

Current RPI forecast (1)

3.2% 3.4% 3.1%

Increase in 2017/2018 RPI (2)

0.5% $0.00 $0.00 $0.01

EPS Sensitivity

https://www.gov.uk/government/collections/data-forecasts




U.K. Regulated:

Incentive Revenues

Annual performance above or below the Ofgem targets for Customer

Minutes Lost (CML), Customer Interruptions (CI), the Broad Measure of

Customer Satisfaction Survey and Time to Connect is rewarded or

penalized on a 2-year lag

On a calendar year basis, WPD projects incentive revenues as follows at

$1.30/£:

2018 2019 2020

Current Estimate $100M $90M - $110M $95M - $115M

The following slides provide WPD’s current and projected performance

for the 2017/2018 regulatory year for quality of service and customer

satisfaction incentive mechanisms


(1) Ofgem targets adjusted for YTD planned outages. Performance below the Ofgem target results in a reward. Performance above the Ofgem target

results in a penalty.

(2012/13 prices) West Midlands East Midlands South Wales South West Total

Max reward/penalty +/-£17.7M +/-£17.1M +/-£8.2M +/-£12.2M +/-£55.2M

2017/2018 Year-to-date Performance

A measurement of the cumulative amount of minutes customers are without

electricity.

A measurement of the cumulative amount of interruptions in a customer's electricity

supply, per 100 customers.

43.5

0

10

20

30

40

50

60

70

80

Customer Minutes Lost (CML)

63.9

0

10

20

30

40

50

60

70

80

Customer Interruptions (CI)

CML and Ofgem target are based on a weighted average of all four DNOs. CI and Ofgem target are based on a weighted average of all four DNOs.

While there are separate CML and CI performance targets, performance is combined when

determining the total earned reward.

WPD projects 2017/2018 incentive revenue of approximately £43M (in 2012/2013 prices).

U.K. Regulated Incentive Revenue:

Quality of Service


(2012/13 prices) West Midlands East Midlands South Wales South West Total

Max reward/penalty +/-£4.0M +/-£4.0M +/-£1.9M +/-£2.8M +/-£12.7M

Max Reward

Breakeven

Max Penalty

6.5

7.5

8.5

9.5

Interruptions Connections General Inquiries

Broad Measure Customer Satisfaction Survey Through August 2017

West Midlands East Midlands South Wales South West Average other DNOs

U.K. Regulated Incentive Revenue:

Customer Satisfaction

The Broad Measure of Customer Satisfaction Survey rewards or penalizes DNOs for the

levels of customer satisfaction

Through August 2017, WPD’s performance is near or at the max reward levels. WPD projects

2017/2018 incentive revenue of approximately £11M (in 2012/2013 prices)


U.K. Regulated:

Expected Ofgem RIIO Timelines RIIO-ED1 Indicative Timetable

RIIO-ED2 Preparation and Implementation

2019 2020 2021

Slow-track

assessmentFast-track assessmentPolicy development

2022 2023

Mid 2020

RIIO-ED2

Strategy

Consultation

Early 2021

RIIO-ED2

Strategy

Decision

July 2021

RIIO-ED2

Business Plan

Submission

Nov 2021

RIIO-ED2

Fast Track

Decision

(Draft)

Feb 2022

RIIO-ED

Fast Track

Decision

(Final)

July 2022

RIIO-ED2

Slow Track

Decision

(Draft)

Nov 2022

RIIO-ED2

Slow Track

Decision

(Final)

Apr 2023

RIIO-ED2

Starts

20182017

Consultation

Q3 2017

RIIO-2 Open

Letter

Consultation

Q1 2018

RIIO-2

Strategy

Consultation

(Draft)

Q2 2018

RIIO-2

Strategy

Consultation

(Final)

RIIO-ED2 Indicative Timetable

2016 2017 2018

RIIO-ED1 Mid-period review (MPR)ED1 running

Sept 2017

DPCR5 Close-out

Substantially

Concluded

Nov 2017

RIIO-ED1 MPR

“Needs”

Consultation

Aug 2018

RIIO-ED1

MPR

Consultation

May 2018

RIIO-ED1 MPR

Decision

(Go/No Go)

Nov/Dec 2018

RIIO-ED1

MPR Concludes


U.K. Regulated: Strategy for Transitioning

to a Distribution System Operator (DSO)

Smarter high voltage networks which maximize the usage of

existing assets and can be flexibly upgraded to enable

connection of distributed energy resources to meet the U.K.

low carbon targets

1 OPTIMIZE

INVESTMENT IN

HIGHER VOLTAGE

NETWORKS

2 CONTRACT WITH

CUSTOMERS FOR

NON-NETWORK

SOLUTIONS

3 CO-ORDINATE AT

TRANSMISSION /

DISTRIBUTION

INTERFACE

4 PROTECT THE

INTEGRITY & SAFETY OF

LOWER VOLTAGE

NETWORKS

Using customer provided solutions (e.g. storage and

distributed generation) to increase our network capacity

where this is more economical than reinforcement

Co-ordinating with the Transmission System Operator to

enhance system security and efficiency

Safe and robust low voltage networks which meet the

current and future needs of end-use


Funding Growth

Strong U.S. operating cash flows plus U.K. dividend sufficient to fund PPL dividend. U.S. debt

and equity issuances fund domestic utility growth. U.K. business completely self-funding.

Note: Information provided on slide to be updated on an annual basis. See Appendix for the reconciliation of Domestic Cash Flows.

(1) Represents book depreciation.

(2) Includes domestic issuances (short and long term), net of issue costs.

2016A 2017E

Domestic Cash from Operations $1,761 $1,765

Domestic Maintenance Capex(1)

(693) (817)

Monetization of foreign currency hedges, pre-tax 310 -

Dividend From U.K. Regulated 354 125

Cash Available for Distribution $1,732 $1,073

Common Dividend (1,030) (1,071)

Cash Available for Reinvestment $702 $2

Domestic Growth Capex ($1,233) ($1,456)

Debt Maturities ($470) $0

Debt Issuances and Change in Cash(2)

907 1,158

Equity Issuances 120 330

Other Investing and Financing Activities (26) (34)

Addit ional Funding Sources for Domestic Growth Capex $531 $1,454

($ in millions)


WPD Holding Company LKE Holding Company

PPL Electric Utilities LKE Operating Companies

PPL Capital Funding

Credit Rating

Secured

Unsecured

Long-term Issuer

Outlook

S&P

NR

BBB+

A-

Stable

Moody’s

NR

Baa2

NR

Stable

Credit Rating

Secured

Unsecured

Long-term Issuer

Outlook

S&P

NR

BBB+

A-

Stable

Moody’s

NR

Baa3

Baa3

Stable

WPD Operating Companies

Credit Rating

Secured

Unsecured

Long-term Issuer

Outlook

S&P

NR

A-

A-

Stable

Moody’s

NR

Baa1

Baa1

Stable

Credit Rating

Secured

Unsecured

Long-term Issuer

Outlook

S&P

A

NR

A-

Stable

Moody’s

A1

NR

A3

Stable

Credit Rating

Secured

Unsecured

Long-term Issuer

Outlook

S&P

NR

BBB+

A-

Stable

Moody’s

NR

Baa1

Baa1

Stable

Credit Rating

Secured

Unsecured

Long-term Issuer

Outlook

S&P

A

NR

A-

Stable

PPL Corporation

Credit Rating

Secured

Unsecured

Long-term Issuer

Outlook

S&P

NR

NR

A-

Stable

Moody’s

NR

NR

Baa2

Stable

Moody’s

A1

NR

A3

Stable

PPL’s Credit Ratings

Note: As of September 30, 2017.


$3,223

$1,671

$588

$88

$217 $651

Committed Credit Facilities Cash Drawn

Strong Financial Foundation

Note: As of September 30, 2017.

Debt Maturity Distribution 2017 - 2021 Liquidity Profile

Manageable maturity schedule and strong liquidity profile

provide financial flexibility

U.S.

($ in millions) ($ in millions)

U.K.

$100

$348 $330

$1,268

$1,150

2017 2018 2019 2020 2021

PPL Capital Funding PPL Electric Utilities Kentucky WPD Group


Reconciliation of PPL’s Forecast of Reported

Earnings to Earnings From Ongoing Operations

After-Tax (Unaudited)

Reported Earnings $ 1.06 $ 0.55 $ 0.50 $ (0.10) $ 2.01 $ 2.08 $ 1.93

Less: Special Items (expense) benefit:

Foreign currency economic hedges (0.18) (0.18) (0.18) (0.18)

Spinoff of the Supply segment 0.01 0.01 0.01 0.01

Total Special Items (0.18) 0.01 (0.17) (0.17) (0.17)

Earnings from Ongoing Operations $ 1.24 $ 0.55 $ 0.50 $ (0.11) $ 2.18 $ 2.25 $ 2.10

U.K.

Reg.

KY

Reg.

PA

Reg.

Corp. &

Other Total

Low

2017

High

2017

Forecast (per share - diluted)

2017 Midpoint


Reconciliation of Segment Reported Earnings

to Earnings From Ongoing Operations: 2017


(millions of dollars)

Reported Earnings $ 126 $ 125 $ 95 $ 9 $ 355 $ 560 $ 299 $ 251 $ (60) $ 1,050


Foreign currency economic hedges, net of tax of $20, $66 (37) (37) (122) (122)

Spinoff of the Supply segment, net of tax of ($2), ($2) 4 4 4 4

Adjustment to investment, net of tax of $0 (1) (1)

Total Special Items (37) 4 (33) (122) (1) 4 (119)

Earnings from Ongoing Operations $ 163 $ 125 $ 95 $ 5 $ 388 $ 682 $ 300 $ 251 $ (64) $ 1,169


(per share - diluted)

Reported Earnings $ 0.18 $ 0.18 $ 0.13 $ 0.02 $ 0.51 $ 0.81 $ 0.44 $ 0.37 $ (0.09) $ 1.53


Foreign currency economic hedges (0.06) (0.06) (0.18) (0.18)

Spinoff of the Supply segment 0.01 0.01 0.01 0.01

Total Special Items (0.06) 0.01 (0.05) (0.18) 0.01 (0.17)

Earnings from Ongoing Operations $ 0.24 $ 0.18 $ 0.13 $ 0.01 $ 0.56 $ 0.99 $ 0.44 $ 0.37 $ (0.10) $ 1.70

U.K.

Reg.

U.K.

Reg.

KY

Reg.

PA

Reg.

Corp. &

OtherTotal

KY

Reg.

PA

Reg.

U.K.

Reg.

KY

Reg.

PA

Reg.

Corp. &

OtherTotal

U.K.

Reg.

KY

Reg.

PA

Reg.

Corp. &

OtherTotal

September 30, 2017 September 30, 2017

3rd Quarter Year-to-Date

Corp. &

OtherTotal

3rd Quarter Year-to-Date

September 30, 2017 September 30, 2017


Reconciliation of Segment Reported Earnings

to Earnings From Ongoing Operations: 2016


Year-to-Date December 31, 2016

Reported Earnings $ 1,246 $ 398 $ 338 $ (80) $ 1,902 $ 1.83 $ 0.58 $ 0.50 $ (0.12) $ 2.79


Foreign currency economic hedges, net of tax of $4 (8) (8) (0.01) (0.01)

Spinoff of the Supply segment, net of tax of $2 (3) (3)

Other:

Settlement of foreign currency contracts, net of tax of ($108) 202 202 0.30 0.30

Change in U.K. tax rate 37 37 0.05 0.05

Total Special Items 231 (3) 228 0.34 0.34

Earnings from Ongoing Operations $ 1,015 $ 398 $ 338 $ (77) $ 1,674 $ 1.49 $ 0.58 $ 0.50 $ (0.12) $ 2.45

(millions of dollars) (per share - diluted)

U.K.

Reg.

KY

Reg.

PA

Reg.

Corp. &

OtherTotal

U.K.

Reg.

KY

Reg.

PA

Reg.

Corp. &

OtherTotal


Note: For 2017, due to the generalized and forward-looking nature of this information, the Company has not reconciled the presented non-GAAP

financial measures to the most directly comparable GAAP financial measures.

(1) Includes domestic tax of $108 million associated with the monetization of foreign currency hedges.

Reconciliation of Domestic Cash Flows

Year Ended December 2016

(millions of dollars)

Adjustments PPL Global, LLC

non-GAAP Domestic Monetization FX Dividend From Common Other Domestic Statement of GAAP

Description Amount Maint. Capex Hedges (1)

U.K. Regulated Dividend Investing Change in Cash Cash Flows Amount Description

Domestic Cash from Operations 1,761

Domestic Maintenance Capex (693)

Monetization of FX hedges, pre-tax 310

Dividend From U.K. Regulated 354

Cash Available for Distribution 1,732

Common Dividend (1,030)

Cash Available for Reinvestment 702 693 (202) (354) 1,030 1,021 2,890 Net cash provided by operating

activities - continuing operations

Domestic Growth Capex (1,233) (693) 24 (1,016) (2,918) Net cash used in investing activities -

continuing operations

Debt Maturities (470)

Debt Issuances and Change in Cash 907

Equity Issuances 120

Other Investing & Financing Activities (26)

Addit ional Funding Sources for

Domestic Growth Capex531 202 354 (1,030) (24) (51) (421) (439)

Net cash used in financing activities -

continuing operations

(28) (28) Effect of exchange rates on cash and

cash equivalents

(51) (444) (495) Net decrease in cash and cash

equivalents

Presentation of Funding Growth Reclassifications PPL Consolidated Statement of Cash Flows


Statements contained in this presentation, including statements with respect to future earnings, cash flows, dividends,

financing, regulation and corporate strategy are "forward-looking statements" within the meaning of the federal securities laws.

Although PPL Corporation believes that the expectations and assumptions reflected in these forward-looking statements are

reasonable, these statements are subject to a number of risks and uncertainties, and actual results may differ materially from

the results discussed in the statements. The following are among the important factors that could cause actual results to differ

materially from the forward-looking statements: market demand for energy in our service territories, weather conditions affecting

customer energy usage and operating costs; the effect of any business or industry restructuring; the profitability and liquidity of

PPL Corporation and its subsidiaries; new accounting requirements or new interpretations or applications of existing

requirements; operating performance of our facilities; the length of scheduled and unscheduled outages at our generating

plants; environmental conditions and requirements and the related costs of compliance; system conditions and operating costs;

development of new projects, markets and technologies; performance of new ventures; asset or business acquisitions and

dispositions; any impact of hurricanes or other severe weather on our business; receipt of necessary government permits,

approvals, rate relief and regulatory cost recovery; capital market conditions and decisions regarding capital structure; the

impact of state, federal or foreign investigations applicable to PPL Corporation and its subsidiaries; the outcome of litigation

against PPL Corporation and its subsidiaries; stock price performance; the market prices of equity securities and the impact on

pension income and resultant cash funding requirements for defined benefit pension plans; the securities and credit ratings of

PPL Corporation and its subsidiaries; political, regulatory or economic conditions in states, regions or countries where PPL

Corporation or its subsidiaries conduct business, including any potential effects of threatened or actual terrorism or war or other

hostilities; British pound sterling to U.S. dollar exchange rates; new state, federal or foreign legislation, including new tax

legislation; and the commitments and liabilities of PPL Corporation and its subsidiaries. All forward-looking statements should be

considered in light of these important factors and in conjunction with the factors and other matters in PPL Corporation's Form

10-K and other reports on file with the Securities and Exchange Commission.

Forward-Looking Information Statement


Management utilizes "Earnings from Ongoing Operations" as a non-GAAP financial measure that should not be considered as an

alternative to reported earnings, or net income, an indicator of operating performance determined in accordance with GAAP. PPL

believes that Earnings from Ongoing Operations is useful and meaningful to investors because it provides management's view of

PPL's earnings performance as another criterion in making investment decisions. In addition, PPL's management uses Earnings

from Ongoing Operations in measuring achievement of certain corporate performance goals, including targets for certain

executive incentive compensation. Other companies may use different measures to present financial performance.

Earnings from Ongoing Operations is adjusted for the impact of special items. Special items are presented in the financial tables

on an after-tax basis with the related income taxes on special items separately disclosed. Income taxes on special items, when

applicable, are calculated based on the effective tax rate of the entity where the activity is recorded. Special items include:

• Unrealized gains or losses on foreign currency economic hedges (as discussed below).

• Gains and losses on sales of assets not in the ordinary course of business.

• Impairment charges.

• Significant workforce reduction and other restructuring effects.

• Acquisition and divestiture-related adjustments.

• Other charges or credits that are, in management's view, non-recurring or otherwise not reflective of the company's ongoing

operations.

Unrealized gains or losses on foreign currency economic hedges include the changes in fair value of foreign currency contracts

used to hedge GBP-denominated anticipated earnings. The changes in fair value of these contracts are recognized immediately

within GAAP earnings. Management believes that excluding these amounts from Earnings from Ongoing Operations until

settlement of the contracts provides a better matching of the financial impacts of those contracts with the economic value of

PPL's underlying hedged earnings.

Definitions of non-GAAP

Financial Measures


Management also utilizes the following non-GAAP financial measures as indicators of performance for its businesses:

"U.K. Gross Margins" is a single financial performance measure of the electricity distribution operations of the U.K. Regulated segment. In calculating this

measure, direct costs such as connection charges from National Grid, which owns and manages the electricity transmission network in England and Wales,

and Ofgem license fees (recorded in "Other operation and maintenance" on the Statements of Income) are deducted from operating revenues, as they are

costs passed through to customers. As a result, this measure represents the net revenues from the delivery of electricity across WPD's distribution network

in the U.K. and directly related activities.

"Kentucky Gross Margins" is a single financial performance measure of the electricity generation, transmission and distribution operations of the Kentucky

Regulated segment, LKE, LG&E and KU, as well as the Kentucky Regulated segment's, LKE's and LG&E's distribution and sale of natural gas. In calculating

this measure, fuel, energy purchases and certain variable costs of production (recorded in "Other operation and maintenance" on the Statements of

Income) are deducted from operating revenues. In addition, certain other expenses, recorded in "Other operation and maintenance", "Depreciation" and

"Taxes, other than income" on the Statements of Income, associated with approved cost recovery mechanisms are offset against the recovery of those

expenses, which are included in revenues. These mechanisms allow for direct recovery of these expenses and, in some cases, returns on capital

investments and performance incentives. As a result, this measure represents the net revenues from electricity and gas operations.

"Pennsylvania Gross Margins" is a single financial performance measure of the electricity transmission and distribution operations of the Pennsylvania

Regulated segment and PPL Electric. In calculating this measure, utility revenues and expenses associated with approved recovery mechanisms, including

energy provided as a PLR, are offset with minimal impact on earnings. Costs associated with these mechanisms are recorded in "Energy purchases," "Other

operation and maintenance," (which are primarily Act 129 and Universal Service program costs), "Depreciation" (which is primarily related to the Act 129

Smart Meter program) and "Taxes, other than income," (which is primarily gross receipts tax) on the Statements of Income. This measure represents the

net revenues from the Pennsylvania Regulated segment's and PPL Electric's electricity delivery operations.

These measures are not intended to replace "Operating Income," which is determined in accordance with GAAP, as an indicator of overall operating

performance. Other companies may use different measures to analyze and report their results of operations. Management believes these measures

provide additional useful criteria to make investment decisions. These performance measures are used, in conjunction with other information, by senior

management and PPL's Board of Directors to manage operations and analyze actual results compared with budget.

Reconciliations of margins for future periods are not provided as certain items excluded from Operating Income are inherently subject to change and are

not significant.

Definitions of non-GAAP

Financial Measures

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