Document

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
[X]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the quarterly period ended March 31, 2019.
OR
[   ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from _________ to ___________
Commission File
Number
Registrant; State of Incorporation;
Address and Telephone Number
IRS Employer
Identification No.
 
 
 
1-11459
PPL Corporation
(Exact name of Registrant as specified in its charter)
(Pennsylvania)
Two North Ninth Street
Allentown, PA 18101-1179
(610) 774-5151
23-2758192
 
 
 
1-905
PPL Electric Utilities Corporation
(Exact name of Registrant as specified in its charter)
(Pennsylvania)
Two North Ninth Street
Allentown, PA 18101-1179
(610) 774-5151
23-0959590
 
 
 
333-173665
LG&E and KU Energy LLC
(Exact name of Registrant as specified in its charter)
(Kentucky)
220 West Main Street
Louisville, KY 40202-1377
(502) 627-2000
20-0523163
 
 
 
1-2893
Louisville Gas and Electric Company
(Exact name of Registrant as specified in its charter)
(Kentucky)
220 West Main Street
Louisville, KY 40202-1377
(502) 627-2000
61-0264150
 
 
 
1-3464
Kentucky Utilities Company
(Exact name of Registrant as specified in its charter)
(Kentucky and Virginia)
One Quality Street
Lexington, KY 40507-1462
(502) 627-2000
61-0247570


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Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days.
PPL Corporation
Yes  X   
No        
 
PPL Electric Utilities Corporation
Yes  X   
No        
 
LG&E and KU Energy LLC
Yes  X   
No        
 
Louisville Gas and Electric Company
Yes  X  
No        
 
Kentucky Utilities Company
Yes  X   
No        
 
 
Indicate by check mark whether the registrants have submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrants were required to submit such files). 
PPL Corporation
Yes  X   
No        
 
PPL Electric Utilities Corporation
Yes  X   
No        
 
LG&E and KU Energy LLC
Yes  X   
No        
 
Louisville Gas and Electric Company
Yes  X   
No        
 
Kentucky Utilities Company
Yes  X   
No        
 
 
Indicate by check mark whether the registrants are large accelerated filers, accelerated filers, non-accelerated filers, smaller reporting companies or emerging growth companies. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
 
Large accelerated
filer
Accelerated
filer
Non-accelerated
filer
Smaller reporting
company
Emerging growth company
PPL Corporation
[ X ]
[     ]
[     ]
[     ]
[     ]
PPL Electric Utilities Corporation
[     ]
[     ]
[ X ]
[     ]
[     ]
LG&E and KU Energy LLC
[     ]
[     ]
[ X ]
[     ]
[     ]
Louisville Gas and Electric Company
[     ]
[     ]
[ X ]
[     ]
[     ]
Kentucky Utilities Company
[     ]
[     ]
[ X ]
[     ]
[     ]

If emerging growth companies, indicate by check mark if the registrants have elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
PPL Corporation
[     ]
 
 
 
 
PPL Electric Utilities Corporation
[     ]
 
 
 
 
LG&E and KU Energy LLC
[     ]
 
 
 
 
Louisville Gas and Electric Company
[     ]
 
 
 
 
Kentucky Utilities Company
[     ]
 
 
 
 
 
Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act).
PPL Corporation
Yes        
No  X   
 
PPL Electric Utilities Corporation
Yes        
No  X   
 
LG&E and KU Energy LLC
Yes        
No  X   
 
Louisville Gas and Electric Company
Yes        
No  X   
 
Kentucky Utilities Company
Yes        
No  X   
 
 


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Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol:
Name of each exchange on which registered
Common Stock of PPL Corporation
PPL
New York Stock Exchange
 
 
 
Junior Subordinated Notes of PPL Capital Funding, Inc.
 
 
2007 Series A due 2067
PPL/67
New York Stock Exchange
2013 Series B due 2073
PPX
New York Stock Exchange

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
PPL Corporation
Common stock, $0.01 par value, 721,742,302 shares outstanding at April 25, 2019.
 
 
PPL Electric Utilities Corporation
Common stock, no par value, 66,368,056 shares outstanding and all held by PPL Corporation at April 25, 2019.
 
 
LG&E and KU Energy LLC
PPL Corporation directly holds all of the membership interests in LG&E and KU Energy LLC.
 
 
Louisville Gas and Electric Company
Common stock, no par value, 21,294,223 shares outstanding and all held by LG&E and KU Energy LLC at April 25, 2019.
 
 
Kentucky Utilities Company
Common stock, no par value, 37,817,878 shares outstanding and all held by LG&E and KU Energy LLC at April 25, 2019.

This document is available free of charge at the Investors section of PPL Corporation's website at www.pplweb.com. However, information on this website does not constitute a part of this Form 10-Q.


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PPL CORPORATION
PPL ELECTRIC UTILITIES CORPORATION
LG&E AND KU ENERGY LLC
LOUISVILLE GAS AND ELECTRIC COMPANY
KENTUCKY UTILITIES COMPANY
 
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2019
 
Table of Contents
 
This combined Form 10-Q is separately filed by the following Registrants in their individual capacity: PPL Corporation, PPL Electric Utilities Corporation, LG&E and KU Energy LLC, Louisville Gas and Electric Company and Kentucky Utilities Company. Information contained herein relating to any individual Registrant is filed by such Registrant solely on its own behalf, and no Registrant makes any representation as to information relating to any other Registrant, except that information under "Forward-Looking Information" relating to subsidiaries of PPL Corporation is also attributed to PPL Corporation and information relating to the subsidiaries of LG&E and KU Energy LLC is also attributed to LG&E and KU Energy LLC.
 
Unless otherwise specified, references in this Report, individually, to PPL Corporation, PPL Electric Utilities Corporation, LG&E and KU Energy LLC, Louisville Gas and Electric Company and Kentucky Utilities Company are references to such entities directly or to one or more of their subsidiaries, as the case may be, the financial results of which subsidiaries are consolidated into such Registrants' financial statements in accordance with GAAP. This presentation has been applied where identification of particular subsidiaries is not material to the matter being disclosed, and to conform narrative disclosures to the presentation of financial information on a consolidated basis.
 
 
Page
PART I.  FINANCIAL INFORMATION
 
 
Item 1.  Financial Statements
 
 
 
PPL Corporation and Subsidiaries
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PPL Electric Utilities Corporation and Subsidiaries
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LG&E and KU Energy LLC and Subsidiaries
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Louisville Gas and Electric Company
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Kentucky Utilities Company
 
 
 
 
 
 
 
 
 
 
 
 
 


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Combined Notes to Condensed Financial Statements (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.  Combined Management's Discussion and Analysis of Financial Condition and Results of Operations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PART II.  OTHER INFORMATION
 
 
 
 
 
CERTIFICATES OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
 
CERTIFICATES OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
 


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GLOSSARY OF TERMS AND ABBREVIATIONS
 
PPL Corporation and its subsidiaries
 
KU - Kentucky Utilities Company, a public utility subsidiary of LKE engaged in the regulated generation, transmission, distribution and sale of electricity, primarily in Kentucky.
 
LG&E - Louisville Gas and Electric Company, a public utility subsidiary of LKE engaged in the regulated generation, transmission, distribution and sale of electricity and the distribution and sale of natural gas in Kentucky.
 
LKE - LG&E and KU Energy LLC, a subsidiary of PPL and the parent of LG&E, KU and other subsidiaries.
 
LKS - LG&E and KU Services Company, a subsidiary of LKE that provides administrative, management, and support services primarily to LKE and its subsidiaries.
 
PPL - PPL Corporation, the parent holding company of PPL Electric, PPL Energy Funding, PPL Capital Funding, LKE and other subsidiaries.
 
PPL Capital Funding - PPL Capital Funding, Inc., a financing subsidiary of PPL that provides financing for the operations of PPL and certain subsidiaries. Debt issued by PPL Capital Funding is guaranteed as to payment by PPL.
 
PPL Electric - PPL Electric Utilities Corporation, a public utility subsidiary of PPL engaged in the regulated transmission and distribution of electricity in its Pennsylvania service area and that provides electricity supply to its retail customers in this area as a PLR.
 
PPL Energy Funding - PPL Energy Funding Corporation, a subsidiary of PPL and the parent holding company of PPL Global and other subsidiaries.
 
PPL EU Services - PPL EU Services Corporation, a subsidiary of PPL that provides administrative, management and support services primarily to PPL Electric.
 
PPL Global - PPL Global, LLC, a subsidiary of PPL Energy Funding that, primarily through its subsidiaries, owns and operates WPD, PPL's regulated electricity distribution businesses in the U.K.

PPL Services - PPL Services Corporation, a subsidiary of PPL that provides administrative, management and support services to PPL and its subsidiaries.
 
PPL WPD Limited - an indirect U.K. subsidiary of PPL Global. Following a reorganization in October 2015 and October 2017, PPL WPD Limited is an indirect parent to WPD plc having previously been a sister company.

Safari Energy - Safari Energy, LLC, an indirect subsidiary of PPL, acquired in June 2018, that provides solar energy solutions for commercial customers in the U.S.

WPD - refers to PPL WPD Limited and its subsidiaries.
 
WPD (East Midlands) - Western Power Distribution (East Midlands) plc, a British regional electricity distribution utility company.
 
WPD plc - Western Power Distribution plc, an indirect U.K. subsidiary of PPL WPD Limited. Its principal indirectly owned subsidiaries are WPD (East Midlands), WPD (South Wales), WPD (South West) and WPD (West Midlands).
 
WPD Midlands - refers to WPD (East Midlands) and WPD (West Midlands), collectively.
 
WPD (South Wales) - Western Power Distribution (South Wales) plc, a British regional electricity distribution utility company.
 
WPD (South West) - Western Power Distribution (South West) plc, a British regional electricity distribution utility company.
 

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WPD (West Midlands) - Western Power Distribution (West Midlands) plc, a British regional electricity distribution utility company.
 
WKE - Western Kentucky Energy Corp., a subsidiary of LKE that leased certain non-regulated utility generating plants in western Kentucky until July 2009.
  
Other terms and abbreviations
 
£ - British pound sterling.
 
2018 Form 10-K - Annual Report to the SEC on Form 10-K for the year ended December 31, 2018.
 
Act 11 - Act 11 of 2012 that became effective on April 16, 2012. The Pennsylvania legislation authorized the PUC to approve two specific ratemaking mechanisms: the use of a fully projected future test year in base rate proceedings and, subject to certain conditions, a DSIC.
 
Act 129 - Act 129 of 2008 that became effective in October 2008. The law amended the Pennsylvania Public Utility Code and created an energy efficiency and conservation program and smart metering technology requirements, adopted new PLR electricity supply procurement rules, provided remedies for market misconduct and changed the Alternative Energy Portfolio Standard (AEPS).

Act 129 Smart Meter program - PPL Electric's system wide meter replacement program that installs wireless digital meters that provide secure communication between PPL Electric and the meter as well as all related infrastructure.

Adjusted Gross Margins - a non-GAAP financial measure of performance used in "Item 2. Combined Management's Discussion and Analysis of Financial Condition and Results of Operations" (MD&A).
 
Advanced Metering System - meters and meter-reading systems that provide two-way communication capabilities, which communicate usage and other relevant data to LG&E and KU at regular intervals, and are also able to receive information from LG&E and KU, such as software upgrades and requests to provide meter readings in real time.

AFUDC - allowance for funds used during construction. The cost of equity and debt funds used to finance construction projects of regulated businesses, which is capitalized as part of construction costs.

AOCI - accumulated other comprehensive income or loss.

ARO - asset retirement obligation.
 
ATM Program - at-the-market stock offering program.
 
CCR(s) - coal combustion residual(s). CCRs include fly ash, bottom ash and sulfur dioxide scrubber wastes.
 
Clean Air Act - federal legislation enacted to address certain environmental issues related to air emissions, including acid rain, ozone and toxic air emissions.
 
Clean Water Act - federal legislation enacted to address certain environmental issues relating to water quality including effluent discharges, cooling water intake, and dredge and fill activities.

CPCN - Certificate of Public Convenience and Necessity. Authority granted by the KPSC pursuant to Kentucky Revised Statute 278.020 to provide utility service to or for the public or the construction of certain plant, equipment, property or facility for furnishing of utility service to the public.
 
Customer Choice Act - the Pennsylvania Electricity Generation Customer Choice and Competition Act, legislation enacted to restructure the state's electric utility industry to create retail access to a competitive market for generation of electricity.

Depreciation not normalized - the flow-through income tax impact related to the state regulatory treatment of depreciation-related timing differences.


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DNO - Distribution Network Operator in the U.K.
 
DRIP - PPL Amended and Restated Dividend Reinvestment and Direct Stock Purchase Plan.

DSIC - Distribution System Improvement Charge. Authorized under Act 11, which is an alternative ratemaking mechanism providing more-timely cost recovery of qualifying distribution system capital expenditures.
 
DSM - Demand Side Management. Pursuant to Kentucky Revised Statute 278.285, the KPSC may determine the reasonableness of DSM programs proposed by any utility under its jurisdiction. DSM programs consist of energy efficiency programs intended to reduce peak demand and delay the investment in additional power plant construction, provide customers with tools and information regarding their energy usage and support energy efficiency.

DUoS - Distribution Use of System, the charge to licensed third party energy suppliers who are WPD's customers and use WPD's networks to deliver electricity to their customers, the end-users.
 
Earnings from Ongoing Operations - a non-GAAP financial measure of earnings adjusted for the impact of special items and used in "Item 2. Combined Management's Discussion and Analysis of Financial Condition and Results of Operations" (MD&A).

ECR - Environmental Cost Recovery. Pursuant to Kentucky Revised Statute 278.183, Kentucky electric utilities are entitled to the current recovery of costs of complying with the Clean Air Act, as amended, and those federal, state or local environmental requirements that apply to coal combustion wastes and byproducts from the production of energy from coal.

ELG(s) - Effluent Limitation Guidelines, regulations promulgated by the EPA.
 
EPA - Environmental Protection Agency, a U.S. government agency.

EPS - earnings per share.
 
FERC - Federal Energy Regulatory Commission, the U.S. federal agency that regulates, among other things, interstate transmission and wholesale sales of electricity, hydroelectric power projects and related matters.
 
GAAP - Generally Accepted Accounting Principles in the U.S.
 
GBP - British pound sterling.

GHG(s) - greenhouse gas(es).

GLT - gas line tracker. The KPSC approved mechanism for LG&E's recovery of costs associated with gas transmission lines, gas service lines, gas risers, leak mitigation, and gas main replacements.

HB 487 - House Bill 487. Comprehensive Kentucky state tax legislation enacted in April 2018.

IRS - Internal Revenue Service, a U.S. government agency.
 
KPSC - Kentucky Public Service Commission, the state agency that has jurisdiction over the regulation of rates and service of utilities in Kentucky.

kWh - kilowatt hour, basic unit of electrical energy.

LIBOR - London Interbank Offered Rate.

MATS - Mercury and Air Toxics Standards, regulations promulgated by the EPA.

Moody's - Moody's Investors Service, Inc., a credit rating agency.

MW - megawatt, one thousand kilowatts.
 

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NAAQS - National Ambient Air Quality Standards periodically adopted pursuant to the Clean Air Act.
 
NERC - North American Electric Reliability Corporation.

New Source Review - a Clean Air Act program that requires industrial facilities to install updated pollution control equipment when they are built or when making a modification that increases emissions beyond certain allowable thresholds.
 
NPNS - the normal purchases and normal sales exception as permitted by derivative accounting rules. Derivatives that qualify for this exception may receive accrual accounting treatment.

OCI - other comprehensive income or loss.
 
Ofgem - Office of Gas and Electricity Markets, the British agency that regulates transmission, distribution and wholesale sales of electricity and gas and related matters.
 
OVEC - Ohio Valley Electric Corporation, located in Piketon, Ohio, an entity in which LKE indirectly owns an 8.13% interest (consists of LG&E's 5.63% and KU's 2.50% interests), which is recorded at cost. OVEC owns and operates two coal-fired power plants, the Kyger Creek plant in Ohio and the Clifty Creek plant in Indiana, with combined capacities of 2,120 MW.

Performance unit - stock-based compensation award that represents a variable number of shares of PPL common stock that a recipient may receive based on PPL's attainment of (i) relative total shareowner return (TSR) over a three-year performance period as compared to companies in the Philadelphia Stock Exchange Utility Index; or (ii) corporate return on equity (ROE) based on the average of the annual ROE for each year of the three-year performance period.

PJM - PJM Interconnection, L.L.C., operator of the electricity transmission network and electricity energy market in all or parts of Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and the District of Columbia.

PLR - Provider of Last Resort, the role of PPL Electric in providing default electricity supply within its delivery area to retail customers who have not chosen to select an alternative electricity supplier under the Customer Choice Act.
 
PP&E - property, plant and equipment.

PPL EnergyPlus - prior to the June 1, 2015 spinoff, PPL Energy Supply, LLC, PPL EnergyPlus, LLC, a subsidiary of PPL Energy Supply that marketed and traded wholesale and retail electricity and gas, and supplied energy and energy services in competitive markets.

PPL Energy Supply - prior to the June 1, 2015 spinoff, PPL Energy Supply, LLC, a subsidiary of PPL Energy Funding and the indirect parent company of PPL Montana, LLC.

PPL Montana - prior to the June 1, 2015 spinoff of PPL Energy Supply, PPL Montana, LLC, an indirect subsidiary of PPL Energy Supply that generated electricity for wholesale sales in Montana and the Pacific Northwest.

PUC - Pennsylvania Public Utility Commission, the state agency that regulates certain ratemaking, services, accounting and operations of Pennsylvania utilities.

RAV - regulatory asset value. This term, used within the U.K. regulatory environment, is also commonly known as RAB or regulatory asset base. RAV is based on historical investment costs at time of privatization, plus subsequent allowed additions less annual regulatory depreciation, and represents the value on which DNOs earn a return in accordance with the regulatory cost of capital. RAV is indexed to Retail Price Index (RPI) in order to allow for the effects of inflation. RAV additions have been and continue to be based on a percentage of annual total expenditures that have a long-term benefit to WPD (similar to capital projects for the U.S. regulated businesses that are generally included in rate base).
 
RCRA - Resource Conservation and Recovery Act of 1976.

Registrant(s) - refers to the Registrants named on the cover of this Report (each a "Registrant" and collectively, the "Registrants").
 

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Regulation S-X - SEC regulation governing the form and content of and requirements for financial statements required to be filed pursuant to the federal securities laws.
 
RFC - ReliabilityFirst Corporation, one of eight regional entities with delegated authority from NERC that work to safeguard the reliability of the bulk power systems throughout North America.
 
RIIO - Ofgem's framework for setting U.K. regulated gas and electric utility price controls which stands for "Revenues = Incentive + Innovation + Outputs." RIIO-1 refers to the first generation of price controls under the RIIO framework. RIIO-ED1 refers to the RIIO regulatory price control applicable to the operators of U.K. electricity distribution networks, the duration of which is April 2015 through March 2023. RIIO-2 refers to the second generation of price controls under the RIIO framework. RIIO-ED2 refers to the second generation of the RIIO regulatory price control applicable to the operators of U.K. electricity distribution networks, which will begin in April 2023.

Riverstone - Riverstone Holdings LLC, a Delaware limited liability company and, as of December 6, 2016, ultimate parent company of the entities that own the competitive power generation business contributed to Talen Energy.

RPI - retail price index, is a measure of inflation in the United Kingdom published monthly by the Office for National Statistics.
 
Sarbanes-Oxley - Sarbanes-Oxley Act of 2002, which sets requirements for management's assessment of internal controls for financial reporting. It also requires an independent auditor to make its own assessment.
 
SCRs - selective catalytic reduction, a pollution control process for the removal of nitrogen oxide from exhaust gas.

Scrubber - an air pollution control device that can remove particulates and/or gases (primarily sulfur dioxide) from exhaust gases.
 
SEC - the U.S. Securities and Exchange Commission, a U.S. government agency primarily responsible to protect investors and maintain the integrity of the securities markets.
 
SERC - SERC Reliability Corporation, one of eight regional entities with delegated authority from NERC that work to safeguard the reliability of the bulk power systems throughout North America.
 
Smart metering technology - technology that can measure, among other things, time of electricity consumption to permit offering rate incentives for usage during lower cost or demand intervals. The use of this technology also has the potential to strengthen network reliability.

S&P - S&P Global Ratings, a credit rating agency.
 
Superfund - federal environmental statute that addresses remediation of contaminated sites; states also have similar statutes.
 
Talen Energy - Talen Energy Corporation, the Delaware corporation formed to be the publicly traded company and owner of the competitive generation assets of PPL Energy Supply and certain affiliates of Riverstone, which as of December 6, 2016, became wholly owned by Riverstone.

Talen Energy Marketing - Talen Energy Marketing, LLC, the new name of PPL EnergyPlus subsequent to the spinoff of PPL Energy Supply.

TCJA - Tax Cuts and Jobs Act. Comprehensive U.S. federal tax legislation enacted on December 22, 2017.

Treasury Stock Method - a method applied to calculate diluted EPS that assumes any proceeds that could be obtained upon exercise of options and warrants (and their equivalents) would be used to purchase common stock at the average market price during the relevant period.

VEBA - Voluntary Employee Beneficiary Association. A tax-exempt trust under the Internal Revenue Code Section 501(c)(9) used by employers to fund and pay eligible medical, life and similar benefits.


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VSCC - Virginia State Corporation Commission, the state agency that has jurisdiction over the regulation of Virginia corporations, including utilities.

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Forward-looking Information
 
Statements contained in this Form 10-Q concerning expectations, beliefs, plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements that are other than statements of historical fact are "forward-looking statements" within the meaning of the federal securities laws. Although the Registrants believe that the expectations and assumptions reflected in these statements are reasonable, there can be no assurance that these expectations will prove to be correct. Forward-looking statements are subject to many risks and uncertainties, and actual results may differ materially from the results discussed in forward-looking statements. In addition to the specific factors discussed in each Registrant's 2018 Form 10-K and in "Item 2. Combined Management's Discussion and Analysis of Financial Condition and Results of Operations" in this Form 10-Q, the following are among the important factors that could cause actual results to differ materially and adversely from the forward-looking statements:
 
•
the outcome of rate cases or other cost recovery or revenue proceedings;
•
changes in U.S. state or federal or U.K. tax laws or regulations;
•
the direct or indirect effects on PPL or its subsidiaries or business systems of cyber-based intrusion or the threat of cyberattacks;
•
significant decreases in demand for electricity in the U.S.;
•
expansion of alternative and distributed sources of electricity generation and storage;
•
changes in foreign currency exchange rates for British pound sterling and the related impact on unrealized gains and losses on PPL's foreign currency economic hedges;
•
the effectiveness of our risk management programs, including foreign currency and interest rate hedging;
•
non-achievement by WPD of performance targets set by Ofgem;
•
the effect of changes in RPI on WPD's revenues and index linked debt;
•
developments related to ongoing negotiations regarding the U.K.'s intent to withdraw from the European Union and any actions in response thereto;
•
the amount of WPD's pension deficit funding recovered in revenues after March 31, 2021, following the next triennial pension review that began in March 2019;
•
defaults by counterparties or suppliers for energy, capacity, coal, natural gas or key commodities, goods or services;
•
capital market conditions, including the availability of capital or credit, changes in interest rates and certain economic indices, and decisions regarding capital structure;
•
a material decline in the market value of PPL's equity;
•
significant decreases in the fair value of debt and equity securities and its impact on the value of assets in defined benefit plans, and the potential cash funding requirements if fair value declines;
•
interest rates and their effect on pension and retiree medical liabilities, ARO liabilities and interest payable on certain debt securities;
•
volatility in or the impact of other changes in financial markets and economic conditions;
•
the potential impact of any unrecorded commitments and liabilities of the Registrants and their subsidiaries;
•
new accounting requirements or new interpretations or applications of existing requirements;
•
changes in the corporate credit ratings or securities analyst rankings of the Registrants and their securities;
•
any requirement to record impairment charges pursuant to GAAP with respect to any of our significant investments;
•
laws or regulations to reduce emissions of GHGs or the physical effects of climate change;
•
continuing ability to access fuel supply for LG&E and KU, as well as the ability to recover fuel costs and environmental expenditures in a timely manner at LG&E and KU and natural gas supply costs at LG&E;
•
weather and other conditions affecting generation, transmission and distribution operations, operating costs and customer energy use;
•
catastrophic events such as fires, earthquakes, explosions, floods, tornadoes, hurricanes and other storms, droughts, pandemic health events or other similar occurrences;
•
war, armed conflicts, terrorist attacks, or similar disruptive events;
•
changes in political, regulatory or economic conditions in states, regions or countries where the Registrants or their subsidiaries conduct business;
•
receipt of necessary governmental permits and approvals;
•
new state, federal or foreign legislation or regulatory developments;
•
the impact of any state, federal or foreign investigations applicable to the Registrants and their subsidiaries and the energy industry;
•
our ability to attract and retain qualified employees;
•
the effect of any business or industry restructuring;
•
development of new projects, markets and technologies;
•
performance of new ventures;

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•
business dispositions or acquisitions and our ability to realize expected benefits from such business transactions;
•
collective labor bargaining negotiations; and
•
the outcome of litigation against the Registrants and their subsidiaries.

Any forward-looking statements should be considered in light of such important factors and in conjunction with other documents of the Registrants on file with the SEC.

New factors that could cause actual results to differ materially from those described in forward-looking statements emerge from time to time, and it is not possible for the Registrants to predict all such factors, or the extent to which any such factor or combination of factors may cause actual results to differ from those contained in any forward-looking statement. Any forward-looking statement speaks only as of the date on which such statement is made, and the Registrants undertake no obligation to update the information contained in such statement to reflect subsequent developments or information.


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PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
PPL Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars, except share data)

 
Three Months Ended March 31,
 
2019
 
2018
Operating Revenues
$
2,079

 
$
2,126

 
 
 
 
Operating Expenses
 
 
 
Operation
 
 
 
Fuel
194

 
214

Energy purchases
250

 
241

Other operation and maintenance
490

 
468

Depreciation
284

 
269

Taxes, other than income
80

 
83

Total Operating Expenses
1,298

 
1,275

 
 
 
 
Operating Income
781

 
851

 
 
 
 
Other Income (Expense) - net
52

 
(43
)
 
 
 
 
Interest Expense
241

 
239

 
 
 
 
Income Before Income Taxes
592

 
569

 
 
 
 
Income Taxes
126

 
117

 
 
 
 
Net Income
$
466

 
$
452

 
 
 
 
Earnings Per Share of Common Stock:
 
Net Income Available to PPL Common Shareowners:
 
 
 
Basic
$
0.65

 
$
0.65

Diluted
$
0.64

 
$
0.65

 
 
 
 
Weighted-Average Shares of Common Stock Outstanding
(in thousands)
 
 
 
Basic
721,023

 
694,514

Diluted
729,953

 
695,322

 
The accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.

3

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
PPL Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)

 
Three Months Ended March 31,
 
2019
 
2018
Net income
$
466

 
$
452

 
 
 
 
Other comprehensive income (loss):
 
 
 
Amounts arising during the period - gains (losses), net of tax (expense) benefit:
 
 
 
Foreign currency translation adjustments, net of tax of $0, $0
294

 
116

Qualifying derivatives, net of tax of $4, $4
(19
)
 
(20
)
Defined benefit plans:
 
 
 
Net actuarial gain (loss), net of tax of $1, $0
(3
)
 
(1
)
Reclassifications from AOCI - (gains) losses, net of tax expense (benefit):
 
 
 
Qualifying derivatives, net of tax of ($6), ($2)
24

 
12

Defined benefit plans:
 
 
 
Net actuarial (gain) loss, net of tax of ($5), ($9)
21

 
36

Total other comprehensive income
317

 
143

 
 
 
 
Comprehensive income
$
783

 
$
595

 
The accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.


4

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
PPL Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)
 
Three Months Ended March 31,
 
2019
 
2018
Cash Flows from Operating Activities
 

 
 

Net income
$
466

 
$
452

Adjustments to reconcile net income to net cash provided by operating activities
 

 
 

Depreciation
284

 
269

Amortization
22

 
21

Defined benefit plans - (income)
(66
)
 
(50
)
Deferred income taxes and investment tax credits
89

 
59

Unrealized losses on derivatives, and other hedging activities
53

 
85

Stock-based compensation expense
14

 
15

Other
(3
)
 
(3
)
Change in current assets and current liabilities
 

 
 

Accounts receivable
(57
)
 
(71
)
Accounts payable
(94
)
 
(36
)
Unbilled revenues
48

 
58

Fuel, materials and supplies
31

 
43

Prepayments
(86
)
 
(73
)
Regulatory assets and liabilities, net
(25
)
 
64

Accrued interest
48

 
39

Other current liabilities
(72
)
 
(120
)
Other
(21
)
 
6

Other operating activities
 
 
 
Defined benefit plans - funding
(127
)
 
(150
)
Other assets
(20
)
 
(30
)
Other liabilities
(10
)
 
(12
)
Net cash provided by operating activities
474

 
566

Cash Flows from Investing Activities
 

 
 

Expenditures for property, plant and equipment
(729
)
 
(750
)
Purchase of investments
(55
)
 
—

Proceeds from the sale of investments
57

 
—

Other investing activities
5

 
(3
)
Net cash used in investing activities
(722
)
 
(753
)
Cash Flows from Financing Activities
 

 
 

Issuance of long-term debt
—

 
144

Issuance of common stock
22

 
100

Payment of common stock dividends
(296
)
 
(273
)
Net increase in short-term debt
424

 
369

Other financing activities
(8
)
 
(9
)
Net cash provided by financing activities
142

 
331

Effect of Exchange Rates on Cash, Cash Equivalents and Restricted Cash
3

 
(2
)
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash
(103
)
 
142

Cash, Cash Equivalents and Restricted Cash at Beginning of Period
643

 
511

Cash, Cash Equivalents and Restricted Cash at End of Period
$
540

 
$
653

 
 
 
 
Supplemental Disclosures of Cash Flow Information
 
 
 
Significant non-cash transactions:
 
 
 
Accrued expenditures for property, plant and equipment at March 31,
$
322

 
$
313

Accrued expenditures for intangible assets at March 31,
$
64

 
$
65


 The accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.

5

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CONDENSED CONSOLIDATED BALANCE SHEETS
PPL Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars, shares in thousands)

 
March 31,
2019
 
December 31,
2018
Assets
 

 
 

 
 
 
 
Current Assets
 

 
 

Cash and cash equivalents
$
518

 
$
621

Accounts receivable (less reserve: 2019, $61; 2018, $56)
 

 
 

Customer
749

 
663

Other
104

 
107

Unbilled revenues
456

 
496

Fuel, materials and supplies
274

 
303

Prepayments
157

 
70

Price risk management assets
109

 
109

Other current assets
62

 
63

Total Current Assets
2,429

 
2,432

 
 
 
 
Property, Plant and Equipment
 

 
 

Regulated utility plant
40,752

 
39,734

Less:  accumulated depreciation - regulated utility plant
7,532

 
7,310

Regulated utility plant, net
33,220

 
32,424

Non-regulated property, plant and equipment
357

 
355

Less:  accumulated depreciation - non-regulated property, plant and equipment
104

 
101

Non-regulated property, plant and equipment, net
253

 
254

Construction work in progress
1,834

 
1,780

Property, Plant and Equipment, net
35,307

 
34,458

 
 
 
 
Other Noncurrent Assets
 

 
 

Regulatory assets
1,666

 
1,673

Goodwill
3,260

 
3,162

Other intangibles
728

 
716

Pension benefit asset
715

 
535

Price risk management assets
172

 
228

Other noncurrent assets
290

 
192

Total Other Noncurrent Assets
6,831

 
6,506

 
 
 
 
Total Assets
$
44,567

 
$
43,396

 
The accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.


6

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CONDENSED CONSOLIDATED BALANCE SHEETS
PPL Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars, shares in thousands)

 
March 31,
2019
 
December 31,
2018
Liabilities and Equity
 

 
 

 
 
 
 
Current Liabilities
 

 
 

Short-term debt
$
1,428

 
$
1,430

Long-term debt due within one year
202

 
530

Accounts payable
823

 
989

Taxes
112

 
110

Interest
332

 
278

Dividends
298

 
296

Customer deposits
260

 
257

Regulatory liabilities
100

 
122

Other current liabilities
506

 
551

Total Current Liabilities
4,061

 
4,563

 
 
 
 
Long-term Debt
21,114

 
20,069

 
 
 
 
Deferred Credits and Other Noncurrent Liabilities
 

 
 

Deferred income taxes
2,941

 
2,796

Investment tax credits
125

 
126

Accrued pension obligations
718

 
771

Asset retirement obligations
267

 
264

Regulatory liabilities
2,700

 
2,714

Other deferred credits and noncurrent liabilities
469

 
436

Total Deferred Credits and Other Noncurrent Liabilities
7,220

 
7,107

 
 
 
 
Commitments and Contingent Liabilities (Notes 7 and 11)


 


 
 
 
 
Equity
 

 
 

Common stock - $0.01 par value (a)
7

 
7

Additional paid-in capital
11,051

 
11,021

Earnings reinvested
4,761

 
4,593

Accumulated other comprehensive loss
(3,647
)
 
(3,964
)
Total Equity
12,172

 
11,657

 
 
 
 
Total Liabilities and Equity
$
44,567

 
$
43,396

 
(a)
1,560,000 shares authorized; 721,371 and 720,323 shares issued and outstanding at March 31, 2019 and December 31, 2018.

The accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.


7

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CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
PPL Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)  

 
Common
stock
shares
outstanding (a)
 
Common
stock
 
Additional
paid-in
capital
 
Earnings
reinvested
 
Accumulated
other
comprehensive
loss
 
Total
December 31, 2018
720,323

 
$
7

 
$
11,021

 
$
4,593

 
$
(3,964
)
 
$
11,657

Common stock issued
1,048

 


 
32

 
 
 
 
 
32

Stock-based compensation
 
 
 
 
(2
)
 
 
 
 
 
(2
)
Net income
 
 
 
 
 
 
466

 
 
 
466

Dividends and dividend equivalents (b)
 
 
 
 
 
 
(298
)
 
 
 
(298
)
Other comprehensive income
 
 
 
 
 
 
 
 
317

 
317

March 31, 2019
721,371

 
$
7

 
$
11,051

 
$
4,761

 
$
(3,647
)
 
$
12,172

 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2017
693,398

 
$
7

 
$
10,305

 
$
3,871

 
$
(3,422
)
 
$
10,761

Common stock issued
3,985

 
 

 
115

 
 

 
 

 
115

Stock-based compensation
 

 
 

 
(9
)
 
 

 
 

 
(9
)
Net income
 

 
 

 
 

 
452

 
 

 
452

Dividends and dividend equivalents (b)
 

 
 

 
 

 
(286
)
 
 

 
(286
)
Other comprehensive income
 

 
 

 
 

 
 

 
143

 
143

March 31, 2018
697,383

 
$
7

 
$
10,411

 
$
4,037

 
$
(3,279
)
 
$
11,176

 
 
 
 
 
 
 
 
 
 
 
 
(a)
Shares in thousands. Each share entitles the holder to one vote on any question presented at any shareowners' meeting.
(b)
Dividends declared per share of common stock at March 31, 2019 and March 31, 2018: $0.4125 and $0.4100.

The accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.


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9

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CONDENSED CONSOLIDATED STATEMENTS OF INCOME
PPL Electric Utilities Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)

 
Three Months Ended March 31,
 
2019
 
2018
Operating Revenues
$
645

 
$
639

 
 
 
 
Operating Expenses
 
 
 
Operation
 
 
 
Energy purchases
171

 
161

Other operation and maintenance
150

 
133

Depreciation
95

 
85

Taxes, other than income
31

 
32

Total Operating Expenses
447

 
411

 
 
 
 
Operating Income
198

 
228

 
 
 
 
Other Income (Expense) - net
5

 
6

 
 
 
 
Interest Income from Affiliate
2

 
—

 
 
 
 
Interest Expense
42

 
37

 
 
 
 
Income Before Income Taxes
163

 
197

 
 
 
 
Income Taxes
42

 
49

 
 
 
 
Net Income (a)
$
121

 
$
148

 
(a)
Net income equals comprehensive income.

The accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.


10

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
PPL Electric Utilities Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)
 
Three Months Ended March 31,
 
2019
 
2018
Cash Flows from Operating Activities
 

 
 

Net income
$
121

 
$
148

Adjustments to reconcile net income to net cash provided by operating activities
 

 
 

Depreciation
95

 
85

Amortization
5

 
6

Defined benefit plans - expense
—

 
2

Deferred income taxes and investment tax credits
16

 
21

Other
(2
)
 
(5
)
Change in current assets and current liabilities
 

 
 

Accounts receivable
(25
)
 
(30
)
Accounts payable
(5
)
 
(36
)
Unbilled revenues
13

 
16

Prepayments
(88
)
 
(69
)
Regulatory assets and liabilities, net
(15
)
 
5

Taxes payable
(2
)
 
4

Other
(12
)
 
(19
)
Other operating activities
 

 
 

Defined benefit plans - funding
(21
)
 
(28
)
Other assets
2

 
(25
)
Other liabilities
(1
)
 
1

Net cash provided by operating activities
81

 
76

 
 
 
 
Cash Flows from Investing Activities
 

 
 

Expenditures for property, plant and equipment
(264
)
 
(245
)
Expenditures for intangible assets
—

 
(1
)
Net cash used in investing activities
(264
)
 
(246
)
 
 
 
 
Cash Flows from Financing Activities
 

 
 

Payment of common stock dividends to parent
(120
)
 
(72
)
Net increase in short-term debt
60

 
213

Other financing activities
(1
)
 
—

Net cash provided by (used in) financing activities
(61
)
 
141

 
 
 
 
Net Decrease in Cash, Cash Equivalents and Restricted Cash
(244
)
 
(29
)
Cash, Cash Equivalents and Restricted Cash at Beginning of Period
269

 
51

Cash, Cash Equivalents and Restricted Cash at End of Period
$
25

 
$
22

 
 
 
 
Supplemental Disclosure of Cash Flow Information
 
 
 
Significant non-cash transactions:
 
 
 
Accrued expenditures for property, plant and equipment at March 31,
$
142

 
$
147


 The accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.

11

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CONDENSED CONSOLIDATED BALANCE SHEETS
PPL Electric Utilities Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars, shares in thousands)

 
March 31,
2019
 
December 31,
2018
Assets
 

 
 

 
 
 
 
Current Assets
 

 
 

Cash and cash equivalents
$
23

 
$
267

Accounts receivable (less reserve: 2019, $30; 2018, $27)
 

 
 

Customer
320

 
264

Other
19

 
38

Accounts receivable from affiliates
11

 
11

Unbilled revenues
107

 
120

Materials and supplies
24

 
25

Prepayments
86

 
5

Regulatory assets
11

 
11

Other current assets
9

 
9

Total Current Assets
610

 
750

 
 
 
 
Property, Plant and Equipment
 

 
 

Regulated utility plant
11,794

 
11,637

Less: accumulated depreciation - regulated utility plant
2,892

 
2,856

Regulated utility plant, net
8,902

 
8,781

Construction work in progress
609

 
586

Property, Plant and Equipment, net
9,511

 
9,367

 
 
 
 
Other Noncurrent Assets
 

 
 

Regulatory assets
809

 
824

Intangibles
260

 
260

Other noncurrent assets
53

 
42

Total Other Noncurrent Assets
1,122

 
1,126

 
 
 
 
Total Assets
$
11,243

 
$
11,243

 
The accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.


12

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CONDENSED CONSOLIDATED BALANCE SHEETS
PPL Electric Utilities Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars, shares in thousands)

 
March 31,
2019
 
December 31,
2018
Liabilities and Equity
 

 
 

 
 
 
 
Current Liabilities
 

 
 

Short-term debt
$
60

 
$
—

Accounts payable
373

 
418

Accounts payable to affiliates
48

 
25

Taxes
10

 
12

Interest
42

 
37

Regulatory liabilities
60

 
74

Other current liabilities
84

 
101

Total Current Liabilities
677

 
667

 
 
 
 
Long-term Debt
3,694

 
3,694

 
 
 
 
Deferred Credits and Other Noncurrent Liabilities
 

 
 

Deferred income taxes
1,345

 
1,320

Accrued pension obligations
257

 
282

Regulatory liabilities
667

 
675

Other deferred credits and noncurrent liabilities
141

 
144

Total Deferred Credits and Other Noncurrent Liabilities
2,410

 
2,421

 
 
 
 
Commitments and Contingent Liabilities (Notes 7 and 11)


 


 
 
 
 
Equity
 

 
 

Common stock - no par value (a)
364

 
364

Additional paid-in capital
3,158

 
3,158

Earnings reinvested
940

 
939

Total Equity
4,462

 
4,461

 
 
 
 
Total Liabilities and Equity
$
11,243

 
$
11,243

 
(a)
170,000 shares authorized; 66,368 shares issued and outstanding at March 31, 2019 and December 31, 2018.

The accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.


13

Table of Contents



CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
PPL Electric Utilities Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)

 
Common
stock
shares
outstanding
(a)
 
Common
stock
 
Additional
paid-in
capital
 
Earnings
reinvested
 
Total
December 31, 2018
66,368

 
$
364

 
$
3,158

 
$
939

 
$
4,461

Net income


 


 


 
121

 
121

Dividends declared on common stock


 


 


 
(120
)
 
(120
)
March 31, 2019
66,368

 
$
364

 
$
3,158

 
$
940

 
$
4,462

 
 
 
 
 
 
 
 
 
 
December 31, 2017
66,368

 
$
364

 
$
2,729

 
$
899

 
$
3,992

Net income


 


 


 
148

 
148

Dividends declared on common stock


 


 


 
(72
)
 
(72
)
March 31, 2018
66,368

 
$
364

 
$
2,729

 
$
975

 
$
4,068

 
(a)
Shares in thousands. All common shares of PPL Electric stock are owned by PPL.

The accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.















14

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15

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CONDENSED CONSOLIDATED STATEMENTS OF INCOME
LG&E and KU Energy LLC and Subsidiaries
(Unaudited)
(Millions of Dollars)

 
Three Months Ended March 31,
 
2019
 
2018
Operating Revenues
$
845

 
$
872

 
 
 
 
Operating Expenses
 

 
 

Operation
 

 
 

Fuel
194

 
214

Energy purchases
79

 
80

Other operation and maintenance
214

 
205

Depreciation
123

 
117

Taxes, other than income
18

 
17

Total Operating Expenses
628

 
633

 
 
 
 
Operating Income
217

 
239

 
 
 
 
Other Income (Expense) - net
—

 
(3
)
 
 
 
 
Interest Expense
54

 
50

 
 
 
 
Interest Expense with Affiliate
7

 
5

 
 
 
 
Income Before Income Taxes
156

 
181

 
 
 
 
Income Taxes
32

 
39

 
 
 
 
Net Income (a)
$
124

 
$
142

 
(a)
Net income approximates comprehensive income.

The accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.


16

Table of Contents



CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
LG&E and KU Energy LLC and Subsidiaries
(Unaudited)
(Millions of Dollars)
 
Three Months Ended March 31,
 
2019
 
2018
Cash Flows from Operating Activities
 

 
 

Net income
$
124

 
$
142

Adjustments to reconcile net income to net cash provided by operating activities
 

 
 

Depreciation
123

 
117

Amortization
10

 
5

Defined benefit plans - expense
3

 
3

Deferred income taxes and investment tax credits
36

 
8

Other
(1
)
 
—

Change in current assets and current liabilities
 

 
 

Accounts receivable
8

 
(5
)
Accounts payable
(33
)
 
10

Accounts payable to affiliates
7

 
2

Unbilled revenues
21

 
31

Fuel, materials and supplies
29

 
42

Regulatory assets and liabilities, net
(10
)
 
60

Taxes payable
(29
)
 
7

Accrued interest
42

 
42

Other
(15
)
 
(67
)
Other operating activities
 

 
 

Defined benefit plans - funding
(21
)
 
(108
)
Expenditures for asset retirement obligations
(21
)
 
(9
)
Other assets
(2
)
 
(3
)
Other liabilities
(1
)
 
1

Net cash provided by operating activities
270

 
278

Cash Flows from Investing Activities
 

 
 

Expenditures for property, plant and equipment
(278
)
 
(294
)
Net cash used in investing activities
(278
)
 
(294
)
Cash Flows from Financing Activities
 

 
 

Net increase (decrease) in notes payable with affiliate
74

 
12

Issuance of long-term debt
—

 
100

Net decrease in short-term debt
(12
)
 
(29
)
Distributions to member
(56
)
 
(69
)
Other financing activities
—

 
(1
)
Net cash provided by financing activities
6

 
13

Net Decrease in Cash and Cash Equivalents
(2
)
 
(3
)
Cash and Cash Equivalents at Beginning of Period
24

 
30

Cash and Cash Equivalents at End of Period
$
22

 
$
27

 
 
 
 
Supplemental Disclosure of Cash Flow Information
 
 
 
Significant non-cash transactions:
 
 
 
Accrued expenditures for property, plant and equipment at March 31,
$
88

 
$
124


 The accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.

17

Table of Contents



CONDENSED CONSOLIDATED BALANCE SHEETS
LG&E and KU Energy LLC and Subsidiaries
(Unaudited)
(Millions of Dollars)

 
March 31,
2019
 
December 31,
2018
Assets
 

 
 

 
 
 
 
Current Assets
 

 
 

Cash and cash equivalents
$
22

 
$
24

Accounts receivable (less reserve: 2019, $28; 2018, $27)
 

 
 

Customer
239

 
239

Other
60

 
63

Unbilled revenues
148

 
169

Fuel, materials and supplies
219

 
248

Prepayments
25

 
25

Regulatory assets
27

 
25

Total Current Assets
740

 
793

 
 
 
 
Property, Plant and Equipment
 

 
 

Regulated utility plant
13,806

 
13,721

Less: accumulated depreciation - regulated utility plant
2,146

 
2,125

Regulated utility plant, net
11,660

 
11,596

Construction work in progress
1,046

 
1,018

Property, Plant and Equipment, net
12,706

 
12,614

 
 
 
 
Other Noncurrent Assets
 

 
 

Regulatory assets
857

 
849

Goodwill
996

 
996

Other intangibles
75

 
78

Other noncurrent assets
136

 
82

Total Other Noncurrent Assets
2,064

 
2,005

 
 
 
 
Total Assets
$
15,510

 
$
15,412

 
The accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.

18

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CONDENSED CONSOLIDATED BALANCE SHEETS
LG&E and KU Energy LLC and Subsidiaries
(Unaudited)
(Millions of Dollars)
 
March 31,
2019
 
December 31,
2018
Liabilities and Equity
 

 
 

 
 
 
 
Current Liabilities
 

 
 

Short-term debt
$
69

 
$
514

Long-term debt due within one year
202

 
530

Notes payable with affiliates
187

 
113

Accounts payable
278

 
366

Accounts payable to affiliates
17

 
9

Customer deposits
63

 
61

Taxes
34

 
63

Price risk management liabilities
4

 
4

Regulatory liabilities
40

 
48

Interest
74

 
32

Asset retirement obligations
73

 
82

Other current liabilities
122

 
126

Total Current Liabilities
1,163

 
1,948

 
 
 
 
Long-term Debt
 
 
 
Long-term debt
5,084

 
4,322

Long-term debt to affiliate
650

 
650

Total Long-term Debt
5,734

 
4,972

 
 
 
 
Deferred Credits and Other Noncurrent Liabilities
 

 
 

Deferred income taxes
999

 
956

Investment tax credits
125

 
126

Price risk management liabilities
17

 
16

Accrued pension obligations
259

 
282

Asset retirement obligations
214

 
214

Regulatory liabilities
2,033

 
2,039

Other deferred credits and noncurrent liabilities
175

 
136

Total Deferred Credits and Other Noncurrent Liabilities
3,822

 
3,769

 
 
 
 
Commitments and Contingent Liabilities (Notes 7 and 11)


 


 
 
 
 
Member's Equity
4,791

 
4,723

 
 
 
 
Total Liabilities and Equity
$
15,510

 
$
15,412

 
The accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.


19

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CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
LG&E and KU Energy LLC and Subsidiaries
(Unaudited)
(Millions of Dollars)

 
Member's
Equity
December 31, 2018
$
4,723

Net income
124

Distributions to member
(56
)
March 31, 2019
$
4,791

 
 
December 31, 2017
$
4,563

Net income
142

Distributions to member
(69
)
Other comprehensive income
1

March 31, 2018
$
4,637

 
The accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.

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CONDENSED STATEMENTS OF INCOME
Louisville Gas and Electric Company
(Unaudited)
(Millions of Dollars)

 
Three Months Ended March 31,
 
2019
 
2018
Operating Revenues
 
 
 
Retail and wholesale
$
397

 
$
407

Electric revenue from affiliate
13

 
12

Total Operating Revenues
410

 
419

 
 
 
 
Operating Expenses
 
 
 
Operation
 
 
 
Fuel
78

 
79

Energy purchases
74

 
76

Energy purchases from affiliate
2

 
6

Other operation and maintenance
94

 
89

Depreciation
51

 
48

Taxes, other than income
9

 
9

Total Operating Expenses
308

 
307

 
 
 
 
Operating Income
102

 
112

 
 
 
 
Other Income (Expense) - net
—

 
(1
)
 
 
 
 
Interest Expense
21

 
18

 
 
 
 
Income Before Income Taxes
81

 
93

 
 
 
 
Income Taxes
17

 
21

 
 
 
 
Net Income (a)
$
64

 
$
72

 
(a)
Net income equals comprehensive income.

The accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.


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CONDENSED STATEMENTS OF CASH FLOWS
Louisville Gas and Electric Company
(Unaudited)
(Millions of Dollars)

 
Three Months Ended March 31,
 
2019
 
2018
Cash Flows from Operating Activities
 

 
 

Net income
$
64

 
$
72

Adjustments to reconcile net income to net cash provided by operating activities
 

 
 

Depreciation
51