ppl corporation 2018 eei-aga esg/sustainability reportppl corporation 2018 eei-aga...

PPL Corporation 2018 EEI-AGA ESG/Sustainability Report


SUSTAINABILITY HIGHLIGHTS FOR 2018PPL provides transparent, voluntary disclosure of sustainability issues through several reporting mechanisms. We are pleased to provide investors and other interested stakeholders with our 2018 EEI/AGA report using a common set of key environmental, social and governance (ESG) metrics across the utility sector. In response to feedback from investors, PPL has added two new sections addressing governance and oversight of cybersecurity and natural gas operations.

Managing our resources and reducing our carbon footprint

• Announced an enterprise-wide goal to cut carbon dioxide emissions (CO2) 70% from 2010 levels by 2050. By the end of 2018, PPL had already achieved a 52% reduction from 2010 levels.

• Reduced SF6 emissions by 57% since 2010 as part of our enterprise-wide CO2 goal. An industry leader in SF6 management, PPL Electric Utilities (PPL Electric) reduced its leak rate by 95% since 2011.

• Continued to offset emissions associated with Western Power Distribution (WPD) energy use. Also made continued progress against WPD’s voluntary goal to reduce its business carbon footprint 5% from 2012-2013 levels by 2023; WPD has already exceeded this goal with a 7.9% reduction.

• Acquired Safari Energy, a leading provider of solar energy solutions for businesses in the U.S. The company has over 340 solar projects completed or in development in 24 states.

• Connected nearly 300 megawatts of solar, wind and energy storage resources to our networks.

• Completed upgrades at our Kentucky hydroelectric power plants, increasing the amount of clean, renewable energy at Ohio Falls by 25% and at Dix Dam by 38%.

• Provided$30.8millioninenergyefficiencyrebatestomore than 1 million participants, saving more than 547 million kilowatt-hours of electricity and reducing peak demand by more than 190 megawatts.

Safely delivering reliable and affordable energy

• Sustained top-quartile reliability performance at our U.S. utilities and performed well against our reliability benchmarks in the U.K., with our utility businesses reducing outages, on average, 26% from 2011 to 2018.

• Provided award-winning customer service, ranking among the very best for customer satisfaction in each of the regions we serve and receiving our 46th and 47th J.D. Power awards in the U.S. Our U.K. business, WPD, once again topped all other distribution network operating companies in a broad measure of customer satisfaction (2017/2018 regulatory year) and received the U.K. government’s Customer Service Excellence Award for the 26th consecutive year.

• Maintained our focus on cost performance and affordability, with typical bills for PPL Electric, Louisville Gas and Electric (LG&E) and Kentucky Utilities (KU) residential customers below respective regional averages (based on EEI’s “Typical Bills and Average Rates Report for Winter 2019”).

• Were recognized by the Southeastern Electric Exchange for PPL Electric’s safest year on record during 2018. Also recognized at LG&E with the American Gas Association’s Accident Prevention AwardforSafetyExcellence.Amongitspeers,LG&Efinished2018 with the lowest rate of incidents resulting in lost or restricted time at work.

• Invested more than $3.3 billion in 2018 in new infrastructure tobenefitourcustomers.Thisincludedmodernizingthegrid,incorporating automation, replacing and building new power lines and substations and enhancing security, both cyber and physical.

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Qualitative SectionPPL Corporation operates seven fully regulated, high-performing utilities in the United Kingdom, Pennsylvania and Kentucky, each a constructive regulatory jurisdiction. PPL believes this business portfolio positions the company well for continued success and provides earnings and dividend growth potential.

PPL’s overarching strategy is to deliver best-in-sector operational performance, invest in a sustainable energy future, maintain astrongfinancialfoundation,andengageanddevelopitspeople.


Investing in our employees and communities

• Worked proactively to expand the talent pool for positions that will be available in the next several years due to retirements. In addition to college co-op programs, our companies actively recruited and trained trade craft workers. PPL has a relatively low turnover rate of 6.9%.

• Supported diverse businesses – those owned by minorities, women and veterans. In 2018, the company spent $212 million with 265 diverse businesses.

• Strengthened communities with charitable funding of more than $12 million in 2018 and partnered with our communities for economic development, disaster readiness and emergency preparedness.

• Were recognized for outstanding 2018 performance in a number of areas including being ranked one of the best places to work for people with disabilities on the Disability Equality Index; named one of America’s Best Employers by Forbes Magazine; and received a perfect score of 100% on the Human Rights Campaign Foundation’s Corporate Equality Index for its Pennsyl-vania operations.

SUSTAINABILITY GOVERNANCE AND STRATEGYPPL’s Board of Directors has designated its Compensation, Governance and Nominating Committee (CGNC) with responsibility for overseeing PPL’s practices and positions to further ESG performance and sustainability. The committee receives updates, which include climate-related issues, at regularly scheduled meetings. The full board receives sustainability updates as significantmattersarise.

The Corporate Sustainability Committee, which includes senior leaders throughout the corporation (including operating compa-nies, human resources, compliance, risk, investor relations and audit), is responsible for developing sustainability strategy, providing oversight and establishing the priorities and performance metrics. The committee is chaired by the Vice President-Public Affairs and Sustainability. The sustainability strategy, commit-ments and priorities are reviewed by the expanded corporate leadershipcouncil,whichincludesPPL’sChiefExecutiveOfficer,ChiefFinancialOfficer,ChiefHumanResourcesOfficer,GeneralCounsel and operating company presidents – and starting in 2019, thenewlycreatedChiefOperatingOfficerposition.Thestrategycommitments and priorities are then presented to the Board of Directors,withspecificoversightbytheCGNC.

OVERSIGHT OF CYBERSECURITY PPL takes a defense-in-depth approach to protecting our assets, investing in physical and cyber protections to reduce risk, increase resiliency and maintain the integrity of our systems. Our cyberse-curity approach includes rigorous, mandatory, enforceable and regularly audited standards; close coordination and information sharing among our industry and with government partners at all levels; and efforts to prepare, respond and recover should eletric and gas operations be affected in any way.

The management of cybersecurity risks is integrated into our Enterprise Risk Management (ERM) process. The PPL Corporate Security Council, which includes senior leaders throughout the corporation(includingPPL’sChiefComplianceOfficer,ChiefFinancialOfficer,ChiefHumanResourcesOfficer,GeneralCounsel,VP-Corporate Audit, operating company presidents and Chief InformationOfficers)overseesandgovernsactionstoensurethatPPL is effectively managing cybersecurity risks by conducting regular reviews of the overall enterprise cybersecurity strategy, posture and risks. The council is chaired by the Vice President & ChiefInformationSecurityOfficer.Inaddition,thefullBoardofDirectors receives periodic updates of cyber-related matters.

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IDENTIFYING AND MANAGING CLIMATE RISK AND OPPORTUNITY Climate-related issues are assessed and integrated in business objectives and strategy at various levels throughout the company. Strategy groups across our company evaluate different options to inform business strategy, using modeling and input from our internal experts and third parties as needed. Ultimately, these assessments inform our business strategy at the enterprise level as well as the operating company level.

As part of the ERM process, operating company leadership has primary accountability for identifying, assessing and managing

climate-related risks and opportunities. Each operating company has a representative involved in the ERM process, which provides a business portfolio view of material risks that may impact achieve-ment of PPL’s business strategy. PPL’s Risk Management group manages this process and reports quarterly to the Audit Commit-tee of PPL’s Board of Directors. The ERM process is overseen by theChiefFinancialOfficer.

PPLhasidentifiedseveralclimate-relatedrisksandopportunitiesnoted in the tables below. For a complete list and expanded details, please refer to PPL’s 2019 CDP climate survey response.

Opportunity Strategy to Realize

Investments in grid assets due to severe weather events

Enterprise-wide monitoring of reliability performance and system planning and analyses; about $15 billion in planned infrastructure investments from 2019-2023.

Investments in grid assets due to increase in distributed generation

Studies inform decisions on grid enhancements to enable increased renewables and distributed generation; demonstration projects for solar, storage

and electric vehicles; transition to distribution system operator in U.K.

Investments in cleaner generation Strategy groups evaluating new and enhanced business opportunities, as well as options to serve shifting customer demands.

Greater demand for power and delivery

System enhancements necessary to meet long-term electricity demand; studyingsystemimpactsofgreaterelectrification.

Risk Management Method

Transition risk: Increased pricing of GHG emissions

Integrated resources planning process and engagement with regulators and policymakers at the state and federal levels. Regulatory processes

across operating companies allow cost recovery for prudent costs. Costs of U.K. carbon credits/tax included in customer rates.

Transition risk: Mandates on, and regulation of, existing products

and services that could increase costs and reduce demand for products and services

Advocacy and engagement with policymakers and regulators (reasonable regulations and affordable rates; alternative rate designs), economic development programs and expanded customer offerings.

Transition risk: Impacts to grid reliability due to transition

to lower emissions technology

Conduct planning studies based on sensitivity analyses looking at impacts to the system from renewables and distributed generation under various scenarios to inform cost-effective grid enhancements.

Physical risk: Change in precipitation patterns and

extreme variability in weather patterns

Monitor reliability performance and conduct planning analyses of systems, looking at trends in weather, vegetation management and

other impacts; infrastructure investments to modernize and strengthen grid; maintain adequate on-site fuel supply, substation flood defense.

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MANAGEMENT AND OVERSIGHT OF NATURAL GAS OPERATIONSLG&E is engaged in the distribution and sale of natural gas, serving more than 300,000 natural gas customers in Kentucky.

Safety strategy

LG&E has a Natural Gas Pipeline Safety Compliance Program Steering Committee that provides enhanced oversight for compli-ance with federal gas safety regulations (49 CFR 192), as well as state and local pipeline safety regulations. This cross-functional committee includes representation from Gas Distribution Operations (GDO), Corporate Compliance, Safety and Technical Training, Federal Policy, and Legal and Audit Services. The company also has a Pipeline Safety Management Systems program, with the objective of implementing the elements of American Petroleum Institute recommended practices (API-1173). Moreover, LG&E maintains integrity management plans, including those for transmission, distribution and storage. LG&E continues to make strategic infrastructure investments enhancing pipeline safety and reliability.

Methane emissions reduction

LG&E leadership has overall responsibility for the oversight of methaneemissionsandreportsanyitemsofsignificancethroughPPL’s expanded corporate leadership council as described under the “Sustainability Governance and Strategy” section above.

LG&E currently monitors methane emission reduction strategies inclusive of pipeline replacement, damage prevention, gas emergency response rate, and nonemergency leak repair rates. Achievementofemissionsreductionsisnotspecificallyfactoredinto compensation. However, incentive compensation includes

individualgoalsforcertain individualsresponsibleformanage-ment of climate-related issues. Additionally, base-pay increases areoften basedonannualemployeeperformance,includingmanagement of climate-related issues for those with responsibility for those issues.

LG&E has approached methane reduction through both infrastruc-ture replacement and operation and maintenance activities.

Infrastructure Replacement

• In 2017, the company completed the replacement of 540 miles of cast/wrought iron and bare steel distribution pipelines with primarily plastic pipelines.

• The steel customer service line replacement program started in 2018. LG&E is replacing approximately 45,000 steel service lines with plastic.

• The elevated pressure replacement program is an initiative to replace areas of the elevated pressure (3 psig) system with medium pressure pipelines. This program will replace aging infrastructure in the current elevated pressure system.

• Amine gas treatment systems used to process gas withdrawn from gas storage are being replaced with H2S scavenger systems and will reduce SO2 emissions.

Operational/Maintenance Activities

• When transmission pipeline segments are removed from service for repairs or construction activities, gas is moved out of the pipeline to the extent possible, instead of letting it vent to the air.

• Verificationdigsarebeingidentifiedforareassurroundinglocations where legacy gas materials (Aldyl-A, high density polyethylene and copper piping) were found on services.

Cautionary statement regarding forward-looking information: Any statements made in this document 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. Although based on current beliefs and expectations, forward-looking statements involve various risks and uncertainties, including those that PPL Corporation describes in its Form 10-K and other filings with the Securities and Exchange Commission. Actual results may differ materially from the forward-looking statements.

Additional ResourcesSignificanthighlightsduringthe2018reportingperiodcanbereviewedstartingonPage20ofthePPL Corporation Annual Report 2018. See PPL’s 2018 Sustainability Report, PPL’s 2019 CDP climate survey response, Climate Assessment report and PPLCorporation’sForm10-Kformoreonspecificplans,progressandinitiatives.


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PORTFOLIORef. No. Last Year - 2017 Current Year - 2018

1 Owned Nameplate Generation Capacity at end of year (MW) 9,183 9,183

1.1 Coal 5,754 5,754

1.2 Natural Gas 3,285 3,285

1.3 Nuclear _ _

1.4 Petroleum _ _

1.5 Total Renewable Energy Resources 144 144

1.5.1 Biomass/Biogas _ _

1.5.2 Geothermal _ _

1.5.3 Hydroelectric 134 134

1.5.4 Solar 10 10

1.5.5 Wind _ _

1.6 Other _ _

2 Net Generation for the data year (MWh) 33,235,708 34,820,653

2.1 Coal

2.2 Natural Gas

2.3 Nuclear

2.4 Petroleum

2.5 Total Renewable Energy Resources

2.5.1 Biomass/Biogas

2.5.2 Geothermal

2.5.3 Hydroelectric

2.5.4 Solar

2.5.5 Wind

2.6 Other

2.i Owned Net Generation for the data year (MWh) 32,704,879 34,546,832

2.1.i Coal 27,724,637 27,883,084

2.2.i Natural Gas 4,625,242 6,301,108

2.3.i Nuclear _ _

2.4.i Petroleum _ 2,062

2.5.i Total Renewable Energy Resources 355,000 360,578

Quantitative Section Parent Company: PPL Corporation Operating Company(s): PPL Electric Utilities (PPL EU), Louisville Gas & Electric and Kentucky Utilities (LKE), and Western Power Distribution (WPD) Business Type(s): Fully regulated utilities; Distribution (U.K.); T&D (Pennsylvania) and T&D plus regulated generation (Kentucky)State(s) of Operation: Pennsylvania, Kentucky, and Virginia; United Kingdom State(s) with RPS Programs: Pennsylvania (mandatory) Regulatory Environment: Regulated Report Date: August 31, 2019


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Ref. No. Last Year - 2017 Current Year - 2018

2.5.1.i Biomass/Biogas _ _

2.5.2.i Geothermal _ _

2.5.3.i Hydroelectric 337,000 343,548

2.5.4.i Solar 18,000 17,030

2.5.5.i Wind _ _

2.6.i Other _ _

2.ii Purchased Net Generation for the data year (MWh) 530,829 273,821

2.1.ii Coal

2.2.ii Natural Gas

2.3.ii Nuclear

2.4.ii Petroleum

2.5.ii Total Renewable Energy Resources

2.5.1.ii Biomass/Biogas

2.5.2.ii Geothermal

2.5.3.ii Hydroelectric

2.5.4.ii Solar

2.5.5.ii Wind

2.6.ii Other

3 Investing in the Future: Capital Expenditures, Energy Efficiency (EE), and Smart Meters

3.1 Total Annual Capital Expenditures (nominal dollars)

$1,254,000,000 PPL Electric Utilities

$892,000,000

Louisville Gas & Electric and Kentucky Utilities

$1,015,000,000

Western Power Distribution

$1,196,000,000 PPL Electric Utilities

$1,117,000,000

Louisville Gas & Electric and Kentucky Utilities

$954,000,000

Western Power Distribution

3.2 Incremental Annual Electricity Savings from EE Measures (MWh) 671,055 547,291

3.3 Incremental Annual Investment in Electric EE Programs (nominal dollars) $96,775,010 $88,137,446

3.4 Percent of Total Electric Customers with Smart Meters (at end of year)100%

PPL Electric Utilities (advanced meters)

100% PPL Electric Utilities

(advanced meters)

4 Retail Electric Customer Count (at end of year) 10,597,979 10,649,818

4.1 Commercial

4.2 Industrial

4.3 Residential


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EMISSIONS


5 GHG Emissions: Carbon Dioxide (CO2) and Carbon Dioxide Equivalent (CO2e)

5.1 Owned Generation

5.1.1 Carbon Dioxide (CO2)

5.1.1.1 Total Owned Generation CO2 Emissions (MT)

5.1.1.2 Total Owned Generation CO2 Emissions Intensity (MT/Net MWh)

5.1.2 Carbon Dioxide Equivalent (CO2e)

5.1.2.1 Total Owned Generation CO2e Emissions (MT) 28,416,661 29,481,226

5.1.2.2 Total Owned Generation CO2e Emissions Intensity (MT/Net MWh) 0.87 0.85

5.2 Purchased Power


5.2.1.1 Total Purchased Generation CO2 Emissions (MT)

5.2.1.2 Total Purchased Generation CO2 Emissions Intensity (MT/Net MWh)


5.2.2.1 Total Purchased Generation CO2e Emissions (MT) 4,580,361 4,656,452

5.2.2.2 Total Purchased Generation CO2e Emissions Intensity (MT/Net MWh) 0.47 0.44

5.3 Owned Generation + Purchased Power


5.3.1.1 Total Owned + Purchased Generation CO2 Emissions (MT)

5.3.1.2 Total Owned + Purchased Generation CO2 Emissions Intensity (MT/Net MWh)


5.3.2.1 Total Owned + Purchased Generation CO2e Emissions (MT) 32,997,022 34,137,678

5.3.2.2 Total Owned + Purchased Generation CO2e Emissions Intensity (MT/Net MWh) 0.77 0.75

5.4 Non-Generation CO2e Emissions

5.4.1 Fugitive CO2e emissions of sulfur hexafluoride (MT) 90,107 49,513

5.4.2 Fugitive CO2e emissions from natural gas distribution (MT) 28,132 29,040

6 Nitrogen Oxide (NOx), Sulfur Dioxide (SO2), Mercury (Hg)

6.1 Generation basis for calculation

6.2 Nitrogen Oxide (NOx)

6.2.1 Total NOx Emissions (MT) 15,710 17,329

6.2.2 Total NOx Emissions Intensity (MT/Net MWh) 0.000 0.001

6.3 Sulfur Dioxide (SO2)

6.3.1 Total SO2 Emissions (MT) 13,499 16,698

6.3.2 Total SO2 Emissions Intensity (MT/Net MWh) 0.000 0.000

6.4 Mercury (Hg)

6.4.1 Total Hg Emissions (kg) 77 71

6.4.2 Total Hg Emissions Intensity (kg/Net MWh) 2.35E-6 2.06E-6

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RESOURCES


7 Human Resources

7.1 Total Number of Employees 12,512 12,444

7.2 Total Number on Board of Directors/Trustees 11 11

7.3 Total Women on Board of Directors/Trustees 1 2

7.4 Total Minorities on Board of Directors/Trustees 4 4

7.5 Employee Safety Metrics

7.5.1 Recordable Incident Rate 1.08 1.18

7.5.2 Lost-time Case Rate 0.15 0.13

7.5.3 Days Away, Restricted, and Transfer (DART) Rate 0.26 0.23

7.5.4 Work-related Fatalities 1 0

8 Fresh Water Resources

8.1 Water Withdrawals - Consumptive (Billions of Liters/Net MWh) 0.92e6 1.64e6

8.2 Water Withdrawals - Non-Consumptive (Billions of Liters/Net MWh) 14.31e6 13.17e6

9 Waste Products

9.1 Amount of Hazardous Waste Manifested for Disposal 829.03 790.67

9.2 PercentofCoalCombustionProductsBeneficiallyUsed 34% 34%

NATURAL GAS DISTRIBUTIONRef. No. Last Year - 2017 Current Year - 2018

1 METHANE EMISSIONS AND MITIGATION FROM DISTRIBUTION MAINS

1.1 Number of Gas Distribution Customers 324,487 325,785

1.2 Distribution Mains in Service

1.2.1 Plastic (miles) 2,125 2,163

1.2.2 Cathodically Protected Steel - Bare & Coated (miles) 2,184 2,205

1.2.3 Unprotected Steel - Bare & Coated (miles) 0.7 0.5

1.2.4 Cast Iron / Wrought Iron - without upgrades (miles) - -

1.3 Plan/Commitment to Replace / Upgrade Remaining Miles of Distribution Mains (# years to complete)

1.3.1 Unprotected Steel (Bare & Coated) (# years to complete)

1.3.2 Cast Iron / Wrought Iron (# years to complete)

Gas Company ESG/Sustainability Quantitative Section Parent Company: PPL Corporation Operating Company(s): Louisville Gas & Electric and Kentucky Utilities (LKE) Business Type(s): Fully regulated gas distribution utility State(s) of Operation: Kentucky Regulatory Environment: Regulated Report Date: August 31, 2019


2 Distribution CO2e Fugitive Emissions

2.1 CO2e Fugitive Methane Emissions from Gas Distribution Operations (metric tons) 28,132.25 29,012.25

2.2 Natural Gas Throughput from Gas Distribution Operations in thousands of scf 41,844.60 48,152.74

2.3 Fugitive Methane Emissions Rate (thousand scf of Methane Emissions per thousand scf of Methane Throughput) stated as CO2e using EPA’s Global Warming Potential for methane 36.86 33.03

NATURAL GAS TRANSMISSION AND STORAGE1.2 Transmission Pipelines, Blow Down Volumes, and Fugitive Emissions

1.2.1 Total Miles of Transmission Pipeline Operated by gas utility (miles) 408.1 381.1

1.2.2 Volume of Transmission Pipeline Blow Down Emissions - outside storage and compression facilities:

1.2.2.1 scf natural gas

1.2.2.3 metric tons CO2e

1.3 Underground Natural Gas Storage Emissions

1.3.2 Storage Compressor Station Emissions (metric tons CO2e)

1.3.3 Storage Facility Wellhead Component Fugitive Emissions (metric tons of CO2e)

2 CO2e EMISSIONS FOR TRANSMISSION AND STORAGE COMPRESSION

2.1 CO2e Emissions for Transmission Pipelines (metric tons)

2.2 CO2e Emissions for Storage Facilities (metric tons)

3 CONVENTIONAL AIR EMISSIONS FROM TRANSMISSION AND STORAGE COMPRESSION

3.1 Emissions reported for all permitted sources (minor or major)

3.1.1 NOx ( metric tons per year) 86.63 137.26

3.1.2 VOC (metric tons per year) 6.64 9.28

NATURAL GAS GATHERING AND BOOSTING1 METHANE EMISSIONS

1.1 Gathering and Boosting Pipelines, Blow Down Volumes, and Emissions

1.1.1 Total Miles of Gathering Pipeline Operated by gas utility (miles)

1.1.2 Volume of Gathering Pipeline Blow Down Emissions (scf)

1.1.4 Gathering Pipeline Blow-Down Emissions outside storage and compression facilities (metric tons CO2e)

2 CO2e COMBUSTION EMISSIONS FOR GATHERING & BOOSTING COMPRESSION

2.1 CO2e Emissions for Gathering & Boosting Compression Stations (metric tons)

3 CONVENTIONAL COMBUSTION EMISSIONS FROM GATHERING & BOOSTING COMPRESSION

3.1 Emissions reported for all permitted sources (minor or major)

3.1.1 NOx ( metric tons per year)

3.1.2 VOC (metric tons per year)

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