PPL (PPL) Q1 FY26 earnings call: guidance and Q&A

What is the timeline for the Genco JV to sign contracts and make announcements?

Management is encouraged by recent momentum and expects meaningful announcements this year, but notes the complexity of the agreements. They are actively working through the process of getting SSAs in place.

“I'd be surprised if we weren't doing -- announcing something meaningful this year.”

asked by Jeremy Tonet · answered by Vincent Sorgi

How much of the data center growth on Slide 7 is incremental to the current earnings and capital plan?

For the 28 GW of data center projects, there is at least another $0.5 billion of upside CapEx beyond what's in the current plan, though some of it would be spent beyond the 2029 plan period.

“When we look at the 28 gigs, I would say, there's probably another $0.5 billion at least to serve that incremental demand, Jeremy. Some of that, though, I would say would be spent beyond the current plan period in 2029, but it's, I would say, at least another $0.5 billion of upside beyond what's in the current plan.”

asked by Jeremy Tonet · answered by Vincent Sorgi

What are PPL's thoughts on the impact of the RBA if it goes through as initially proposed, for both the EDC side and the Genco JV?

PPL supports PJM's focus on bilateral contracting but has concerns that the proposed RBA might not ensure costs are borne by large loads, potentially shifting them to other customers. If approved as is, PPL Electric Utilities would need state-level protections. The JV's participation depends on final rules, but its priority remains active bilateral processes.

“But I would say there's quite a bit of work that needs to be done to ensure that the cost that are related to any backstop auction are actually borne by the large loads that they are intended for and that our other customers don't end up getting allocated those costs through some unintended consequence or some allocation methodology that doesn't achieve what we're all trying to achieve here.”

asked by Jeremy Tonet · answered by Vincent Sorgi

With increasing load projections in Kentucky, what generation resources might be needed, and what is the timing for new generation?

The type of resource depends on customer and load ramp. A new CPCN filing is becoming more likely this year, especially if hyperscalers commit to significant load. The probability-weighted demand growth is 3.5 GW compared to 1.8 GW in the prior CPCN, potentially requiring 1 to 3 new projects, including batteries and possibly gas generation.

“But I mean, our probability weighted 3.5 gig. We have 1.8 gig in the current CPCN. So I mean it's almost twice the load that's being supported by the current CPCN.”

asked by David Arcaro · answered by Vincent Sorgi

What alternative generation solutions could the Blackstone JV bring online sooner, and what is the progress on that front?

The JV's generation choices depend on hyperscaler needs. Batteries and potentially fuel cells are technologies that can be brought online sooner. Some hyperscalers want generation to ramp with their schedules, while others are comfortable relying on the existing PJM fleet until full ramp. This is handled on a one-off basis with customers.

“So batteries are really -- maybe fuel cells are really the technologies that we can bring online sooner ultimately, the hyperscaler will be the one to determine if and how much they -- of that they would want prior to kind of the backstopping the larger CCGT.”

asked by Michael Lonegan · answered by Vincent Sorgi

Is there any progress on proposed legislation in Pennsylvania to allow regulated generation, given affordability concerns and potential benefits?

Proposed legislation to incentivize new generation (through long-term contracts or utility ownership) is in committee. Management believes the legislature will likely wait to see how PJM's market dynamics (like the backstop auction and new market design) shake out before pushing the legislation further. PPL is not waiting and is actively pursuing generation through its Blackstone JV.

“So my sense, Paul, is that the legislature is going to want to see how some of those market dynamics shake out before they push that legislation part within the broader legislature.”

asked by Paul Patterson · answered by Vincent Sorgi

Could you elaborate on PPL's unique competitive advantage in transmission, especially regarding grid-enhancing technologies and the advanced transmission system?

PPL has a competitive advantage due to its early deployment of dynamic line rating (DLR), integrated into PJM's day-ahead market. More significantly, a decade of investment in its transmission grid has created one of the most reliable and automated grids with upsized lines, enabling quick and cost-effective connection of large loads. Connecting a gigawatt costs PPL less than $150 million, significantly lower than peers, with hyperscalers directly covering over half the cost.

“So we're at the point now at this 28 gigs, we're probably to get a gigawatt scale added, we're spending less than the $150 million total. The hyperscalers are directly paying under the energy services agreement, soon to be under the new tariff they're paying under direct payments, so [indiscernible] more than half of that amount.”

asked by Paul Patterson · answered by Vincent Sorgi