PPL : 2025 Annual Report

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2025 ANNUAL REPORT PPL CORPORATION PPL CORPORATION AT A GLANCE N aģƢǀaƣƸ ƣ AŧŧĪŲƸżǝŲ܉ £a܏ żƸaŧ aƫƫĪƸƫ żł ݕښڛ܏ژ ěiŧŧiżŲ ƣŤĪƸ ĜaƠ ƸaŧiǭaƸiżŲ żł ݕژڟ ěiŧŧiżŲ â ݕڟ ěiŧŧiżŲ i ŲŲǀ ŧ ƣ Ų Fżǀƣ ƣĪŃǀŧaƸĪģ ǀƸiŧiƸǣ ŰƠ ŲiĪƫ żƣĪ ƸŊa ڙ܏ڜ ŰiŧŧiżŲ ǀƸi iƸǣ ǀ ƣƫ ܠĪŧĪĜƸƣi ģ Ńaƫܡ i Ƹ Ī Ã܏ o ƸŊa ڟڛ܉ږږږ ŰiŧĪƫ żł Ī ĪĜƸƣiĜ ģ Ń iŲ ŧǣ ڝڜ ěiŧŧiżŲ iŧż a ܫŊżǀƣƫ żł Īŧ ĜƸƣiĜi ǣ ģĪ iǜ ƣĪģ r ƣ Ƹ żł ƣ Ńǀ ƸĪģ ŲĪƸ ƫ Īƣ Ơ i ǣ Ųf Ƹǀ Ťǣ ڝ܉ژږږ ŰĪŃaǝaƸƸƫ r ƣ ƸŊa ڜ܉ڛږږ łǀŧŧܫƸiŰĪ ĪŰƠŧżǣ ¼żƠܫƢǀaƣƸiŧĪ żƣ ŲĪaƣܫƸżƠܫƢǀaƣƸiŧĪ ƣĪŧiaěiŧiƸǣ ƸŊĪ ƠaŲǣ a Ƹż aĜ iĪǜĪ ŲĪƸܫǭĪƣż ĜaƣěżŲ ĪŰiƫƫiżŲƫ ěǣ Aŧ Ųł ƣŰaƸi ł D . ڒڐڒ ǝ ŊĪ ǢĜĪƠƸi żł ƣŤĪ aƠiƸaŧiǭaƸ ǝŊiĜŊ ł r ڒڐڒ MAJOR BUSINESS SEGMENTS KEY INFORMATION K ntucky R gulated £ f ƸǀĜŤǣ Ų ŲƫiƫƸ ƣi i ǣ ł ƸŊĪ ŃǀŧaƸĪģ ĪŧĪĜ ƣiĜ Ƹǣ Ųģ Ų Ƹǀƣ ŧŃ Īƣ ƸiżŲ żł żǀiƫǜiŧŧĪ ƫ ģ / ĜƸƣiĜ Ơa ǣ ģf ŲƸǀĜŤǣ i i i ŰƠa ǣ ǝ iĜŊ ƣ Ų ƣ ǣ ڍ܏ iŧŧiż ǀ Ƹ Ű ƣ i Ų ĜŤǣ ģ ßiƣŃiŲ Ųģ ƠĪƣ ěżǀƸ ړ܉ڎڌڌ Ű a ƸƸ żł ǀŧaƸĪģ ĪŲĪƣ ƸiŲŃ a iƸǣ܏ e nsylv i R gulated ode and R gulated £ £ ƫǣŧǜ Ųi Ű ŲƸ ŲƫiƫƸ żł ƸŊĪ ŃǀŧaƸĪģ ĪŧĪĜƸƣiĜiƸǣ ģĪ iǜ ƣǣ ƠĪƣaƸiż żł ĪĜƸƣiĜ ÃƸi iƸ Ơ Ƹiż ǝ iĜ ƣ ƫ Ơ Ǣi a Ī ǣ ܏ i i Ų ǀ ƸżŰ ƣƫ i Ƹ ƣ Ųģ ĜĪŲƸƣa £Ī ǣ ǜ i £ ¦Ŋżģ ƫŧa ģ ŃŰĪŲƸ iƫƸ żł ƸŊĪ ƣ ǀŧaƸĪģ Īŧ ƸƣiĜiƸǣ ģ ŲaƸǀƣ Ń ĪƣaƸiż ¦ żģĪ a ģ ƣ ǣ ģ ƫ ƣǜ Ơ Ǣi a Ī ǣ ڔڌڌ܉ڌڌڌ ĜǀƫƸ ƣƫ ƣ żģĪ ƫ aŲģ܏ MESSAGE TO OUR SHAREOWNERS DEAR SHAREOWNERS, The ne gy i du try a a i f ection oint - shap d by electr cat n, apid la ge- oad rowth a d more f e u n se e e eather These onv rging fo ces a e accelerating electr city dema d, i creasing the eed for gr a e y te r silience a d making timely develop ent of eliable eneratio itica to long-term r liability a d affordability. PPL i u iquely positio ed fo this ment a d built to lead Our trategy to crea e the utilities of the future stron e , sm rt lean r d m r f cient - lig directly with t day's challenges a d opportunities. t s supported by a st o g operation l and fin ncia f dation d a f ard ooking i v tm nt appr a h that rioritiz iability ffordabil ty d n -t rm u atio Our ra egic sitioning i a ched by r v n f I 2 , e r vided high y reliable vice u u t m rs, adva ced ritica i fr tru tur i tm nt a the r g n w , x eeded u - ing e help e y ffo dable d achi ved ur key fin cial rg t a l wh le maintaining a t n and ta le ala sheet I shor e did at w said w going do Th ectio hat follow high ight r rog m nt d t e a tio w ar taking driv n inued u i the ye ead De vering Our C m m n s Pr iding liable rv i a r respo sibility of u d n 025, w again deli d quar i - rs - u rti e r smissio nd dist ibution eliability r r tfol o, t p-d ile en r tio erf m i Kentucky d b r-than- arg ed as leak r p ime - ll despit w r ening ather d gr wing dema ds n ur y e At the m me, x u ed 4. i o f p a ed i fra tr tur impr v m nt trength n d moderniz r grid deploy adv cedm ng, epla leak n a p d begi n r tio f n w enera io n Ken ucky t meet ri i gd m d T ese i v tments d ctly upp t r iability esilienc and ong-t rm ffo dability fo ur cus m rs Our t n d e cuti ni u p rted by ructiv r ulat ry ut n O tober uredr ulat ry p r l in Ken ky fo a r en tion es men eyond the 1,000 m awatt W) we'r alr dy uilding ar y th s y ar, w ivedr t a ap ls i entucky that s c ntinued i v men while m i taining st g f us n usto r ffordability R ent y, als r a hed a ettlement agr m nt i ur r a i e sy n A d while the settlement i subject o p by the P sylv ia u lic ti ity Com issio it demon tr u bility t engag n tru t v ly with oth r ulat rs d stakeholders or shar wn r , PPL hieved the mid int of u 2 going e in s fo a t, f ecting a % n r a v cen Sorgi Pr siden nd Chief Ex tiv ffl r 202 sults Also ast ye , P B d of Dir t s in r ased P m tock d v dend by a ly 6% d w maintained a s r ng balan sh tha ffe u ra egic ad ntage p ta ed ri P L d a r ss e industry. Th a ov sults r f ect y f i nt na , discip ined i v m i ur i f ru ur u anding day- -day cu ion by e nd ex nsi e o der a emen t r ate durable gulat ry fr m w s that u p r tinuedi m elia lity d affordability Pow ng c m c De lop en c n mic de op P L's footp int i r u d w r play g in r singly c nt a e in nablin rojects that r ate obs, t gthen loca n mie nd and long-t m m nity i v s men P n ylv ia, d m d r wth is eing led by igni dat n r int r tion ipeli P je t in adv n ed s e otal p ximate y 2 .2 gig a s GW i u P n y v ia s rvice t r to y ith a r xima e y 5 GW under n tru tio Th rojects e asingly mp t no nly gi na n mic r th, ut also o America r der m tit v s d nat na s urity gi e tra le of digita infra tr tu in the modern n my e t cky cd elop n r mai s r n as well. The ipeline r f ects th 9 GW of pot ntial n wl d thr ugh the a ly 2 30 ith d t nt r r resenting m r than8 W of that tota d a r xima ely 4 GW c nsidered high y acti , nclud ng 00 W unde n tru tion Probability eight d d d g wth rojection mai about 8 W - indicating tha add tio al en ratio r u will e qu d f gr wth nti ma erializ Acr th eg on , P e i clea deliv r he ergy i fra r t r that u ports gr wth while mai tai ng r liability a d protect ng cust mer . T at includesa c ntinued focu on ensuring the system has the a smissio backbon a d generatio olution requi ed to se v ne load resp nsib y Prioritizing A†fordabi ity for Ou Cus o ers Affordabil ty r mainsa f dation le ement of our s a egy, a d we ma nta a lea f on cost withi our dir ct c ntro thr ugh sustained operatio a d ma n nce d s ipl , m rt p ta dep oy ent d techn lo y e abled ef c ency im o ments. 25, e exceeded o r peration a d ma n enanc avings ta get a d a h ved appr ximately $170 millio un- ing fr m r 02 aseline rly achieving ur 02 rget f $175 million a y r y Affordabil ty also depend addr ssi c w do n ful y c t o , a ti ula ly ergy upply c t i der ulated m rk I P sy v nia, f r x ple, r an half of u u t m r bi l r f ect t utsid r n rol, ith the largest sh e be ng energy up ly t th ha ri by r ugh y 200% si D cember 2020. The n - rm e ay i tr ightf w rd asi g g n rati n su p y ntra t impr v g ffo dability i PJM. I th r PPL n inu u p r solutio th xpa d r iable, dispatchab e en tion We're doing thi rough oth adv a y and ta eholder engagement wel a thr ugh a joint v n w unced with Blacks n Infr s c r i Ju y 025. The joint v n u i desig ed o ui d, n nd o r e g n ation n nn y n rv data n r u r under long-t r ergy upply s vic s agr m s. T is p r h, wh ch a ign with i eased r n hyperscalers t "bring y u wn en r tion o ution ," i intended n ur tha la ge-load u r ear he fin ncial risk of their roject ther tha sh ft ng tha risk o other cus m rs Ou f u r main u sui e cd velo ent i m n thatr for - rather tha dermine - u t m r ffordabil ty d v r time w expect la ge-load r wth will low r r nsmissio osts fo ther ust m r d elp ring dow wholesale r ric a n w e r tio u re built s v the dat en r xtending Our Str ng Gr th Outlook Bu ld ng r t ng 2 25 p rfo m , thi ye introdu ed upda d busi ss plan ha ex ends d strengthens P lo g- m gr wth outlook while keepi g u t m r ffordabi ity d cr dit uality fr nt nd n or 2026, w issued n oi e nings guidan of $1.90 t $1.98 r ha , ith idpoint of $1.94 rs a a 7.2% incr a v 2 ngo ng ning ) add tio w ex ended r % to % a u le nings g wth t et thr ugh at least 2 2 d ex t r wth e r the t d of the t rg ed n e Th r wthi u ed by apital plan f $ llion fr 202 thr ugh 02 - $3 bi li nh gh fr m the rior lan p iod r f ecting critica i estment to further strengthen net r s aga s e frequent a d se e to ms, a elera res oratio hen torm stri e odernize t a smissio nd d stribution ystem , d c n truc e ene at n e ources i Ke t cky I rt ntly ou pdated plan doe ot i clude y a n ngs contributio capita i v tments fr m our joint ve ure with Blackst ne De nding o the timi of signed energy u p y vice r nt d the en tion ix se ected by hy er cale s, t e joint ture could potent a ly deli r e rning to PPL i the back end of the plan eriod, with those arnings bei g ups de u pla Add tiona upside pp t n ti r mai v ila le v r ime thr ugh p titi smissi n pp r ities, dditio i fra tr tur r quiredt su t n mic dev lopm n a d further eneratio ds i Kentucky dem d r . Mov ng or rd with Co fidence Ac PPL ur mploye nti to deliv with prof sion lism, skil nd c e, wheth r t ring rvic during v ath p r t ng n f t e n tion m r iable y t m r adv i g th t nologies nd pa tn rships that ill de n the xt a f en gy deliv ry Their mmitme fety e ia ity d s rvice e foundat n of u rfo m d a d ning r ngth of ur m any I n tio lso ra ho ve f d W developi g w d gita ools, pp ying data d adv ced t chnologies a ur eratio t im r v f ie y ngthening r silience nd e h i g th u m per . F m grid modernizat n d au mat n o m g g applicatio of ti ia int lli en , n vatio helping u do u rk sm t a d m r ffe ti y rting ffordabil ty day wh e positioning PPL for long-t r u ss A w v fo d, do with den den i ur t egy, de in u x ut n d c n den the pp unities in fr n of us The m y for s shaping ur i dustry a lerating, d P L i ositio ed x tly wh w w t o b a they a ler t d c nv ge. Our fo u r main n the long a : deliv i g s fe eliable d ffordable n gy f r u us m , while reating dur , long-t r alue f ur ha wn r Th k y fo y ur nt ed u r of Sincer y Vincent Sorg Pr id a d Chief Ex utive Of 2O25 FINANCIAL HIGHLIGHTS For he ye nded De e ber 3 FINANCIAL 2025 2024 Op a n r v nu s (millions $9, 4 $8,462 et n e (millions $1,181 $888 ar ings fr m ngo ng per tio millions a $1, 44 $1,250 Tota sets (millions $45,244 $41,069 ar ings per shar - Diluted $1.5 $1.20 ar ngs fr m n o ng per tio er sha - D u ed (a $1. 1 $1.69 B ok v lue r shar b $19.81 $19.07 M rk t ric er shar $ 5.02 $32.46 M rk t rice/book v lu r i 177% 170% OPERATING - ELECTRICITY SALES (GWh) (c) etail deliv r d 67,347 66,103 W olesale supplied d 1,207 617 Ma gem n t iz s Earnings from Ongoing Oper ti ns "Ongoing Ear gs" a n n- AA fin n ia eas t at should ot ec nsidered s n alternat to r r ed earning et nco e a dic tor of operating erfo man e determi ed n cc rdanc w t GAA L e v st at E rnings fro Ongoing Oper ns s seful d me ningfu to n s rs b ause t ro ides m nage en v w of PL e n ng perf r ce a other c teri aking n estment decision add tion PL nagem n e E rn gs fro Ongo ng Operat o s measu ing ac i ve en of tain corpor t perf r ce goals, nc d ng get fo ertain x cut e ncent v o pe s tio Other c mp nies m y use di feren mea s to r s nt fin cia perf m ce Ea nings fr Ongoing Oper tion s adjust d f the m a t of specia t m pecia tem r en ed n the ancia tables na -ta as s wit the at d i com ta es o specia t m sepa at y disclosed nc m ta es o pecia t m w en app cab ca c at d ba d on e atutory ta rat of the entity where e vity r corded.S e e on iliation f Ea nings fr Ongo ng Oper t o on ag million of do a s a d p ge V (per shar ) of t is r o (b sed n 51 04 d 738 s s ofc m n tock o tstanding (in thous nds Dece er nd ece er 24. (c Ex ludes he R ode Isl nd R gula d s g ent electr city sales r v es e decoupled fro vo umes del v red. (d Re r sents ER -r gu a edm n c pal d u g l ted f-syst sales FINANCIAL & OPERATING HIGHLIGHTS Reconciliation of Earnings from Ongoing Operations (per share - d ted) KY Reg. PA Reg. RI Reg. Co p. & Total 20 Other 2 25 Net n o e $0.91 $ . 6 $ .1 $(0.29) $1.5 $1.20 L ss Specia Item expense) enefi 1 tra egic c rpor t initiat ves - - - 0.01) Acquisition n egr ti n - - ( .0 ) ( .0 ) 0.40 PPL Ele tric billing issue - - (0.02 EC b n a r u n iti n djustm n 0.01 DE projects impairm nt (0.02 IT t sf m t (0.02) - (0.01 (0.04 (0.07 0.03 En rgy ciency progr ettlement (0.01 - (0.01) P T A dju tm nt (0.04 - (0.04 u m sy t gr n mpa t (0.02) - ( . 2) Tota Specia I m (0.02) - ( .08) ( .12) ( .22) 0.49) Ear ngs from Ongoing Operation $0. $0. $0. $(0.17 $1.81 $1.69 (1 Se Combined M ge n s Discussio and An lysis of i al C ndit nd Res t f Oper ons for dditional fo sp al t St c n ained h s A a R por cludi men h r s of ur arning and c p e y, "fo w d-looking ements" with he g f the federal securities l . Al ho gh PL C por t bel eve h he pect ons and a su pt o f ec d i hese fo rd-looking men r sonab e, the e men r subj a number of sks u r int e nd her fa and ua res t ay diffe r ally fr he r sults discussed these men F rd- ook g s y be dent fled by heu e of w rd uch a "will ikely" "be i v pec " pla ," intends," " y" "str gy" "target " "goals," " nticipat " nd her imilar w rd and nclude tho im s m bou r future oals r gy pla r ings dividend gr h A yf w rd-lo n t m t should b ns der d in ight f the fa nd o her m s d scu sed "I A sk a s" and "I m ombined M nagement s D scussio and Analysis of Fi cial ondit n nd Res ts f Oper o s" PP or o s A ual Report F - and other r ports o flle with he S curities and xchang Co m ssio . Th s sks o omprehensiv and giv hese and o her poss ble sks and ncer int es, i es r should not place ndu eli n nf d-looking st m n s s predi t o of r s ts. A yf w d-look g s ents m de by PPL C r t o s k on y s f he dat hich they ade. PP orpor t s under no oblig o nd xpr ss y d sclaims y blig o , upda alt r ts fo d-looking st m nts, whe her s r ult of n w format on s bse ue vent o herwise RECONCILIATION OF FINANCIAL MEASURES (UNAUDITED) Bu C mbined M nagemen iscussio d A a ysi of Fina cial C d t o a d esults of Operation 1 epor of I dependen egistered u lic Acco nting irm Opinio n the ina cial tatements. 2 C nsolidated tat ments ofI 4 onsolidated tat m nt of o hens v I 5 C nsolidated tat ments of Ca F w 56 C nsolidated Balance S eets 7 C nsolidated tat ments of Equity 9 C mbined ot t Financia tat ment ot 1 um y of Sign c n Ac ounting o icies ........................... .......................................... ot egment d e ated fo matio ot 3 e e fr mC n wit Cu tomer ............................................................................ 5 N t Pref ed e itie ..................................................................... ............................ ........... ot Earnings e Sh ot I m d Other Tax ..................................................................... ................................. 2 o Utility a egu ati ot Financing Ac vitie 10 ot Ac uisitio , evelop en a d ivestitu 11 o 1 e iremen d o employ en n 1 ot 1 Jo ntly Ow d F cilit s 1 ot 1 C tments a d ontingenc s..................................................................... ................ o 1 e ated arty Tr i 3 N 1 Other c (Expense ne 13 N F r V u ea men s N t 1 Der va eI str ents a d H dging Ac vi ie .................................................................. 3 N 1 Goodwill a d Other I ngib Assets ........................... ................................................... N 1 Asset Re ir men Ob gatio 45 N t 1 Ac ated Other o hens ve I Loss ............................ .............................. 146 N 2 N Acco nting Gu dan e ending Adoptio .................................................................. 14 C mp riso of -Ye umulati e Tota e r 148 M nagement Re or nI rna on ol ov r n ncia e o ting 4 Re or of I dependent Regis r d Pu lic Acco nting irm Opinion on I rnal on ol v inancia e o ting..................................................................... ......... G ssary of T r sa d Abb viatio 15 FINANCIAL TABLE OF CONTENTS or 10- fo the ye ended ec 1, 025, ed by PL orp r ti n wit the e ities d xchange ommissi n n e 20 2026. lease visit PL orp i ' sit , w . p m/inv t r , fo the full t x . BUS NESS Gen r (All Registra ts) PPL headquartered in Allentown, Pennsylvania is utility holding mp y, in rp ated in 1994 PPL th ugh its gulated utility bsidiari deli electricity to t in Pennsylvania Kentucky Virginia d Rhode Island; deliv tu l ga to t in Kentucky d Rhod Island d ge te electricity fro po pl ts in Kentucky PPL s principal bsidiaries at De mb 31, 2025 ar shown belo (* denote Regi t nt). PPL Corporat on* PPL Capita Fund ng Pr ide fi ing for th operations of PPL and ertain bsidiarie PPL E ectr c* Engages in the r gulated tr missi and distribution of electricity in Penn ylvani R E Engages in the r gulated tr missi distribution and le of electricity nd regulated distribution and le of natural gas in Rhode Island KU* Engages in the r gulated generation tr mission distribution and le of electricity prim ily in Kentucky LG&E Engages in the r gulated generation tr mission, distribution and le of electricity and r gulated distribution and le of natural gas in Kentucky LKE A holding mpany that owns regulated utility oper tion thr ugh it bsidiari LG&E and KU Rhode sland Regu ated Segment Kentucky Regu ated Segment Pe sy van a Regu ated Segment In additio to PPL th othe Regi t nt included in this port ar a foll PPL El ctric headqu te d in Allentown, Pennsylvania is wholly ed bsidiary of PPL d gulated public utility that is electricity tr issi d di tributio ic provid in a te d nt l Pennsyl ania PPL El tric is bject to gulatio a a public utility by th PAPUC, d tain of it tr issi activitie ar bject to th jurisdiction of th FERC unde th Fede l Po Act PPL Electri deli electricity in it Pennsylvani ic ar aa d provide electricity pply to tail t in that ar aa a PLR und th Cu t Choi Act PPL El tric a organized in 1920 a Pennsylvani Po & Light Comp y LG&E headquartered in Loui ille Kentucky is wholly ed bsidiary of LKE d gulated utility gaged in th ge tion tr ission, di tributio d ale of electricity d di tributio d ale of natu l ga in Kentucky LG&E is bject to gulatio a a publi utility by th KPSC d tain of its tr issi activitie ar bject to th jurisdiction of th FERC und th Fede l Po Act LG&E a in rp ated in 1913 1 KU headquartered in Lexington, Kentucky is wholly ed bsidiary of LKE d gulated utility gaged in th gene tion tr ission, di tributio d ale of electricity in Kentucky d Virginia KU is bject to gulatio a a public utility by th KPSC d th VSCC d tain of its tr issi d wholesale power activitie ar bject to th jurisdicti of th FERC unde th Fede l Po Act KU it Kentucky t de th KU d it Virginia t unde th Old Dominion Po KU a in rp ated in Kentucky in 1912 d in Virginia in 1991 Segment Info matio (PP ) PPL is organized into th portabl gm ts a depicted in th ch t ab Kentucky Regulated which prim ily pr t th lts of LG&E d KU Pe sylv ia Regulated which prim ily pr ts th lts of PPL Electric d Rhode Island Regulated, which prim ily pr ts th lts of RIE "C porate and Other" prim ily include rp ate le l fi an ing sts, tain nall ated corp ate co t d tain - bl t in ed in nj ctio with the acquisition of RIE A mp ison of PPL s Regulated gm ts is shown belo Fo th year ded De be 31, 2025: Kentucky Pe ylvania Rhod Island Regulated Regulated Regulated Operating Re n (in billions) $ 3 $ 3 1 $ 2 2 Net In (i millio ) $ 674 $ 639 $ 85 Electricity deliv ed (GWh) 31,368 37,186 7,165 Natu l ga delivered (Bcf) 47 40 At De mb 31, 2025: Regulatory As t Ba (in billio ) (a) $ 13 6 $ 11 1 $ 4 Se ic ar a (i sq a miles) 8,000 10,000 1,200 Cu t (i millio ) 1 4 1 0 (a) Rep nt capitalizatio fo Kentucky Regulated d te ba for Pennsylvani Regulated d Rhode Island Regulated Th a nt for Pe n ylvania Regulated reflect timated 2025 ye nd te ba fo Pennsylvania electri di tributio Th a ount fo Rhode Island Regulated exclude acquisiti n- lated adju t nt for ning a ts Se Note 2 to th Fi an ial Stat m ts for additio l fi an ial informatio by gm t Se Note to th Fi ial Statements fo additio l n info atio (PPL El ctric LG&E and KU) PPL El tric ha two ope ting gm ts di tributio d tr ission which e aggregated into singl portabl gm t Each of LG&E d KU op ates a single op ating d portable gm t Kentucky Regulated Segment (PPL) Th Ke tucky Regulated gm sts pr m rily of th r gulated electricity ge r io r mi on and distribut o oper io nduc ed by LG&E and KU ll LG&E's r gulated distribut on and le of natural gas (PPL LG&E and KU) LG&E d KU ar gaged in th gulated gene ti tr issi di tributi d ale of electricity in Kentucky d, in KU' case al Virginia LG&E al gage in th di tributio d ale of natu l ga in Kentucky LG&E provide el tric ic to approxi tely 443,000 t d provide tu l ga ic to approxi tely 336,000 t in Loui ille d 16 r unding untie ring approxi tely 700 sq a mile KU provide electric ic to approxi tely 553,000 t in 77 untie in nt l, uthea te d t Kentucky d approxi tely 28,000 t in fi untie in uthw te Virginia ring approxi tely 4,800 non ontig sq a mile KU al ll wholesale electricity to tw nicipaliti in Kent ky und load following nt ct Franchi and Lic nse LG&E d KU provid electricity deliv y ice, and LG&E provide tu l ga di tributio ice in thei r spectiv ic territori pu uant to tain franchi es li tatutory ic a a nt d other right or pe issi n gr ted by tate legislat citie nicipalitie othe titie Competitio Th r ar r ntly no othe electric public utilitie ope ting within th el tric ic ar a of LG&E d KU Fr tim to time bills ar introduced into th Kentucky Ge l As mbly which ek to a th ize promot ndate in r a ed di tributed ge tion t er choi or othe de lopm ts Neithe th Kentucky Ge l As mbly th KPSC ha adopted approved pl timetable fo r tail electri industry mpetitio in Kentucky Th tu timing of legislativ gulatory actio if y, garding indu try re t ct ing d thei impact LG&E d KU which y be signific t, a n t r ntly be predicted Virginia fo ly de gulated jurisdicti ha a ted legislatio that impl m ted hybrid del of t-based gulatio KU' ope tio in Virginia have be na d in gulated Alte ativ n gy cha lectricity oil, propane d other fuel indi ctly impact LG&E s tu l ga n Marketer y al mpet to ll tu l ga to rtai larg d- LG&E s tu l ga tariff include ga pric pa -th ugh chanis lating to its ale of natu l ga a a m dity Theref e, cu t tu l ga pu ha fr alte ativ pplie do not ge lly impact LG&E s profit ability. So larg industrial d ercial cu t how y physically bypa LG&E s faciliti d ek deli ry ic di ctly fro inte tate pipeli or othe tu l ga di tributio syst Po Supply At De be 31, 2025 LG&E owned gene ting pacity of 2,466 MW d KU ned gene ting pacity of 4,798 MW Th syst pacity of LG&E s d KU s owned ge ti is ba d up l fact including th ope ting peri n d physical condition of th units d y be vi d periodically to reflect ch ge in ci t During 2025 LG&E s d KU s pow pl ts gene ted th following ount of electricity GWh Fuel So LG&E KU Coal 10,331 14,738 Gas 1,613 4,899 Hydro 220 10 Solar 12 Total (a) 12,172 19,754 (a) This gene ti pr t in r a for LG&E of 3% d in r a for KU of 5% fro 2024 output Th jority of LG&E s d KU s ge ted el tricity a ed to pply thei tail t ba LG&E d KU jointly dispatch thei ge tion units with th lo t t gene tio ed to thei t Wh LG&E ha x gene tio pacity afte ing it t d it ge ti t is lo th that of KU KU purchases electricity fro LG&E d vi a Du to vi tal quir ts n gy effi ciency a d th lativ t of pla m t a of De be 31, 2025 LG&E d KU ha tired appr imately 1,500 MW of coal-fir ed ge tio pl ts si 2010 LG&E d KU ived approval fro th KPSC to de lop 4 MW Sola Shar facility to ic a Sola Sh prog Th Sola Shar progr is volunt y progr that all t to bs ib capa ity in th Sola Shar facility Co tr ti m in 500-kil att pha es wh bs ipti is mplete Th ugh De mb 31, 2025 tr tio of fi 500- kilo att pha a mpleted LG&E d KU ntin to rket th progr m d are accepting bs ipti n fo th sixth 500-kilo att pha On No mb 6, 2023, th KPSC is ed an orde approving LG&E s d KU' De mb 15, 2022 CPCN qu ts (i) to tr t 645 MW t ting NGCC mb ti turbine at LG&E s Mill Creek Ge ting Statio in Jeff County, Kentucky (ii) to tr t 120 MW la photo ltaic el tric gene ting facility in Me Co ty Kentucky (iii) to acqui 120 MW lar facility to be built by third-party la develope in Mari County, Kentucky d (iv) to tr t 125 MW 4-hour batt y gy t age sy t facility at KU' E W. Br Ge ting Statio Th orde al a th ized LG&E s d KU' try into four pot tial la PPAs bject to tain nditi n but defe ed for futu proceedings specifi decisi n t ry treat nt ch is Ag m ts lated to tw of th fo potential la PPAs have be te inated On PPA ag m t a te inated by th develope due to land nt l is Th nd ag m t te inated cont ct lly due to PPA pric in r a that a not acceptabl to LG&E d KU Further, th de approved th w adju ted panded n gy effi ciency prog ntained in th qu ted 2024-2030 DSM plan Th KPSC orde included approval of th que ted ti nt of tw isting coal-fir ed ge tio its LG&E s Mill Cr k Unit 1 (300 MW) in 2024 which oc ed De be 3 2024 d Mill Creek Unit 2 (297 MW) in 2027, bject to tain nditio d th all ga -fired units LG&E bseq ntly qu ted for Mill Creek Unit 2 to in ope tio l pa t th 2027 date Th orde denied approval of th ti nt of KU' E W. Br Unit (412 MW) d Gh t Unit 2 (486 MW) in 2028 at this time citing th ed for additio l cl ity garding vi tal mplia gulatio Th w NGCC facility will be jointly ned by LG&E (31%) d KU (69%) d th la units will be jointly d by LG&E (37%) d KU (63%), th batt y t age unit will be ow d by LG&E d th proposed PPA tr actio d DSM progr will be te d into nducted jointly by LG&E d KU, istent with LG&E d KU s shared dispatch t allocation tariff r th fram orks In February 2024, LG&E d KU te d into ag m ts to begin tr tio of Mill Cr k Unit 5 Total project t timated at approxi tely $1.0 billion including AFUDC Co ercial ope tion of th facility is ticipated to begin in mid- 2027 Se "2025 CPCN d "Rat Ca Pr dings in Note 7 to th Fi ial Stat ts for additio l informatio th 2025 applicatio filed with th KPSC garding tain futu pl fo gene ti d gene ti elated co tr tio tte Fuel Supply Coal and natu l ga pected to be th pred in t fuel ed by LG&E d KU fo ge tio for th fore eable futu Natu l ga ed for ge ti is purcha ed ing nt ct l nge nt pa te fro LG&E s tu l ga di tributio ope tio Natu l ga d oil are al ed for inte ediate d peaking pacity d fl tabilizatio in al-fir ed boile Fuel inventory is intained at le ls timated to be ne y to a oid ope tio l di uptio at coal-fir ed ge ting units Reliability of coal deliv ie an be affe cted fr tim to tim by l fact including fl tuatio in de nd, coal mi productio is high or lo ri le l ts lock outages and othe pplie tr sp te ope ting or fi an ial diffic ulti LG&E d KU have te d into al pply ag ts with ari ppli for coal deliv ie th ugh 2030 d a gm t thei al pply ag m ts with spot rket pu ha es a eded Fo thei isting units LG&E d KU pect fo th fo bl futu to purcha t of thei coal fr t Kentucky uthe Indi a uthe Illi is rthe We t Virginia d t Pe sylv ia LG&E d KU ntin to purchase certain qu titi of ultr -lo lf nt t coal fr Wy ing for bl ding at Trimbl Co ty Unit 2 Coal is delivered to th gene ting pl ts prim ily by barg a d il To hanc th liability of natu l ga pply LG&E d KU have d fi long t pipelin tr sp t capacity ic with nt ct of vari du ti n th ugh 2056 on th inte tate pipelin ing Ca Ru Unit 7, si simple cycl mb tio turbines at th Trimbl Co ty site d th futu Mill Cr k Unit 5 This pipeline al th tw simple cycl units at th Paddy' Ru site Fo th simple cycle comb ti turbines at th E W. Br facility firm long t pipelin tr sp t capacity ha be purchased due to th facility s n ctio to tw inte tate pipelin a d of th units having dual fuel pability LG&E d KU have firm nt ct for portion of th tu l ga fuel for Ca Ru Unit 7 th ugh 2027 Th bulk of th tu l ga fuel is pected to be purchased th spot rket (PPL and LG&E) Natu l Ga Distributi Supply Four underg und natu l gas st age fields in ice with t rking natu l ga capacity of approxi tely 11 Bcf, ar ed to provid tu l ga ic to LG&E s firm ale t Natu l ga is t ed during th a fo withdra al during th following wint heating a n Without this t age capacity LG&E uld need to purchase additi nal tu l ga d pipelin tr sp tati ic during wint nths wh n t de nd in r a d th t of tu l ga pply d pipeli tr sp tati ic a pected to be highe At De mb 31, 2025 LG&E had 9 7 Bcf of natu l gas st ed underg und with rying valu of $3 millio LG&E ha portfolio of pply ng ts of varying te that pr id mpetitively priced tu l ga designed to et its firm ale obligatio Th tu l ga pply ng m ts includ pricing provisi n that are rket ponsiv In tande with pipeli tr sp tatio ic th tu l ga pplie provid th liability d fl ibility y to LG&E s tu l ga t LG&E purchases tu l ga pply tr sp tati ic fr tw pipeli LG&E ha t of nt ct with n pipelin that ar bject to te ination by LG&E betw 2028 d 2031 Total wint a capacity unde th nt ct is 184,900 MMBtu/day and a capacity is 60,000 MMBtu/day LG&E ha tw additio l nt ct with this a pipelin On nt ct is for pipelin pacity th ugh 2031 for 60,000 MMBtu/day during both th wint ra d m a Th othe nt ct is fo pipeli pacity th ugh 2028 for 30,000 MMBtu/day during th wint a LG&E ha tw nt ct with nd pipelin with total pacity of 40,000 MMBtu/day during both th wint ra d m a that expi in 2030 LG&E pect to pu ha tu l ga pplie fo it ga di tributio operatio fro onshor producing gions in South Tex Ea t Tex North Louisi n d Arka a a lla ga iginating in th Ma ellu d Utic prod tio ar a (PPL LG&E and KU) r missi LG&E d KU nt ct with th Te n Valley Auth ity to acta thei tr issi liability ordinato d nt ct with Tr Serv Inte atio l, In to a t a thei independ t tr ission organi ti n Rate LG&E is bject to th jurisdiction of th KPSC d th FERC, d KU is bject to th jurisdiction of th KPSC th VSCC d th FERC LG&E d KU ope te unde FERC pproved open a tr issi tariff Prio to Ja ary 1, 2026 LG&E s d KU s Kentucky ba te alculated ba d on tu capitalizatio (c equity long t debt d sh t-te debt) including adju t nt fo rtai t in t nt d t d pa tely th ugh othe Effe ctiv Ja ary 1, 2026, pu ant to th KPSC te case Kentucky ba te calculated ba d on tu te ba (net utility pl t plus tain gulatory a ts d rking pital le a umulated deferred in ta d tain gulatory liabilities) d include ry of applicable ope ti n d inte an pens KU' Virginia ba te ar alculated ba d on tu te ba (net utility pl t pl rtai gulatory a ts d rking capital le a lated defe ed in tax tain gulat y liabiliti a d mi ella deducti n ) d include ry of applicable ope ti n d inte an pens KU' te to tw nicipal t fo wholesale pow quir m ts e calculated ba d on al update to fo ul te that utiliz tu te ba (net utility pl t plus rking pital le a lated deferred in tax d mi ella ous deducti n ) d include ry of applicable op atio d inte an pens Se "Financial and Operatio l De lopm ts in "Combined Manage nt s Di si d Analysis of Fi an ial Conditio d Re lt of Op atio d Note 7 to th Fi ial Statem ts fo additio l informatio r nt te proceedings gulatory tte d te chanis Pe ylvania Regulated Segment (PPL) Th Pe ylvania Regulated gm sts of PPL El tric r gulated publ c tility gaged in th distribut on and r ssion of electricity (PPL and PPL El ctric) PPL Electri deliv electricity to approxi tely 1 millio t in 10,000 qu mile territory in 29 untie within a t d tral Pe sylv ia PPL El tric al provid electricity to tail t in this territory a a PLR unde th Cu t Choi Act Franchi and Li PPL El tric provide electricity deliv y ic in it ic te itory pur t to rtai franchi es lic ses, statut y ic a a nt d othe right or pe issi n gr ted by th Pennsylvani tate legislat e, citie nicipalitie or othe titie Competitio Pu uant to a th izatio fr th Co n alth of Pennsylvani d th PAPUC, PPL Electri ope te gulated di tributio nopoly in its ic ar a Ac rdingly, PPL Electri doe not fa mpetiti in its electricity di tributio busin Pu ant to th Cu t Choi Act, ge tion of electricity is a mpetitiv busin in Pe sylv ia d PPL Electri doe not own or op ate any gene tio faciliti Th PPL Electri tr ission busin ope ting de FERC pproved PJM Op Ac Tr issi Tariff is bject to mpetition pur t to FERC Orde 1000 fro titi that ar not in mb t PJM tr issi n n with spect to th tr tio d owne hip of tr issi facilitie within PJM Rate and Regulatio r missi PPL El tric s tr issi facilitie ar within PJM, which ope te th electricity tr issi nn twork d electri n gy rket in th Mid-Atlantic d Midw t gions of th U S PJM a a FERC pproved Regional Tr issi Operat (RTO) to promot greater participatio d mpetitio in th gion it In additio to op ating th electricity tr issi nn tw k, PJM al admini t gional rket fo n gy pacity d ancill y ic A prim y objectiv of y RTO is to pa te th ope tion of d a to th tr ission grid fro rket particip ts that buy ll electricity in th a rket Electri utilitie ntin to th tr issi a ts d to cei thei shar of tr issi n but th RTO di ct th nt l d ope tion of th tr issi facilitie Certai type of tr issi in t nt ar bj t to mpetitiv pr tlined in th PJM tariff PPL El tric s tr issi n billed in a rdan with FERC pp ved Op Ac Tr issi Tariff that utiliz a formul -ba d te ry chanis Unde this fo ula te ar put into ef ect Ja ary 1st of each ye ba d upon a tual expenditu fr th t tly filed FERC Fo 1, fo a ted capital additi n d othe data ba d on PPL El tric s books d rd Rate mpared during th ye to th ti ted al pens a d capital additio that will be filed in PPL El tric s al FERC Fo 1, filed unde th FERC s Unif Sy t of Ac unt Unde th chanism y diff betw th n quir m t in ef ect and act l pendit in r d for that ye is rded th lusi n f th te ye ha tr issi ic fr PJM Se "PLR belo a gulatory a t gulatory liability, d th gulatory a t gulatory liability is to be d fr tu ed to t s st ting one year af e As PLR, PPL El tric al pu Distributio PPL El tric s di tribution ba te ar alculated ba d on tu te ba (net utility pl t plus a h rking pital allo a le pl t- lated deferred tax d othe mi ella additio d deductio ). All gulatory a ts d liabilitie except a lated defe r d in tax are excluded fr th tu te ba Theref e tu is d th lated a ts unl s specifically provided for by th PAPUC. Cu r ntly PPL Electric' Sm t Meter ride d th DSIC th only ride a th ized to a tu Certai ope ting pe are al included in PPL El tric s di tributio ba te including age d benefits othe ope tio d inte an pe depr iatio d tax P nsylvania' Alte ativ En gy Portfoli St dard (AEPS) qui electri di tributio mp ie d electricity gene ti pplie to obtai fro alte ativ n gy portion of th electricity ld to tail t in Pennsyl ania Unde th default ic procur m t pl approved by th PAPUC, PPL El tric pu ha all of the alte ativ n gy gene tio pply it ed to mply with th AEPS Act 129 ated gy effi ciency d ati progr de nd side ge nt progr t tering technology qui nt PLR gene ti pply pr m t le di for rket mi onduct d change to th isting AEPS Act 11 a th iz th PAPUC to approve tw specifi te king chanis th of fully proj ted futu te t ye in ba te proceedings d, bject to tain nditi n th of DSIC Such alte ativ te king proced a d chanis provide opportunity for accelerated t y d, theref e important to PPL El tric a it is in period of signifi a t capital in t nt to intain d hanc th liability of it deliv y sy t including th pla m t of aging a ts PPL El tric utilized th fully projected futu te t ye ch is in it 2015 ba te proceeding PPL ha had th ability to utiliz th DSIC re ry ch is si July 2013 Se "Financial d Operatio l De lopm ts in "Combined Manage nt s Di si d Analysis of Fi an ial Conditio d Re lt of Op atio d Note 7 to th Fi ial Statem ts fo additio l informatio r nt te proceedings gulatory tte d te chanis PLR Th Cu t Choi Act qui electric di tributi mp ie including PPL El tric an alte ativ pplie approved by th PAPUC, to acta a PLR of electricity pply for t who do not ch to shop for pply witha mpetitiv pplie d provide that electricity pply t will be d by th PLR pur t to PAPUC gulati In 2025 th following average pe tage of PPL El tric s t load provided by mpetitiv pplie 40% of sidential, 81% of all ercial and industrial d 98% of larg ercial and industrial t PPL El tric s electricity gene tio t ar tablished ba d upon th lt of a mpetitiv licitation proc In No mb 2024, th PAPUC approved PPL El tric s default ic pl for th period of June 1, 2025 th ugh May 31 2029 which included total of eight licitati n fo el tricity pply held mi ally in February d July Th ugh De be 31, 2025 tw auctions of th pl mpleted Th pl al included licitatio for alte ativ n gy edits held ally in July with th first licitatio in 2025 d th fi l licitatio in 2029 Th ugh De mb 31, 2025, alte ativ n gy credit licitation ha be n mpleted Pu uant to th pl PPL Electri nt ct for all electricity pply fo sidential, m ial d industrial t wh elect to take default ic fr PPL El tric Th licitatio ntai mix of prod ts including 10-y a bl k n gy nt ct for residential t 12 d 24 th fix d-pric load-following nt ct fo r sidential d all m ial d industrial t 12 onth al tim pricing nt ct for larg m ial d indu trial t d alte ativ n gy credit nt ct for residential, ercial and industrial t Th nt ct fulfill PPL Electric' obligatio to provide t er electricity pply a a PLR Nu alte ativ pplie have of ered to pr id gene tio pply in PPL El tric s ic a a As th t of ge tio pply is pa through t for PPL Electric it fi ial lts not impacted if its t pu ha electricity pply fro th alte ativ pplie Rhod Island Regulated Segm (PPL) Th Rhode Island Regulated gm sts pr m rily of th r gulated electric ty r mission and distribut on oper io and r gulated distribut on and le of natural gas ndu ted by RIE RIE is gaged in th gulated tr issi di tributio d ale of electricity d gulated di tributio d ale of tu l ga in Rhode Island RIE provide electri ic to approxi tely 515,000 t d natu l ga ic to approxi tely 280,000 t RIE' ic ar a bstantially all of Rhode Island Franchi and Li RIE provide electricity deli ry ic a d natu l ga di tributio ic in its ic territory pur t to tain fra hi es lic ses, statutory ic a a a nt d other rights or pe issi n gr ted by th Rhode Island tat legislat e citie nicipalitie or othe titie Competition Th r ar r ntly no othe electric or ga public utilitie ope ting within th ic ar a of RIE Alte ativ n gy cha lectricity oil, propane d other fuel indi ctly impact RIE' tu l ga Marketer y al mpet to ll tu l ga to rtai larg d- RIE' tu l ga tariff include ga pric pa - th ugh chanis lating to it ale of natu l ga a a m dity Theref e, cu t tu l ga purchases fro alte ativ pplie do not ge lly impact RIE' profit ability So larg industrial d ercial cu t how y physically bypa RIE' faciliti a d ek deliv y ic di ctly fr inte tate pipeli or othe tu l ga di tributio syst Rate and Regulation In ge l, RIE ope te bject to th jurisdiction of th FERC th RIPUC d th Rhod Island Division of Public Utilitie d Carri Distribution RIE n d intain electric d natu l ga di tributio n tworks in Rhod Island Di tributio ar prim ily fro th ale of electricity tu l ga d lated ic to tail t Di tributi ale gulated by th RIPUC, which is sp sibl fo approving th te d othe te of ic a part of th te king proc Natu l ga d electric di tributio n ar derived fr th gulated ale d di tribution of electricity d natu l ga to sidential, m ial, d industrial t within RIE' ic te itory unde th tariff te Th tariff te approved by th RIPUC ar designed to th t in r d by RIE for products d ic pr ided al g with tu in t nt RIE' di tribution ba te alculated ba d tu te ba (net utility pl t pl ash rking capital allo a le pl t- lated deferred tax d othe mi ella additio d deductio ). All gulatory a ts d liabilitie except a lated defe ed in tax are excluded fr th tu te ba Theref e tu is a ned on th lated a ts unl s specifi ally provided fo by th RIPUC. Cu tly RIE' ISR d Re bl En gy Gr th Prog adju t nt chanis ar th only chanis a th ized to tu Certain op ating penses are al included in RIE' di tribution ba te including age d benefits othe ope ti d inte pens depreciation d tax r missi RIE n an electric tr issi syst in Rhode Island RIE' tr issi ic ar gulated by th FERC d ordinated with ISO New Engl d Defe l Mechani RIE rd n in a rdan witha ting principl fo te egulated op atio fo ng m ts betw RIE d th applicable gulat Th includ ari deferral chanis ch as capital tra ke n gy effi ci cy progr d othe progr that qualify a Alte ativ Re Progr (ARPs) ARPs enable RIE to adju t te in th futu in sp n to pa t activitie mpleted ts RIE' el tric d ga di tributio te both have nue de upling ch ism which allo for al adju t nt to th RIE' deliv y te a a lt of th iliatio betw allo d n a d billed n RIE al ha othe ARPs lated to the achie nt of tain objectiv de nd side nage nt initiati d tain othe r te king ch is RIE gniz ARPs witha r sponding of set to gulatory a t liability a unt wh th gulatory specified events nditio have be t, wh th nt ar dete inable d ar probabl of ry (or paym t) th ugh futu te adju t nt LRS RIE is quired by th RIPUC d by tatut to provid LR to all t wh ha t elected to cei thei electri pply fro egulated po produc y t who for y a has stopped ceiving ge ti ic fro r gulated pow produc The charge for LR is th of th applicable LR charge in additi to all appropriate Retail Deliv y charge a tated in th applicable tariff Th nthly charge fo LR al includ th t in r d by RIE to mply with th Re bl En gy St dard tablished in Rhode Island Ge l La Section 39-26-1 d th t to mply with th RIPUC' Rule Go ing En gy So Di lo Th charge fo LR include the admini t ti t a ciated with th procur t of LRS, including adju t nt for uncollectible a ts a approved by th RIPUC Nu alte ativ pplie have of ered to pr id gene tio pply in RIE' ic a a As th t of gene ti pply is pa through t for RIE, it fi an ial lt ar t impacted if its t pu ha electricity pply fro th alte ativ pplie Se "Financial d Operatio l De lopm ts in "Combined Manage nt s Di si d Analysis of Fi an ial Conditio d Re lt of Op atio d Note 7 to th Fi ial Statem ts fo additio l informatio r nt te proceedings gulatory tte d te chanis Natu l Ga Distributi Supply To et th projected an al ga pply qui nt of approxi tely 35 Bcf, RIE ha portfolio of ga pply nge nt of varying nt ct l te d duratio to provide ic to its t Th tu l ga pply nge nt include nt ct with tu l ga produc d rketer that reflect rket pric signals RIE al ha firm pipelin a d underg und t age capacity nt ct to pport th deli ry of tu l ga pplie to it t To nage th wint peak quir m ts for RIE t RIE nt ct for liquified tu l ga (LNG) ic a d d ope te rtai LNG t age facilitie Th RIE ga pply portfolio includ nt ct fo firm tr sp tati ic with eleven inte tate pipeli mp ie d tu l gas st age ope to Th nt ct ha ari te ination date with tain nt ct being bject to gr al provisions providing RIE with fl ibility in naging it upstr a portfolio RIE ha purchased and pect to ntin to purchase tu l ga pplie fo its ga di tribution ope tio fr sh producing gions a d by it pipeli capacity portfolio in South Tex Ea t Tex d Louisiana, as lla ga iginating in th Ma ellu d Utic productio a RIE pect to purchas tain tu l ga pplie that iginat in Canada d fro gional LNG import te inal Corp ate and Othe (PPL) PPL Se ic provid PPL bsidiari with admini t ti nage nt d pport ic Th t of th ic ar charged di ctly to th spectiv cipi ts for th ic provided indi ctly ch ged to applicable cipi ts ba d a age of th cipi ts lati in ted capital, op atio d inte an pe a d numbe of ploy tio of ll di ct and indi ct co ts PPL Capital Funding provide fi an ing fo th ope tions of PPL d rtai bsidiari PPL s growth in te egulated busin provide th organizatio with an hanced corp ate le l fi an ing alte ative th ugh PPL Capital Funding, that enable PPL to t ef ectively pport targeted credit profile a all of PPL s ted mp ie As lt, PPL utiliz PPL Capital Funding a of pital in fi an ings in additio to ntinued di ct fi ing by tain ope ting bsidiari Unlik th of PPL S vi PPL Capital Funding' t ar not gene lly ch ged to PPL bsidiari Co t charged di ctly to PPL ENV RONMENTAL MATTERS (All Registra ts) Th Regi t nt ar bject to rtai isting d developing fede l, gi al tate and lo al la d gulatio with spect to ai d ate quality land us d othe vi tal tte d y be bject to diff t d tringent la d gulatio enacted in th futu Th EPA d other fede l agenci with jurisdicti r vi tal tt have is ed vi tal gulatio lating to air, ate d a t that di ctly affe ct the electri pow industry. Du to th vi tal is it y be ne ary fo th Regi t nt to dify a tain op atio ope tion of tain facilitie to mply with tatut gulatio d othe r qui nt of gulat y bodi ts In addition legal challeng to vi tal pe its le add un tainty to timating futu t of mplying with ch pe its d le Th Regi t nt ar nitoring utiv de d othe ongoing actions by th Pr id tial admini t tion but ar able to predict change in gulatio gulatory guidance legal interpretati n policy positio d impl m tatio actio that y lt Se "Legal Matte in Note 12 to th Fi an ial Statem ts fo di sion of vi tal itm ts d ntingencie Se Note 18 to th Fi an ial Stat m ts for informatio lated to th impact of CCRs AROs LG&E d KU ar titled to r, th ugh th ECR chanism rtai t of mplying with th Cl a Ai Act, a ded, d other fede l, tate and local envi tal qui nt applicable to coal comb tio a t a d by-p ducts fro coal-fir ed ge ting facilitie upon KPSC vi Co t not d by th ECR chanis for LG&E d KU d all ch co t fo PPL Electri a d RIE ar bj t to te ry at th di tion of th mp ies' spectiv tate gulatory a th itie th FERC, if applicable Be PPL Electri a d RIE do not own y gene ting pl ts they ha le posur to lated vi tal mplian ts Th Regi t nt a provid a a to th ulti te out of futu proceedings before regulat y a th itie (PPL LG&E and KU) EPA De gulat y Initiat On Ma h 12 2025, th EPA n ed pl to id 31 vi tal le including th Sectio 1 1 perfo an t dard d issi n limits for gr hous ga es th dange t finding fo gr nhous ga es th Good Neighbor Pl th Me ury d Ai Toxi St dard visi n to th fine particulate tt t dard th ELG d th CCRs Rule Suppl m ting pr io Ex tiv Orde di cting vari gulatory ch ge April 9, 2025, Pr id t Tr p is ed an Ex tiv Orde d Pr id tial Me ndum di cting vi of isting le peal of unlawful le d initiation of z -based budgeting proc by which tain le uld a to tically pi unl tended While th t Pr id tial admini t tio y ek to impl t gulatory change tsid of th le king pr change to isting le ge lly pected to quire formal le king proceedings Any fi l EPA actio pealing or vising r nt le will likely lt in legal challeng PPL, LG&E d KU ar able to predict futu gulatory ch ge if y, that y lt fro th EPA de gulatory pl th tc of y a ciated legal challeng PPL LG&E d KU e cl ely nitoring th ongoing EPA initiativ a d y lated litigatio for th impact to our busi including pl ned capital penditu to mply with th EPA le Ai NAAQS Applicable gulati n quir each tat to id tify a within its boundari that fail to et th NAAQS (k a attain nt ar a ), d develop tate impl m tation pl to achie d intain mplian States that ar found to ntribut signifi a tly to othe tate' ttain nt with z t dard ar quired to tablish "good ighbor tate impl m tation pl In addition for attain nt of ozone d fine particulat t dard tain tat including Kent ky bject to gional EPA progr known a th Cr -State Ai Pollutio Rule (CSAPR). Th Cl a Ai Act ha signifi ant impact th op atio of fossil fuel ge tion pl ts Th Cl a Ai Act quir th EPA periodically to tablish d vi NAAQS for six pollutant including ozone (contributed to by nitrogen oxide issi n ) d particulate tter, which ar particul ly le ant for fossil fuel gene tion pl ts On February 2, 2024, th D C Ci uit Co t gr ted th EPA ti fo volunt y nd, without vacat of th z n le which a unde legal challenge Th EPA will mplete vi to in rp at tudie d updated analys to dete in the adeq acy of th isting z n t dard On Ma h 6, 2024 th EPA fi lized visi n to th particulat tt t dard that lo th prim y t dard fo fi particulates Se l tates and trade group challenged th EPA fi lized visi to th particulate tt t dard in th D C Ci uit Co t In Ma h 2025, th EPA n ed that it uld id th vi d fi particulat t dard On No mb 25 2025, th EPA filed ti in th D C. Ci uit Co t to acate th fine particulate t dard Th D C Ci uit Co t ha not sp ded to th ti d vi tal groups have filed sp agai t th tio No ttain nt designatio for ti in which LG&E d KU gene ti is located including Jeff County, Kentucky uld pot tially qui additio l particulate tte d nitrogen oxide ductio fr including LG&E s Mill Creek Station d tringent qui nt for gene tio PPL, LG&E d KU ar unabl to predict futu impl tatio a tio th out of futu eval ations by th EPA d th tates with spect to th NAAQS t dard In Ma h 2021, th EPA leased fi l visi n to th Cr -State Ai Pollutio Rule (CSAPR), ai d at ring mplian with th 2008 ozone NAAQS d providing fo r ductio in z n a on nitrog id issi for 2021 d bsequent ye In Ma h 2023, th EPA leased a fi l Fede l Impl tatio Pl unde th Good Neighbo pr isio of th Cl a Ai Act providing for signifi ant additi nal nitrogen oxide issi ductio fo mpli with th vi d 2015 z NAAQS Th ductio in Kentucky tat -wide nitroge id budget heduled to m in 2023, with th larg t ductions pl ned for 2026 Th le provid fo r duced availability of nitrog id allo a that have hi t ically pe itted ope tio l fl ibility for fossil units d uld pot tially lt in traint that y qui impl tatio of additio l issi nt ls accelerate impl m tation of lo ission gene ti technologi In Ju 2024, th U S Supr m Co t is ed a tay of th Good Neighbor Pl while th D C. Ci uit Co t id legal challeng to th le On De be 10, 2024, EPA published in th Fede l Regi t ra ppl m t to th rd On De mb 6, 2024, th U S Co t of Appeal for th Sixth Ci uit a ated d nded th EPA di pp al of Kentucky's state impl m tation pl for th z n NAAQS In Ma h 2025, th EPA n ed that it uld id th Good Neighbor Pl On Ja ary 27, 2026, th EPA leased proposed Pha I Good Neighbo Pl visi providing fo approval of tain tate impl m tation pl including that of Kentucky d withdra ing l prio di pp als d r ctio PPL LG&E d KU ar nitoring ongoing legal d gulatory developm ts PPL LG&E d KU ar unabl to predict th ulti te out of pending litigatio futu issi ductio that y be quired by future fede l le tate impl m tatio actio Complia with th NAAQS CSAPR, Good Neighbor Pl d lated qui nt y qui in tallation of additio l pollutio nt ls or othe mplia a tio incl iv of tir m ts th t of which PPL, LG&E d KU belie uld be bject to te ry Modifi tion of Me y and Ai Toxics Stand ds In 2012, th EPA is ed th Me y d Ai Toxi St dard (MATS) le quiring ductio in y d othe haz dous ai pollutant fro fo il fuel-fir ed pow pl ts LG&E d KU in talled signific t nt ls to achie mplia with MATS d othe r le On May 7, 2024, th EPA is ed a fi l le in r a ing th tringency of MATS d furthe ducing issi of tain haz rd ai pollutant to reflect pe eived developm ts in nt l tech logi Legal challenge to th le have be filed in th D C Ci uit Co t PPL LG&E d KU have vi ed th fi l le d do not pect signifi a t ope tio l change additi nal nt ls to be quired On Ju 17 2025, th EPA prop ed in th Fede l Regi t to peal th 2024 MATS visi n pt for th Particulat Matt Contin Emissi Monitoring Sy t te ting iteria Greenhou Ga Standards On May 9, 2024 th EPA is ed a fi l le unde Sectio 11 of th Cl a Ai Act, which tablishe perform t dard d issi n limits ai d at ducing GHG issi n fro tain w isting d dified fo il fuel-fir ed el tric ge ting units (EGUs) In th fi l le th EPA d it uld t performan t dard fo isting natu l ga -fired turbin in futu r le Th t dard quir phased impl tatio of a bon mitigatio technologi including tat -of the- t effi ci cy qui nt a bon captu d qu tration d natu l ga -firin g New tu l ga EGUs uld be im diately bj t to th tricter effi ci cy t dard Legal challeng to th le have be filed in th D C. Ci uit Co t PPL LG&E d KU ar unabl to predict th impact of w GHG ducti qui nt until mpleti of mp hensiv vi d lution of lated legal d gulat y proceedings While th impact of w GHG ductio quir m ts ope tio d fi an ial lt of ope ti n uld potentially be bstantial, th t of mplying with ch qui nt is pected to be bj t to te ry On June 17, 2025, th EPA prop ed in th Fede l Regi t two opti fo peal of th 2024 t dard In th first prop al th EPA uld dete in that EGU issi of gr hous ga do not pos a dange t to th health d lf of th publi a d peal th 2024 d 2015 t dard for EGUs Unde an alte ate propo al, th EPA uld peal th 2024 t dard fo isting al tu l-ga d oil-fired t a ge ting units al g with t st dard for mb tio turbin On Febr ry 12, 2026, th EPA is ed fi l ideratio dete inatio pealing th 2009 dange t finding for GHG issi fro to vehicles which provided pport for th gulati of GHG issi n Whil the action ha im diate impact gulation of GHG issi fro electric ge ting its th EPA is pected to take additi nal gulatory actio with sp t to that indu trial ct PPL, LG&E d KU n bl to dete in the exact impact on ope tions until lution of pending gulatory a ti n d litigatio Cli te Change (All Registra ts) In t ye th fede l gov t ha undertaken ari ef ort ai d at addr sing climate ch ge which uld ha fa - aching impact PPL' busi ope tio prod ts d ic In 2022, th U S. Supr m Co t led that provisions of th EPA Cl a Po Pl pr ised on gene ti shifting fr coal-fir ed pl ts to lo itting tu l ga -fi d pl ts d bl exceeded th a th ity gr ted to th EPA unde th Cl a Ai Act While th EPA nt ds that th w GHG issi le di d ab is istent with th provisions of th Cl a Ai Act, it is n tain ho ling fro th D C. Ci uit Co t if appealed th U S. Supr m Co t y affe ct th w GHG issi le d y futu EPA le king on GHG issi n Th r nt Pr id tial admini t tio ha is ed ari x tiv orde garding climate change initiativ a d is pected to ntin to ider ch ge in gulatio gulatory guidance legal interpretatio policy positio d impl m tatio a tio but th Regi t nt able to predict th change that y ulti tely be adopted Th developm ts ar ge lly prelimin y or ongoing in tu d th Regi t nt a not predict th fi l out or ultimat impact on op atio PPL ha adopted a goal of net-z arb issions by 2050, which PPL pect will includ ntinuing to ti n ic ge tion, deploying ne gene ti technology d in ting in arch and in ati that will help to achie this goal, whil intaining liabl a d affo rdable gy in ic territori Th t-z o goal late to di ct and indi ct carbon issi n istent with Gr nh Ga Protocol guidan d fe ed by th EPA Cent fo Corp ate Climate Leadership Achi m t of our issions goal y be affe cted by fact that are tsid of nt l including pot tial load growth pecially fro larg load t n gy policy d gulatio at th tat a d fede l le l, technological de lopm ts d th t of ne ge ti tech logy PPL is a ar of th ari risk a ciated with climate change including in r a d frequency d rity of athe To addr th risks, PPL ntin to rk to ad an grid de izatio d impr th mp y' equipm t to help mitigat th impact of tr athe ts d improv liability Water/Wast (PPL LG&E and KU) Cl Wate Act Regulations unde th fede l Cl a Wate Act dictate pe itting d mitigatio quir m ts for facilitie d tr tio project that impact "W ter of th United States" Many othe r qui nt late to pow pl t ope tio including th treat nt of pollutant in effl uent prio to di harge th temp at of effl nt di harg d th lo ation, design d tr tion of oling ate intake t ct es at ge ting facilitie d t dard intended to protect aq ati organi that be trapped at or pulled th ugh oling ate intake t ct es at gene ting facilitie Th qui nt uld impos signifi a t t for LG&E d KU which pected to be bj t to te ry A proposed le definitio visi a is ed in No Cl Wate mb 2025 A fi l le is pected by th Act Jurisdicti d of 2026 Envi tal groups d othe have clai d that di harg to ground te fr leaking CCR impoundm ts at po pl ts ar bj t to Cl a Wate Act pe itting On April 12, 2019, th EPA leased gulatory clarificatio finding that Cl a Wate Act jurisdiction doe not ch di harg to groundwater On Ja ary 23, 2020, th EPA n ed fi l le difying th jurisdictio l op of th Cl a Wate Act Th a n ed le vi th definition of th "W t of th United States," including visi to clud ground ater fro th definitio In April 2020, th U S Supr m Co t is ed a ling that Cl a Wate Act jurisdictio y apply to tain di harg to ground ate that lt in th fu tio l equivalent of di ct di harg to navigabl ate In De be 2025 propo d visi to th definitio of "W t of th United States", th EPA cl ified groundwater ex lusi n d fi l le is pected by th d of 2026 PPL LG&E d KU ar na a of y unpe itted lea fro their facilitie that are bject to Cl a Wate Act jurisdicti but futu gulatory de lopm ts d judicial lings uld pot tially bject certain lea fr CCR impoundm ts d landf lls to additio l pe itting d diatio qui nt which uld impo bstantial ts Any a ciated co t ar pected to be bj t to te ry PPL LG&E d KU unabl to predict th out fi an ial impact of futu r gulatory pr dings d litigatio Wate of th U.S PPL LG&E d KU ar bject to pe itting d mitigatio qui nt fo rtai tr tio activitie that impact "W ter of th United States " On April 21 2020, th EPA d U S Army Corp of Engine published fi l le vising th definition of "W ter of th United States to exclude jurisdicti n tain rf ate On August 30, 2021, U S Di trict Co t in Ariz a ated d nded th le On De be 7, 2021, th EPA d U S Army Corp of Engine propo d to peal th le d t th definitio of "W t of th United States that a in pla prio to 2015 On Ja ary 18, 2023 th EPA d U S Army Corp of Engine published fi l visi to th le broadening th definitio of Wate of th United Stat d rting to th pr -2015 gulatory fr ork Although th broade definiti in rp ates additio l ate bodi y lting pe itting, tr tion d ope ti nal pens ar pected to be im terial and bject to te ry On May 25, 2023 th U S. Supr Co t is ed an opinion in Sackett EPA holding that th go nt s jurisdictio to gulate tlands und th Cl a Wate Act tends to tlands witha ntin rfa n ctio to bodi that are "W ter of th United Stat " On Sept be 8, 2023, th EPA is ed a conforming le that in rp ated th holding of Sackett into fede l definitions of ate of th United Stat tat a d industry gr ps have challenged th nforming le a ll By limiting ate bodi that fall within th jurisdiction of th Cl a Wate Act, th U S. Supr m Co t' decisi uld du th numbe of project th op of project activitie bj t to fede l pe itting for tland A prop ed le garding visi of th definiti a is ed in De be 2025 A fi l le is pected by th d of 2026 PPL LG&E d KU ar unabl to predict th out of t futu litigatio gulatory pr ding but do not pecta terial impact on operatio Superfund and Other Re diatio (All Registra ts) Fr tim to time PPL' bsidiari undertake te ting, nitoring or dial actio in sp n to spills or othe lea at ari ite d of -site lo ati n negotiate with th EPA d tate d lo al ag cies garding a ti n n y to mply with applicable quir ts gotiate with property owne d othe third partie alleging impact fro PPL s op atio d undertake simila actio n ary to lv vi tal tt that aris in th of l ope ti n Ba d analys to date lution of th vi tal tt is t pected to have signific t ad impact th ope tions of PPL PPL Electric LG&E KU d RIE Futu cleanup or diatio rk at site not yet id tified y lt in signifi a t additio l t fo th Regi t nt In policies intained by LKE y be a ailabl to rtai t othe obligatio lated to th tte for LG&E KU, but th nt of in ge imbu t a not be ti ted or a d Se "Legal Matte in Note 12 to th Fi an ial Statem ts fo additio l informatio (All Registra ts) HUMAN CAP TAL PPL togeth with its bsidiari is mmitted to fo t ing an x ptio l rkpla fo ploye PPL pledge to enable th of its r nt d futu rkf by ring afe d healthy rk vi t, ltivating pp tive pow ing d llab ativ lt e, enco aging ploye gage nt d fo t ing prof si nal developm t Matt lated to th prioritie d rp at ltu n by PPL s nior ge nt which provide update to th PPL Bo d of Di ct (the Bo d) Pu ant to its ch ter, th Peopl a d Comp ati Committ of th Bo d al periodically vi d a th mp y's st tegy for hum capital nage nt PPL s in t nt in th of its rkforc is bodied in th following ar a with dedi ated leadership d Bo d ove ight Safety d Complia PPL is mmitted to intaining an ethical and afe rkpla lt fo ploye a d nt ct Additio l tep to th Bo d ha ight in th ar a includ Safety PPL impl m ts progr fo d on health d afety including m gency prepared vehicle afety d accident pr ti n Employ iv afety training d ar aged to share impl m t, d follo be t pra ti PPL quir nt ct rk practic to et exceed PPL afety qui nt d all applicable afety t dard Senior nage nt cei nthly afety data update to dete in whethe additio l afety a should be impl m ted Th Bo d vi th mp y' afety progr d lt l tim ye Th Bo d is al im diately gaged in th t of fatality Complia Th Corp ate Compli Co ittee including nior x ti et qu terly to di tric d othe tte r lated to th mplia a d ethi ltu Am g th it di d tatisti garding Ethi Helplin ports d ploye This info atio is al viewed with th Audit Committe of th Bo d qu terly d with th Bo d ally Corp at ltu Fo t pporti pow ing d llaborativ rkpla lt in which ploye with arious backgrounds a thri Senior nage nt vi rkforc tric lt lated objectiv a d a ciated progr mi n ally Th Bo d al cei periodi update fr nior nage nt on PPL s t tegy d initiativ that driv rp at ltu Employ gage nt Create a rkpla that fo t gaged, high-q ality rkforc PPL s ope ting mp ie gul ly nduct a ts lated to ploye gage nt afety d lt Senior nage nt vi ploy gage nt ef ort with th Bo d at lea t ally Prof si nal developm t In t in th r nt d futu rkforc th ugh training d developm t, si pl ning d creation of pipeli fo inte al ad an m t Senior nage nt vi sion pl ning with th Peopl a d Comp atio Committ of th Bo d on al basi Comp hensi be fits In additio to challenging a d mpetitiv alari PPL of ers mpetitiv benefits progr to attra t d tain talent d pport ploye ll-being PPL of e mpetitiv acatio ti panded lea fo pa nt tir m t progr d inte al d te al developm t opportunitie including tuitio imbur nt offering for derg duat d rtai grad te degr Senior nage nt nducts al benchm king of ploye mp ati d benefits PPL will ntin to gage with ploye d to a th prioriti a rk to be t positio individuals d th mp y for futu PPL had tu te of 10.83% for th year ded De mb 31, 2025 Looking fo d, PPL will intain t ng fo rkfo pl ning to addr futu talent ed At De be 31, 2025 th Regi t nt had th foll ing full tim ploy d ploy pr ted by labor uni Total Full-Time Numb of Union Pe tage of Total Employe Employe Workfo PPL 6,546 2,368 36 % PPL Electric 1,378 902 65 % LG&E 908 57 64 % KU 720 107 15 % (PPL) In May 2025 PPL d th Rhode Island United St lw kers (USW) Local 12431 a hed fi -y a tentativ ag m t that a tified d ef ectiv fr June 2, 2025, th ugh June 2, 2030. The ag t r ntly approxi tely 300 ploye (PPL and LG&E) LG&E s r nt ll tive bargaining ag m t with IBEW Local 2100 which approxi tely 600 ploye is heduled to pi Octobe 1, 2026. It is pected that th partie will be gaging in negotiati n for nt ct prio to that date CYBERSECURITY (All Registra ts) Pr for Id t fying As ing and Ma ging Ma erial Risk fr m Cyber rity Thr ats PPL s Chief Se rity Offi (CSO) is sp n ible fo tablishing, impl m ting d uting PPL s cybe -risk nage nt t tegy for PPL d th othe Regi t nt d ports to PPL s Ex utiv Vi Pr id t d Chief Technology d In atio Offi Th CSO ha 30 ye of peri n leading tech logy d rity organizatio ha degr in mput ie e, and holds prof si nal rtific atio in informatio rity ITa diting, d privacy He is al memb of tio lly d inte atio lly gnized indu try d rity ganiz tio including th Informatio Sy t Audit d Cont l As ciation Inte atio l As ciatio of Privacy Prof si al d th Do tic Se rity Allia Co n il Th CSO ha sp n ibility fo d ove te mpri d of a ed expert in cybe d IT rity who pos appropriate peri n to afeguard th mp y' data tworks d syst mitigate cybe risks d help pr t d mbat cybe th at Reporting to th CSO ar PPL s Chief Technology Se rity Offi (CTSO) d th VP of Corp ate Se rity Th CTSO ha 25 ye of peri n is a tifie d informatio rity prof si al d nage PPL' cybe rity ope tio eeing th impl m tation of rity t tegi a d lutio a th Regi t nt th at ge nt a nage nt cloud rity d tificial intellig n Th Regi t nt nage cybe ity risks th ugh nitoring, defe a d sp n tool including independent third-party a ts inte ala dit a nt of th prog m' ef ectiv n intelligenc ports cybe rity th at tr ds impl m tation of go dels indu try llaboratio d ploye training d a a n Th Regi t nt a tively gaged in cybe rity lated industry fo public-pri ate part hips with la fo m t, -industry pe groups d othe ef ort to help improve th protection of th U S electri grid Th Regi t nt utiliz nitoring tool including but t limited to cybe rity incident d t nage nt pe tratio te ting, intr ion detectio d pr tion, vulne bility a nt d ti ir syst to detect al suspicio syst rn tw k activity Th Regi t nt y al be a a of pot tial cybe rity t incident th ugh ploye ports notification by third-party ic provide or busin part with pot tial impact to th Regi t nt thei syst t or notific ation by gove nt ag cy Th Regi t nts' bj t tte specialists fro a th terpri provide input d pertis into risk gove an proc es including cybe rity informatio technology legal, mplia e ope tio d terpri risk nage nt In de loping thei cybe ity prog th Regi t nt ar guided by ari fram orks including th NIST Cybe rity Fr ork, lunt y fram k that co ists of t dard guidelin a d be t practic fo naging cybe rity risk that is widely ed by itical infra t ct industrie to help dete in a d addr th high t priority cybe rity risks Th Regi t nt nduct gul inte al cybe rity a dits d vulne bility a ts d gul ly gage with third-party cybe rity pert fo te ala ts of thei cybe rity nt ls including technical physical d cial aspect to bette mp hend th op a d gnitude of activ th at to th industry d tio d thei pot tial impact n sy t Th CSO chai th Corp ate Se rity Co n il, isting of nior x ti nage nt which n gul ly to d vi d ove cybe rity risks PPL d th othe Regi t nt al intain pr to vi th cyber risks that is fro th of third-party ic provide a lla progr d proced to mitigate ch risk inte ally d to a th tent to which ch provide ef ectively nage thei cybe risks PPL ha tablished Ex tiv Crisis Te mpri d of PPL s x utiv lead ship including th CLC d additio l offi as ci tan y a r nt to allo th mp y to spond quickly to a isis including a cybe t This te gov d nag rp ate crisis prepared a th busin lin ope ti n d fu ti n Material pot tially terial risks are escalated to th Ex tiv Crisis Te m d othe appropriate lead ship for revi d actio Al th Regi t nts' rkfo dertak ndatory role-based an al training on id tifying, porting, d escalating cybe d physical rity to furthe a sist in th id tification of risk a lla the acceptabl of rp ate electroni Additio lly all ploy d nt ct qui d to participat in th Regi t nts' ethi al cybe phishing paign progr m d mplete al cybe rity a ar n training y In additio to th terpri id initiativ PPL s Kent ky Pennsylvani d Rhode Island operatio bj t to te iv a d rigorous ndatory cybe rity quir m ts that are developed d fo ed by NERC d approved by FERC to protect grid rity d liability LG&E is al bj t to tain rity di ctiv lated to cybe ity is ed by th Depart nt of Ho land Se rity s Tr sp tati Se rity Admini t ti in 2021 Se Note 12 to th Fi ial Statements for additio l informatio th di ctiv Th Regi t nt have be bj t to attempted cybe ity th at d will likely ntin to be bject to ch attempts in th futu While PPL ha t dete ined that y cybe rity incident ha terially affe cted th Regi t nt including thei busin s st tegy lts of ope ti fi an ial ndition th a be no gua nt that th Regi t nt will not be th bject of futu attack th at incident th eq n of which y be terial O r ight of Cyber ity Risks by th Board of Di t and Ma ge nt PPL s Bo d of Di ct (the Bo d) ove th Regi t nts' nage nt of cybe rity risk th ugh vari proc id tified belo Th Bo d ha di ct ight of th Regi t nts' cybe rity prog th ugh periodi ports fro th CSO, at lea t twic ye garding cybe rity tte d risk a lla th adeq acy and ef ectiv n of cybe rity risk nage nt progr Th ugh th ports th Bo d nito th Regi t nts' progr proc d proced lated to cybe ity Th Bo d ha di cted th CEO d CSO to promptly inform th Bo d in th t of terial pot tially terial cybe ity t Each mb of th Bo d ha a to nage nt including th CEO d CSO, to a k que tio d gage in th mp y' approach to pr t, detect a ess d mitigate cybe rity risk PPL' Bo d ha l Bo d memb with peri n in cybe rity including one witha tificate in Cybe -Risk Ov sight fro th Natio l As ciation of Corp ate Di ct A prim y fu tio of th Audit Committ is to a si t th Bo d in th ight of th id tification a t d nage nt of risk Cybe rity risks ar included in PPL' terpri risk nage nt proc d ar ported to th Audit Committe of th Bo d on quart ly basis frequently a eded Comb ned Manage nt's D s d Analysis of F a Cond t d Re t of Operat o (All Registra ts) Th following should be ad in njunctio with th Regi t nts' Co olidated Fi an ial Stat ts d th a mp ying Note Capitalized te d abbr iatio ar defined in th glos ary Dolla ar in millio pt pe sh data le othe is noted "Management' Di si d Analysis of Fi ial Conditio d Re lts of Op atio includ th foll ing informatio "O iew" provide de ription of each Regi t nt s busi s st tegy d di sion of import t fi an ial d ope tio l developm ts "R ults of Op atio for all Regi t nt includ a "State nt of In Analysis," which di ses signifi a t change in principal lin ite th Statements of In mp ing 202 with 2024 Fo PPL "R ults of Operatio al include "Seg nt Ea ings," which provide detailed analysis of a ings by portable gm t Th di si n includ th -GAAP fi ial a "E nings fr Ongoing Operatio d provide planation of th -GAAP fi an ial a a d iliatio of th a to th t mparable GAAP a "Financial Conditi Liquidity d Capital Re s" provide analysis of th Regi t nts' liquidity positio d credit profil This ctio al include di sion of fo a ted a d us of a h d ting agency actio "Financial Conditi Risk Manage nt provide pl ation of th Regi t nts' risk nage nt prog lating to rket and edit risk "Application of Critical Ac ting Policies provide vi of th a ounting policies that ar particul ly important to th lts of op atio d fi ial ndition of th Regi t nt d that quir thei nage nt to ke signifi ant ti te a mpti d othe judgm ts of inhe ntly tain tte Fo mp ison of th Regi t nts' lt of ope tio d ash fl fo th ye ded De be 31, 2024 to De mb 31, 2023, refer to "Combined Ma ge nt s Di si d Analysis of Fi an ial Conditi d Re lts of Op atio in th 2024 Fo 10-K filed with th SEC February 13 2025 Overview Fo de ription of th Regi t nt d thei busin "B in Bus St tegy (All Registra ts) PPL ope te fo gulated utilitie located in Pennsylvania Kentucky d Rhode Island Each of th jurisdictio ha di tinct gulatory t ct a d each of th utiliti ha di tinct cu t er clas PPL s t tegy which is pported by th othe Regi t nt d bsidiari is fo d on creating th utilitie of th futu to driv gr ate alu for t d shar Key objectiv in pport of this t tegy include St ngthening th liability d silie of our electri d ga tworks to improve ic a d prot t agai t r nt d futu athe d t Ad a ing a cleaner gy futu affo rdably d liably This include panding d de izing gene ti with tu l ga bl and battery t age, while pporting arch and de lopm t of lo - a bon luti n Driving op atio l effi ciencies to improve t ic a d help keep n gy afford able Utilizing tificial intellig n d othe ad a ed technologi to inform decisi king, optimi a t pl ning d inte an a d bett nage pply d de nd on th grid Empo ring t th ugh panded digital opti n d impr ed ic Engaging with key takeholde to t ngthe ce adeq acy po mi developm t, d pport th growth d of th gions This t tegy pports mi io to pr id afe affo rdable liable d ustainabl n gy to t d mpetitive long t tu to sh Financ a d Operat o Deve opm ts Joint Venture Ag ement with Bl kst Infr tr tu (PPL) PPL d Black t n Infra t ct have created joint ventur to build d ope te electricity gene tio tatio to pow data te in Pennsylvani unde long t n gy ices ag ts (ESAs) to addr underlying adeq acy and afford ability in Pennsylvani d PJM broadly Co tr tion of gene tio tatio will quir th x tion of ESAs with data nt de lope including hype ale th gulated utilitie in Pe sylv ia PPL owns 51% of th joint ventur inte t d Bla ksto Infra t ct n 49% Th joint nt is actively gaged with hyp aler lando tu l ga pipelin mp ie d turbin nuf ct d ha d ltipl land pa el to enable this ge tio build out how ESAs with hype caler have be signed a of February 20 2026 Regulatory Requi nt (All Registra ts) Th Regi t nt a ot predict th impact that futu r gulatory requir m ts y have on their fi an ial nditi lt of ope tio Rate Ca Proceedings (PP ) On No mb 26, 2025, RIE filed qu t with th RIPUC fo in r a in electric d natu l ga ba di tributi te d approval of rtai gulatory d a unting treat nt In it application RIE ek to impl m t tw -ye te pl In th first ye of th te pl RIE' proposed ba di tributio te for el tric d ga mbined are designed to llect additio l ope ting venue of approxi tely $181 millio ($66 millio 18 2% in electricity n a d $115 millio 36.4% in ga n s) In th nd ye of th te pl RIE' proposed ba di tributio te for el tric d ga mbined designed to llect th proposed ba di tributio te in a for electri a d ga in th first ye of th te pl n d additio l ope ting n of approxi tely $49 millio ($17 millio 3.6% in electricity n d $32 millio 7.4% in ga ). The applicatio is ba d on hi t ical te t ye of Sept be 1, 2024 th ugh August 31, 2025 d que ted an auth ized ROE of 10 75% Subj t to RIPUC appr al, te ar pected to be ef ectiv Sept be 1, 2026. Certai unt partie ha inte ened in th proceeding A ling fr th RIPUC is ticipated during th third quart of 2026 PPL a n t predict th out of th proc ding. S e "Regulatory Matte Rhode Island Activitie Hold Ha le Impl m tatio Ag m t" in Note 7 to th Fi ial Statements for di si n an additio l te king initiati to mitigate t te impact (PPL and PPL El ctric) On Sept be 30, 2025, PPL El tric filed que t with th PAPUC for in r a in di tributio ba te of approximately $356 million th $50 million of which is al ady included in t bills th ugh te ry ch is d approval of tain gulatory d a unting treat nt Th proposed in r a in di tribution ba te uld in r a PPL Electric' total al nue by approximately 8.6% Th applicatio is ba d fully projected futu te t ye of July 1, 2026 th ugh June 30, 2027 d que ted an auth ized ROE of 11 3% Subject to PAPUC approval, te pected to be ef ectiv July 1, 2026. Certai unt partie have inte ened in th proceeding A ling fro th PAPUC is ticipated during th nd quart of 2026 PPL d PPL Electri a not predict th tc of th pr eeding (PPL LG&E and KU) On May 30, 2025, LG&E d KU filed que t with th KPSC for in r a in al electricity d ga of approxi tely $391 millio ($105 millio d $226 millio in electricity n es at LG&E d KU d $60 milli in ga n es at LG&E) d approval of rtai gulatory d a unting treat nt Th n in r a uld be in r a of 8.3% d 11 5% in electricity n at LG&E d KU d in r a of 14 0% in ga n at LG&E The applicatio ba d on fore a ted te t ye of Ja y 1, 2026 th ugh De mb 31, 2026 d que ted a th ized ROE of 10.95% Ne interi te became ef ectiv Ja ary 1, 2026, bject to refund pur t to th KPSC s fi l orde Certai unt partie have inte ened in th pr eedings O Octobe 20, 2025 LG&E d KU filed with th KPSC tipulatio d dati (the ag t) garding propo d lutio f is with jority of th inte in th proceedings Unde the ag t, th partie proposed that th KPSC should is orde gr ting vi d in a in al electricity d ga n of approxi tely $235 millio ($58 millio d $132 millio in electricity n es at LG&E d KU d $45 millio in ga n at LG&E.) The ag m t proposed a vi d a th ized ROE of 9.90% The ag m t propo d "stay out" itm t fr LG&E d KU to frai fro ef ectiv ba te in r a befo August 1, 2028, bj t to rtai x ptio In n ctio with th tay out period the ag m t al prop ed th tablishm t of tw te adju t nt clau chanis Ge tio Co t Re ry Adju t nt Cla (GCR) d Sh ing Mechanis Adju t nt Cla (SM). Th proposed GCR chanis uld provide LG&E d KU ry of d tu in t nt of d t (ex luding fuel am nt which LG&E d KU a via an isting te ch ism) of levant ne ge tio d n gy t age as ts a th ized in th 2022 d 2025 CPCN proceedings (ex luding th Mill Creek Unit 6 NGCC, "2025 CPCN for informatio garding th Mill Creek Unit 6 NGCC) a they are placed in ic The proposed SM chanis uld addr y ba te deficiency rplu during th fi l thirte nths of th tay out period, July 2027 th ugh July 2028, belo ab gge ted ROE band of 9.40% to 10.15% Any ch ba te n deficiency rplu uld be llected fro tu ed to t ra thirte onth billing period beginning No mb 2028 Following is an of th 2025 CPCN Order, LG&E d KU filed ppl m tal te timony with th KPSC in th te a proceedings eking ry of th Mill Creek Unit 2 tay open t th ugh proposed additi nal te adju t nt clau chanis The ag m t furthe proposed that LG&E d KU gulatory defe ala unting for a tual expenses ab or belo ba te le ls for rtai pens including: pensio d post- tir m t be fits t t ation vegetatio ge nt tr issi aiv d credits d ga li ll activitie with ry of ch deferred a t liability ount to be addr d in futu te a On February 16, 2026 th KPSC is ed orde approving portions of th Octobe 2025 tipulatio d dation with dificatio Th KPSC orde provid fo in a in al el tricity d ga of $233 millio ($59 millio d $128 millio in electricity n at LG&E d KU d $46 milli in ga n at LG&E.) Th de includ a th ized tu equity of 9 775% fo ba te purpo d 9.675% fo capital te adju t nt chanis The KPSC orde approv LG&E s d KU s que t for tablishm t of rtai n te adju t nt chanis tariff with dificatio temp y Pilot Ge tio Re ry Adju t nt Cla (PGR) to provide ry of d tu in t nt of applicable t of tain ge tio d t age as ts being built ticipated to be built by LG&E d KU a a th ized in th 2022 CPCN proc ding; th incl io in th PGR of ry of d tu in t nt of tain t a ciated with pot tial te io of th operating lif of LG&E s Mill Cr k Unit 2 beyond it iginal 2027 tir m t date d Extr m ly High Load Fact Tariff for futu applicable t , sucha data te which include qui nt cha long t nt ct mini n paym ts d llate l rity t ct that help protect th inte t of LG&E KU d of othe tepaye The PGR chanis is simila to th GCR proposed in th tipulation, but t ct ed by th KPSC to be pilot adju t nt chanis with te til th a li of te nths following th bmissi of LG&E s d KU s xt ba te proc ding the ef ectiv date of ne te in ch proceeding, with th pectatio that th chanis uld be vi ed in ch proceeding Th pilot chanis will apply to th pl ned Mill Creek Unit 5, Br Battery En gy St age Sy t Me County Sola d Mari County Sola ge ti elated project Th KPSC al included Mill Creek Unit 2' potential tay-open t in th PGR in li of approving th tipulation' que t for t d-al adju t nt chanis fo ch co t Fi lly th KPSC cluded fro ge unde th PGR t lated to Mill Creek Unit 6 d Br Unit 12 pl ned ne ge tio a ts due to thei ticipated in vi date falling tsid of th ti ted pilot ch ism' duration but without prejudi to LG&E d KU eking ry of ch co t in futu proceedings The KPSC orde al approved approved with difi ati or denied in a othe que ted accounting d te tte r lating to gulatory a ts liabilitie depreciatio te d othe a The te change have tr activ ef ectiv date a of Ja ary 1, 2026 Co istent witha th ized te a proced LG&E d KU will refund to t ount billed in x of th fi l approved te within sixty days Th KPSC orde did not approve th SM adju t nt clau that had be qu ted in th tipulatio d de no dificatio to the tay out of e by LG&E d KU to frain fr ef ectiv ba te in r a prio to Augu t 2028 LG&E orde d KU d all inte dified or denied te ha rights to qu t he ing or appeal of th orde of th KPSC d be a th KPSC of th proposed tipulation LG&E d KU d all tipulating partie have th right to withdra fr th tipulatio LG&E LG&E d KU d KU ntin to al ate th details ntai d in th a t predict th out of this tt orde d lated tt a they co id next tep PPL, In addition, pur t to prio orde of th KPSC th LG&E d KU te a applicatio included an as t of potential legal rg of LG&E d KU d luded legal rg y be appropriate On De mb 30, 2025, LG&E filed joint update with KU in th te a proc dings stating that it pect to file ary applicatio for rger approval in mid-2026 with th KPSC Ulti tely formal approval for rg uld be qui d fro th KPSC VSCC d FERC vi bseq nt gulatory applicatio (PPL LG&E and KU) Envi nmental Consideratio s fo Coal-F red Generatio Th busin of LG&E d KU bj t to te iv fede l, tate and local envi tal la le d gulati including th pertaining to CCRs GHG d ELG Se Note 7 , 12 d 18 to th Fi ial Stat ts fo di sion of th signifi a t vi tal tte Th d othe vi tal quir m ts led PPL LG&E d KU to tir approxi tely 1,500 MW of coal-fir ed ge ting pl ts in Kentucky si 2010 As part of th long t gene tio pl ning proc LG&E d KU eval ate nge of fact including th impact of pot tial tricter envi tal gulatio fuel pric na io th t of pla m t ge tion ntinued ope ti n d jo inte an t d th risk of jo equipm t failu in dete ining wh to ti ge tio a ts As lt of vi tal qui nt d aging infra tr tu LG&E ha ught d obtained appr al to tir tw olde coal-fir ed units at th Mill Creek Pl t Mill Creek Unit 1, with 300 MW of capacity a tired in 2024 Mill Cr k Unit 2, with 297 MW of capacity a approved to be tired in 2027, bject to tain nditi n On Octobe 28, 2025, in LG&E d KU s 2025 CPCN proceeding, th KPSC declined to le que t to tend th ope tion of Mill Creek Unit 2 Th KPSC indicated that que t for ti nt approval proceeding y be quired should LG&E elect to ope te Mill Creek Unit 2 beyond its isting approved tir m t date d ek to late r tir th it Se Rate Ca Pr eedings in Note 7 to th Fi an ial Stat m ts for additio l informatio On Octobe 4, 2024, LG&E bmitted n pplicatio lated to th tir m t of Mill Cr k Unit 1, which oc r d on De be 31, 2024 qu ting ry of a ciated co t und th RAR On Febr ry 24 2025, th KPSC is ed orde approving LG&E s t ry for Mill Creek Unit 1 de th RAR of $125 millio d lated ount included in bills beginning in May 2025. Se Note 7 to th Fi ial Statem ts for additio l informatio th Mill Creek Unit 1 RAR 2025 CPCN On February 28, 2025 LG&E d KU filed n pplicatio with th KPSC garding rtai futu pl for ge ti d ge tio - lated tr tio tte Th proposal included in the applicatio intended to ticipated load growth including from pot tial data nt de nd in LG&E s KU s ic territory Th proposal did not include tir m ts of coal or other fossil-fueled pl ts which uld quir additio l KPSC approval pr ed unde Kentucky legislatio na ted in 2023 d 2024 LG&E d KU bmitted joint applicatio to th KPSC fo approval of tain tificates of public nveni n a d sity site mpatibility tificates d a unting treat nt where applicable lating to numbe of gene tio - lated pl or proj ts that ge lly ar pected to be ope ti nal tablished within th next six ye The aggregate projected capital penditu a ciated with th proposal pected to be $3.7 billio Th applicatio included proposal to build 645 MW NGCC gene tion unit at KU' E W. Br tatio (B wn Unit 12) 645 MW NGCC gene tion unit at LG&E s Mill Creek tatio (Mill Creek Unit 6) fo -hour 400 MW (1600 MWh total) batt y n gy t age syst (BESS) at LG&E s Ca Ru tation d lective catalytic ductio (SCR) vi tal facility at KU s Gh t tatio Unit 2 (Ghent Unit 2) Th w NGCC units ar ticipated to be wholly n d by LG&E d th BESS unit jointly owned by LG&E (32%) d KU (68%), witha tual proj t t allocated istent with LG&E s d KU' ultimate n hip sh d isting shared dispatch t allo ation tariff r th fram ks Th prop ed Mill Creek Unit 6 NGCC is in additi to NGCC unit r ntly und r tr tio at that locatio (Mill Creek Unit 5) Th filing al ted proj ted in ic date fo th project including th Br Unit 12 NGCC in 2030, th Mill Creek Unit 6 NGCC in 2031 th Ca Ru BESS in 2028 d th Gh t Unit 2 SCR in 2028

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