Good morning and welcome to the PPL Corporation Third Quarter Earnings Conference. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. I would now like to turn the conference over to Andy Ludwig, Vice President Investor Relations. Please go ahead.

Thank you. Good morning, everyone and thank you for joining the PPL conference call on third quarter 2021 financial results. We provided slides for this presentation in our earnings release issued this morning on the Investor section of our website. Before we get started, I'll draw your attention to Slide 2 and a brief cautionary statement. Our presentation and earnings release, which we'll discuss during today's call, contain forward-looking statements about future operating results and other future events. Actual results may differ materially from these forward-looking statements. Please refer to the appendix of this presentation and PPL SEC filings for a discussion of some of the factors that could cause actual results to differ from the forward-looking statements. We will also refer to non-GAAP measures, including earnings from ongoing operations and adjusted gross margins on this call. For reconciliations to the comparable GAAP measures, please refer to the appendix. Participating on our call this morning are Vincent Sorgi, PPL President and CEO, Joe Bergstein, Chief Financial Officer, and Greg Dudkin, Chief Operating Officer. With that, I will now turn the call over to Vincent.

Thank you, Andy. And good morning, everyone. We appreciate you joining us for our Third Quarter investor update. Moving to Slide 3 in the agenda for today's call, I'll begin this morning with an update on the progress we continue to make in advancing our strategic repositioning. I'll also share some current initiatives underway to advance PPL's Clean Energy strategy and provide a brief operational and regulatory update. Joe will then provide a financial update, including a detailed review of Third Quarter financial results. And as always, we'll leave ample time for your questions. Turning to slide 4, we continue to make excellent progress on our key initiatives to strategically reposition PPL for long-term growth and success. In September, we received FERC approval for our planned acquisition of Narragansett Electric. With FERC's approval, we now have 4 of the 5 approvals necessary to close on the transaction. We continue to make progress on securing the final approval from the Rhode Island Division of Public Utilities and Carriers. In its procedural schedule, the division has established February 25th as the target date for a decision. This would put PPL and National Grid on a path to close on the transaction by March of next year, as originally expected. We've included a slide with the division's procedural schedule in the appendix of today's presentation. As we pursue the final regulatory approval, we continue working closely with National Grid on planning to ensure a smooth transition for Rhode Island customers and Narragansett employees upon closing. Together, we've collaborated through 30 functional integration teams to plan and execute a safe, effective, and minimally disruptive transition of the Rhode Island operations. These teams have built robust day 1 integration plans to execute on identified business requirements, drafted transition service agreements that will be key to providing a stable, seamless transition for customers, redesigned critical business processes to enable the TSAs to effectively operate, designed a new Rhode Island operating model and organization from the ground up, with over 1,100 National Grid employees accepting employment offers pending the close of the transaction. We have initiated an integrated change management and communication strategy to engage our future employees, customers, and Rhode Island stakeholders to begin to build relationships for the long-term; and all 3 labor unions have ratified their new contracts that will be effective under PPL's ownership. As we work to secure final approval, we look forward to partnering with the talented team in Rhode Island to deliver safe, reliable, affordable, and sustainable energy. And we're very excited about the opportunity the acquisition presents to build one of the nation's most advanced clean energy enabling grids in support of Rhode Island's ambitious decarbonization goals. Finally, on this slide, I'm excited to highlight a new, valuable addition to PPL's Board of Directors, Heather Redman. Heather is the Co-Founder and Managing Partner of Flying Fish Partners, a venture capital firm that invests in early-stage artificial intelligence, machine learning startups, including energy-related applications. She brings expertise in disruptive technologies, industry transformation, energy development and energy technology at a time when PPL is squarely focused on driving innovation and positioning our Company for growth in the clean energy transition. I am confident that Heather will be a fantastic addition to our diverse and experienced Board. With Heather's addition, our board now has ten directors, 60% of whom are diverse, and 30% of whom are women. Turning to Slide 5 in advancing our strategic repositioning, we also continue to make progress in deploying proceeds from the sale of our U.K. assets to maximize shareholder value. And while we recognize cash is fungible, we are showing the major buckets for the use of proceeds on this slide, and today, we've announced 2 updates. First, as we continue to develop our business plans, we've identified at least a billion dollars in incremental capital investments in Pennsylvania and Kentucky through 2025 to support grid resilience and modernization to advance a sustainable energy future for our customers. The identified CapEx opportunities predominantly in the T&D areas include continued application of smart grid technologies, which improved overall system reliability and reduce O&M costs at the same time. It also includes further hardening of the system to support reliability and resilience in the face of more frequent and stronger storms. We'll look to make the same types of investments in Rhode Island once we close the transaction and work with Rhode Island stakeholders on the pace of change to the Clean Energy economy in the state, keeping in mind the cost impacts for customers. In addition to our updates on CapEx opportunities, we've also revised our expectations for share repurchases and have allocated an additional $500 million to buybacks. We now expect to repurchase a total of approximately $1 billion of PPL common stock by year-end, effectively doubling the amount previously announced on our Q2 call. We've already completed $550 million in share repurchases through October 31st. We're pleased about the progress we've made in evaluating our capital plans and look forward to sharing additional details at an Analyst Day following the closing of the Narragansett acquisition. In the meantime, we'll continue to review our business plans for additional opportunities that will drive value for both customers and shareholders. We're also providing an update on the timing of an expected change to PPL's dividend and reiterate the planned dividend policy following the closing of the Narragansett acquisition. The dividend has and will remain an important part of PPL's total shareholder return proposition. Given the procedural schedule in place for the required regulatory approval in Rhode Island, we expect to maintain the current quarterly dividend rate through the January 2022 payment. After that date, we plan to realign the dividend, targeting a payout ratio of 60 to 65% of the repositioned PPL earnings as previously communicated. The final decision regarding the dividend will be made by the Board of Directors after the Narragansett closing. Moving to Slide 6, we continue to advance our clean energy strategy as we pursue our goal of net-zero carbon emissions by 2050. In October, our Kentucky utilities filed renewable power purchase agreements with the Kentucky Public Service Commission to provide a combined 125 megawatts of solar power to 5 major customers. Under the 20-year agreements, which will support customer participation in LGNE & KU's Green Tariff, LGNE & KU will procure 100% of the power from a new solar facility that will be built in Western Kentucky. The agreements reflect our continued efforts to support the growth of renewable energy and economic development in the state. In another notable third quarter development, we announced in September that we've joined in expanding coalition of U.S. utilities committed to supporting the growth of electric vehicles as we seek additional opportunities to enable third party decarbonization. The Electric Highway Coalition will focus on development of a seamless network of rapid electric vehicle charging stations connecting major highway systems from the northeast to the midwest, down to Texas. The goal is to create convenient options for long distance EV travel to reduce range anxiety for consumers. We also continue to expand investments in R&D needed to achieve net-zero. Our Kentucky Utilities recently announced a partnership to study the capture of carbon-dioxide emissions. The partnership with the University of Kentucky's Center for Applied Energy Research or CAER will seek to develop cost-effective, scalable technology to capture carbon-dioxide from a natural gas-combined cycle plant. We'll be working with CAER in using the carbon capture infrastructure we've already built at our brown coal facility in 2014 to simulate emissions from a natural gas plant. The project will also support a study aimed at direct air capture of CO2, potentially creating a negative emissions power plant. In addition to capturing CO2, the system aims to produce two value-added streams, hydrogen and oxygen, that can be sold to offset the cost of capturing and storing the CO2. Additional partners in this R&D initiative include Vanderbilt University and EPRI and GTI through their low carbon resources initiative. The carbon capture unit we've built at the Brown plant is one of only a few carbon capture systems in operation today at Power Plants in the United States. Furthering our R&D related efforts, PPL recently acquired an ownership interest in the SOO Green project, a 350-mile underground transmission project that seeks to connect the MISO and PJM power markets and support growing demand for clean energy. We recognize that expanding the nation's transmission grid will be critical to connecting more wind and solar power and reducing greenhouse gas emissions. Breaking through citing, permitting, and other barriers to build this transmission quickly and cost-effectively will be key. SOO Green seeks to tackle these challenges by developing high-voltage transmission lines underground along major rail corridors. PPL's investment in the SOO Green project will enable us to gain valuable insight into this innovative approach. We look forward to lending our capabilities and transmission expertise to support this project's success. Turning to Slide 7. On October 19th, LGNE & KU submitted their triennial joint integrated resource plan to the Kentucky Public Service Commission. The IRP provides the commission with information regarding our potential generation sources over the next 15 years, to meet forecasted energy demand in a least cost manner. The IRP is submitted for informational purposes. It represents a moment in time look at ongoing resource planning using current business assumptions and long-term forecast. LGNE & KU's 2021 IRP projects a significant reduction in coal's contribution to our generation mix declining from over 80% of the expected electricity produced in 2021 to about half of the total power produced in 2036. In our base case scenario for load and fuel prices, we show the retirement of nearly 2,000 megawatts of coal capacity as we economically advance to Clean Energy transition. These projected retirements are consistent with the depreciation study filed in our last presentation, as well as the estimates used in developing our net zero goal announced last quarter. The IRP-based demand and base fuel price scenario envisions solar power playing a growing role in meeting our customers' demand for energy. Over the next 15 years, accounting for nearly 20% of all the power we supply to our Kentucky customers by 2036. This scenario shows an additional 2,100 megawatts of solar combined with 200 megawatts of battery storage along with simple cycle gas units needed for reliability purposes by the end of the planning period to replace those 2,000 megawatts of expected coal plant retirements. We've also added a high case scenario to this slide which reflects the implications of higher demand and higher fuel prices due to several factors. Under the high case scenario, we would expect there to be significantly more energy needed by 2036, requiring additional capacity. Based on our assumptions, that would primarily be met with an additional 5,500 megawatts of incremental renewable and storage resources above the base case scenario through that time period. Further, that would result in more than twice as much output from renewable resources by 2036, reflecting approximately 40% of generation output, primarily replacing natural gas from the base-case scenario. We've provided a slide in the appendix of today's presentation that outlines the differences in the assumptions for the base and high-case scenarios. We expect the next IRP, which will be filed in 2024, to be an extremely important plan based on the current timing of our next coal plant retirements, which are expected to begin again in 2024. Moving to Slide 8. On August 20th, PPL Electric Utilities announced a constructive settlement with an alliance of industrial and municipal customers that have challenged the Company's FERC-approved base transmission return on equity. The settlement, which must be approved by FERC, would change PPL Electric's base ROE from 11.18% to 9.9% from May 2020 to May 2022 with a rate stepping up to 10% by June 2023. The settlement also updates the equity component of PPL Electric's capital structure to be the lower of its actual equity component calculated in accordance with the formula rate template or 56%. The settlement also allows PPL Electric to modify the current formula rate, which is based on a historic test year, and move the Company to a projected year. Further PPL's formula rate could also be modified to be based on the calendar year moving forward rather than the current rate year that begins, June 1. We expect these changes to help reduce regulatory lag as we continue to make additional investments in transmission infrastructure. Overall, the settlement is expected to reduce Net Income by approximately $25 million to $30 million per year. The details of the FERC transmission ROE settlement are included in the appendix of today's presentation. In other operational developments, our utilities continue to be recognized for our award-winning customer service and innovation. PPL Electric Utilities and Kentucky Utilities were once again listed as 2 of the most trusted utility brands in the United States based on a recent study performed by human behavior firm, Escalent. The results of the study showed that communications played a vital role in building brand trust between utilities and our customers in 2020 during the pandemic. It was the third consecutive year PPL Electric received this recognition and the second consecutive year Kentucky Utilities. Also, The Association of Edison Illuminating Companies selected PPL Electric Utilities as a winner of one of their 2021 achievement awards for revolutionary work in vegetation management. Trees are a common cause of outages. Within PPL Electric Utilities service territory, it's estimated that about a third of distribution outages over the past 5 years were caused by trees contacting overhead wires. By using a new approach that leverages data analytics and other new technologies, PPL Electric Utilities found ways to trim and remove the right trees at the right times across 28,000 miles of overhead lines to help prevent outages. This has led to improved reliability despite an increase in more severe weather without increasing overall vegetation management costs. Additionally, Public Utilities Fortnightly has named PPL Electric Utilities as a top innovator for 2021. Thanks to its industry-leading use of dynamic line rating or DLR technology on its transmission line. By using smart sensors that collect real-time information like wind speed and line temperature, operators can relieve transmission congestion and increase the electricity sent over those lines. PPL Electric Utilities has been recognized for its leading-edge approach to integrating DLR into core operations and using data from the sensors to make informed investment decisions. And finally, we continue our efforts to support economic development in the regions we serve. One recent major development in this area is Ford's announcement of plans to construct a $6 billion electric battery complex within our LGNE & KU service territory. It is one of, if not the largest economic development announcement in Kentucky's history, and will have far-reaching positive impacts on communities around the Commonwealth. In fact, 2021 has been a record year for Kentucky in terms of economic development growth with over $10 billion in new investments being announced within the state. Further recent developments in addition to Ford's announcement include a $460 million investment by Toyota and a $450 million investment by GE at its appliance park in Louisville. These decisions exemplify the strengths that Kentucky has to offer large industrial customers. Specifically, we are known for exceptional reliability to deliver energy 24 hours a day, 365 days a year. Further, we have some of the lowest retail rates in the country, an important characteristic for large industrial customers and something we remain keenly focused on maintaining. Kentucky also has the third lowest business costs in the country and is home to 3 global shipping hubs. Our Kentucky service territories are located in a centralized region that is well protected from intensifying coastal storms and other natural disasters. We are excited to support the energy needs of these developments and their perspective impact on our surrounding communities. Before we move to the next slide in the broader context, I would also note that Kentucky Governor Andy Beshear and the State's Office of Energy Policy unveiled a new energy strategy on October 20th called E3. The strategy considers 3 E's as key pillars to the strategic vision of a resilient economy in the state: Energy, the environment, and economic development. And this strategy aligns very well with PPL's Clean Energy transition strategy. We're encouraged by several areas included in the strategy where our utilities will play a vital role and we expect will provide future opportunities. Including ensuring a transmission grid that supports growing renewable resources, ensuring an electric distribution grid that is self-healing, self-sufficient and auto-sensing, supporting a diversified energy supply that is fuel-secure, sustainable, and resilient, incentivizing sustainable business investments including hydrogen and other renewable fuels, supporting the development of carbon capture, utilization, and sequestration industries, and supporting alternative fuel transportation infrastructure. LG&E and KU participated in working groups associated with affordability and economic development in the lead-up to the state announcing its strategy. We believe the strategic framework represents a comprehensive approach to positioning Kentucky for success in a changing energy landscape. We look forward to engaging with the Kentucky administration and other stakeholders as the state further develops its strategy to support sustainability, boost competitiveness and spur job growth and innovation in local and regional economies. I will now turn the call over to Joe for the financial update. Joe.

Thanks, Vince. And good morning, everyone. Let's turn to Slide 9. Today, we announce third quarter reported earnings of $0.27 per share. This reflects special items of $0.09 per share primarily related to losses on the early extinguishment of debt associated with the recapitalization of the Balance Sheet, post the sale of WPD. Adjusting for special items, third quarter earnings from ongoing operations were $0.36 per share compared with $0.30 per share a year ago. Our third quarter results bring our year-to-date earnings from ongoing operations to $0.83 per share. Details on our year-to-date earnings are available in the appendix to today's presentation. Now let's move to Slide 10 for a more detailed look at our third quarter segment results. Our Pennsylvania regulated segment recorded $0.16 per share for the third quarter, which was $0.01 per share lower compared to a year ago. The decrease was primarily due to higher operations and maintenance expense, primarily related to higher storm and support costs and a reserve recorded for a reduction to the return on equity in the transmission formula rate. Partially offsetting these items were returns on additional capital investments in transmission. Turning to our Kentucky regulated segment, third quarter results were $0.21 per share, up $0.04 per share compared to Q3 2020 results. The increase was primarily driven by higher base retail rates effective July 1 and lower interest expense, primarily due to interest costs that were previously allocated to the Kentucky Regulated segment. Partially offsetting this increase was higher operation and maintenance expense related to support and generation-related cost factors that were not individually significant. Results at corporate and other were a loss of $0.01 per share, which was $0.03 higher compared to a year ago. The increase was primarily driven by lower interest expense due to less outstanding long-term holding Company debt. And that concludes my prepared remarks, and I'll turn the call back over to Vince.

Thank you, Joe. In summary, as we work to complete our strategic repositioning, I remain incredibly excited about our future. We continue to build momentum throughout 2021 in executing our strategic objectives, and I'm confident we will emerge from our transformation, a leading U.S. energy Company, stronger, more agile, and better positioned to advance the Clean Energy transition to deliver utilities of the future and to drive long-term value for all of our stakeholders. With that operator, let's open the call for questions.

We will now start the question-and-answer session. If you are using a speakerphone, please pick up your handset before pressing the keys. Our first question today comes from Shar Pourreza with Guggenheim Partners.

Hey, guys.

Hey, Shar.

Just a couple of questions here. Vince, how should we think about the allocation of that $1 billion in new CapEx, both geographic and shaping over time? And will you be able to guide on Rhode Island CapEx right out of the gate in February and March when the deal closes or will there need to be a bit more time to get your plan in motion?

I'll have Greg talk about where we're seeing the $1 billion that we've identified today. And again, we continue to review the business plans. And so, as we put on the slide, we think that'll come in at about $1 to $2 billion as we finalized the plans. On the Rhode Island side, Shar, I think you're hitting the nail right on the head. That's an area where I think we'll have a pretty good sense on what the opportunity is in Rhode Island as we think about the Clean Energy transition and what we've done in Pennsylvania, bringing that grid to Rhode Island to support the renewable ambitions within the state. Of course, there's going to be offshore wind opportunities that we need to get ready for, as well as significant investments in the state. There's also a lot of transmission opportunity. So there, I think we'll have a pretty good sense of what needs to be done. The question will be, it will have to work with the state on how quickly they want to get to the new Clean Energy transition; especially keeping rates in check, which of course we do across all of our jurisdictions. So, I think it's probably a little premature to provide too much detail on that right now. But qualitatively, I would say, I think we'll have a pretty good sense of the opportunity when it happens, we'll need to engage with the state. But Greg, do you want to touch on the billion that we've already identified?

Sure, Vince. From a high level that billion is split between Pennsylvania and Kentucky and the focus is on grid modernization, automation, and resiliency, hardening projects, as well as projects to enable more distributed energy resources and renewables on our grid. I would also add that we anticipate technology-related spend within this period of time. As far as the shaping, I would say, at a high level at this point we're still working through the client on that but it's probably going to be fairly level across the next 5 years.

Got it. That's helpful. And then just lastly, the board has obviously allocated a significant amount of the remaining WPD proceeds to buybacks and obviously you're talking about another $1 billion of CapEx from 2 utilities, you got incremental upside from Rhode Island. Could we just get a refresh on how you and the board are thinking through maybe the remaining unallocated portion between more CapEx, your buybacks in light of where the stock trades? And are organic moves still a possibility, Vince? What's the timing for how you and the board may allocate more? Thanks again.

Yes, Shar. Did you say organic or inorganic moves?

Well, I guess, inorganic.

I want to make sure I understood your question correctly. Generally, when we consider capital allocation, investing in utilities is our top priority, especially as we aim to meet our customers' needs during the transition to a Clean Energy future. It's crucial for us to fund this while minimizing equity issuances in the near future, which is why Joe and the team identified the $3.5 billion of debt that we've reduced with part of our proceeds, allowing us to strengthen our Balance Sheet. This positions us to fund not only this billion but also any additional capital related to Rhode Island and other potential opportunities without needing to issue equity. Regarding stock buybacks, we're evaluating that alongside other opportunities. As I mentioned last quarter, we don’t require M&A to achieve our growth targets, but we will remain open and opportunistic as always. Currently, our focus in M&A is to finalize the Rhode Island deal, initiate the integration, and ensure a smooth transition there. Additionally, we're working with the state on the pace of the Clean Energy transition in Rhode Island, supporting that with our capital and investment plans. So right now, our M&A focus is centered on that, but I always say we won't rule anything out. If an opportunity arises that would enhance shareholder value beyond our organic growth plans, we would certainly contemplate it, as we have in the past; however, it isn't central to our strategy at this time.

That's perfect. I appreciate it. It seems like you guys are tightening up that gap between rate base and earnings. So, it's good. Thank you. Appreciate it.

Sure. Thanks.

Our next question comes from Paul Zimbardo with Bank of America.

Good morning.

Good morning.

Thank you for the time, I have a two-part question, just to clarify Slide 5. Should we be adjusting utility CapEx category for effectively 50% equity content or is it a way that you built some Balance Sheet strength? And also, is it also effectively a toggle that for every incremental dollar of utility CapEx that reduces buyback capacity?

Yes. Joe, why don't you tell him about how we're thinking about that.

We announced today that we will be conducting a billion dollars in total buybacks by the end of the year, along with at least a billion dollars in additional capital investments. We've identified further potential beyond that, but we need to continue analyzing and working through our business plans. The ranges shown on the slide are intended to provide context regarding the remaining proceeds in those areas. As we consider how to use our cash, we also have to take into account various factors like credit, the timing of our expenditures, regulatory mechanisms, and overall efficiencies in our largely domestic platform. All of these factors will inform our comprehensive plan. After we close the Narragansett deal, we will be in a better position to share additional details, including how we will allocate the remaining proceeds and which areas they will support.

Okay. I understand. And then you've mentioned the incremental capitals, primarily transmission and distribution. Just wondering if you could frame the Kentucky generation opportunities through 2026 and 2031 from the priority base case you present.

So, looking ahead to 2028, especially through 2024, which marks our next scheduled coal plant retirement, we don’t anticipate needing much, if any, replacement generation for those retirements. The reserve margin will begin to tighten as we approach 2028. As shown on Slide 18, we are discussing the megawatts in our Integrated Resource Plan under both the base and high case scenarios. Over the 15-year span, particularly post-2028, we'll see more significant retirements and the need for replacements to accommodate the rising energy demand we are projecting. In the base case, we estimate an investment opportunity of around $3 billion over that 15-year period, while in the high case, with an additional 5,600 megawatts and considerably more renewables, the investment opportunity could reach about $10 billion, give or take. It’s important to note that announcements like the Ford initiative and other significant customer additions might not fully align with our base case and may not lead us directly to the high case. The high case assumptions include electric vehicle and electric heating considerations, along with sustained high gas prices. While many factors are still uncertain, the trend towards major new customer additions indicates that we are leaning more towards the high case rather than the base case. The investment opportunities range from $3 billion to $10 billion, depending on the scenario. There won't be a significant need for investment in the next five years, although we might see some activity in 2026 as we prepare for the 2028 retirements. The real substantial investments are likely to come after that period.

Thank you. That's very helpful. Plus, the FERC comment. Looking forward to seeing you all virtually next week, hopefully in person next year. Thanks again.

Great. Thanks.

Our next question comes from Durgesh Chopra with Evercore ISI.

Hey, Durgesh.

Hey, Vince. Good morning. I just had one question. All of the other stuff has been asked and you answered those. Just previously you've highlighted a potential perspective range of EPS growth trajectory, comparing PPL's forward-looking findings growth rate to peers. Obviously now, you've talked about the additional equity share buybacks, the CapEx plan is higher. Can you share your thoughts there on what my bet trajectory, the range that EPS growth might fall under?

Yes. I would just reiterate, I think, what we've talked about in the past. We've said we expect to have a competitive EPS growth rate off of our '22 midpoint when we come out with that, and as you know, that range is anywhere from 4% to 8%. But I would say most of the ranges within that are even tighter in the 5% to 7% range, and so we would expect to be solidly in that range.

Okay. Thanks. And just really one quick one. After this announcement of the $500 million in additional share buyback and the $1 billion in CapEx, we're left with roughly $1 billion in proceeds that still need to be deployed. Is that accurate?

Yes, so we increased the share repurchases from $500 to $1 billion. And so, it's about $0.5 billion left, right?

Going with a billion dollars of capital, you're kind of around a billion dollars left in cash. But we'll continue to evaluate the use of those billion dollars and more details when we after the close of Narragansett.

Excellent. Thanks Vince and Joe. Appreciate the time.

Sure.

Sure, thanks.

Our next question comes from Paul Patterson with Glenrock Associates.

Hey.

Way and combining that with underground high-voltage transmission. For us, the focus isn't on the amount of the investment but rather on being part of an innovative project that could potentially address some of the challenges that often affect many transmission projects. We're genuinely aiming to contribute to this initiative.

I understand your concerns. I'm also quite familiar with the project, and I agree it sounds impressive based on what you've described. However, I have two questions regarding the project. There are two complaints that have been filed at FERC, one concerning the PJM Interconnection. As you mentioned, the project is intriguing; it’s a merchant project, underground, utilizing the right-of-way, all the elements you've mentioned. The complaints, however, pertain to the delays associated with PJM's system impact study, which they state could take up to three years. The second complaint relates to how they will be classified as an external resource in the market. My question revolves around these two issues. I trust that your team has conducted due diligence, even if the project is not particularly large. I'm curious about your insights on how these two complaints may develop, as they could significantly affect the project's economics and timeline. I've been monitoring this case, including the testimony exchanges, and I wonder if you have any perspective on how you're interpreting these complaints regarding the system impact study and the external capacity treatment they are pursuing.

Greg, I don't know if there's anything specific regarding those issues that you're willing and able to talk to?

Really not too much to talk about. But I guess from a high level, Paul, for us to or for the United States to really get to being much greener and really reducing the carbon footprint, we're going to need a lot more transmission. So, I think these issues brought up on the SOO Green project are probably going to be beyond just this project. Those are the types of issues that need to be resolved if we are to really expand the use of renewables and ultimately expand our transmission system.

Okay, that sounds like an exciting project. I wanted to get your insights on it. Thank you for your time, and congratulations on the ROE settlement. It looks like you secured a strong agreement regarding the Pennsylvania transmission ROE. That's all from me. Thank you very much.

Okay. Thanks, Paul.

Our next question comes from Ryan Levine with Citi.

Good morning.

Good morning.

What's the average price of the $500 million share buyback to date that you're able to buy in those shares?

Under 29 bucks?

Yup.

All right. As you look ahead, you mentioned moving towards the high case in Kentucky. Can you quantify the load upside from additional development within your service area? Have you observed any early signs of post-COVID load patterns in your region that might influence some of those fees?

Yes. In general regarding the load, we're observing that commercial and industrial loads in Pennsylvania are approaching pre-COVID levels, although still slightly below them. We have slides in the deck illustrating this trend, which reflects similar patterns across the country. Retail and hospitality sectors have yet to fully recover. In Kentucky, we're noticing the same trends in the commercial sector. The industrial sector in Kentucky has mostly recovered from the shutdowns experienced during COVID, but due to chip shortages and supply chain challenges, some factories are still in the process of ramping back up. This is contributing to the shortfall in commercial and industrial loads. In Pennsylvania, we see more workers continuing to work from home compared to Kentucky, which has mostly returned to pre-COVID conditions, showing a slight positive trend. We're curious to see how much of this hybrid work arrangement remains permanent, and anticipate that residential loads will stay slightly elevated, although that is still uncertain. Regarding the announcements we discussed, it's too early to determine the specific load impacts and timing. For instance, in the case of the Ford plant, final designs must be completed and released first. While these developments are overall positive for our region, aiding economic opportunities, it's premature to convert that into a precise megawatt load estimate. We will provide that information as soon as possible.

I appreciate the information you've provided. Regarding the supply chain issues you mentioned that are affecting some of the manufacturers in your service area, are you experiencing any limitations in the implementation of capital expenditures due to these supply chain challenges that could affect the pace of your spending?

Yes. I'll let Greg talk about that.

Yeah, we're starting to see some extended lead times on some select material and equipment, but we've been able across our footprint, to extend the supplier base and mitigate that to some degree. But we're really not experiencing significant delays in current projects and don't expect an impact on our increased capital plan going forward.

Appreciate the color.

Thanks, Ryan.

Our next question comes from Steve Fleishman with Wolfe Research.

Hello. Good morning. Thanks for taking my questions. First, you clearly did not win that asset, and I'm not sure if you even submitted a bid. Can you share your thoughts on why that was not something you pursued?

Yes, Steve, I don't think it's appropriate to talk about specific M&A opportunities in the market or even hypotheticals for that matter. So, I would just say, on the M&A front, we're focused on Rhode Island and getting that.

Okay.

Not only to complete it but then, the transition to happen in very smooth way and then get off the TSAs and get fully under our ownership. So that's where our focus is.

Okay. Secondly, I want to clarify something regarding Slide 5. The additional utility CapEx represents an asset figure, not an equity figure. Only about half of that would be considered equity. I'm unclear if you're utilizing the entire $10.4 billion in cash proceeds as indicated, or how I should interpret this since there seems to be a mix of asset and equity.

I'll let Joe talk to that.

I understand your question, Steve, and it's similar to what Paul asked earlier. You need to consider the full transition of the company and the balance sheet after the sale of WPD. When looking at the use of proceeds, it’s important to factor in the financial strength that enables us to implement a more robust business plan without needing equity. We are returning capital to shareholders through the buyback and, of course, there's the acquisition of Narragansett. However, we haven't finalized our business plans yet. For now, we are trying to provide you with broad categories of opportunities until we complete the acquisition of Narragansett and can offer a comprehensive forecast. I appreciate your question, but we need to go through the entire process and consider Rhode Island in the plan along with all available opportunities, after which we will be able to present a clearer picture to you. Meanwhile, we aim to provide some incremental data until we reach that stage.

But Steve.

Yeah.

I think to your point and just to solidify what Joe is saying, So, when we look at that $1 to $2 billion, and this is kind of to your point, I think. We can fund that range without additional equity going forward, so.

Absolutely. I think another way to ask that question is whether your targeted debt paydown is proportionate to your strong metrics. You've accomplished a significant amount of debt paydown. Regarding the investment of additional equity or proceeds, it seems like you're gradually integrating that over time. If we consider 2022 as a baseline, it appears you're not really putting all this capital to use, which makes it somewhat misleading as a base. In theory, if you're growing at the same rate as other utilities from that baseline, you should see growth since you haven't fully utilized your available funds. I was just trying to understand if you are going to base the growth on 2022, it doesn't really serve as a new baseline.

But certainly, we will put the money to work on the acquisition of Narragansett, and the buybacks are actively being executed.

The buyback.

And the debt reductions complete. So, it's significantly behind us and so if you think about the opportunity, I don't know if it is different than any other utilities that has a forward capital plan that hasn't deployed the capital yet. So, I do think it is the base. We have transitioned and TSA and other costs that are in there that are a little different. But as far as utilizing the proceeds, I expect that the lion's share of those will be utilized by the time we get to the close of Narragansett, and provide a forecast and a base year and a growth rate.

Okay. Fair enough. Thank you. Great. Thanks.

Our next question comes from Anthony Crowdell with Mizuho.

Good afternoon, Vince. Good afternoon, Joe.

Afternoon.

How are you?

Good, Vince. This may be our sixth year, though I know it's early. I would like to follow up on Steve's question and apologize for going back to Slide 5. Considering that slide and the additional capital expenditures you announced today, with a billion dollars in share buybacks totaling a billion dollars a year, is it correct that the remaining proceeds amount to $700 million?

Yes. That's correct, yes.

So then do you have the ability to do $2 billion of share buybacks if what's left is $700 million?

I believe we do have that ability. However, the purpose of this page was to outline our overall perspective on how we view the opportunity with the proceeds. These questions all relate to the same point, and I want to emphasize that we haven't finalized the business plan yet. We are providing some details in the meantime as we consider this and develop the plans. Vince mentioned this, but we view applying those proceeds to capital as a more effective use of funds to improve the system, deliver the network that customers require, and do so affordably. We are still in the process and need to fully develop the plan.

Okay. But I'm not just considering share buybacks. If you had an additional utility CapEx of up to $2 billion, plus another $1 billion, totaling $2 billion, would that amount be greater than the proceeds, the 10 fours? Is that correct?

Yes. But again, the balance sheet is set up so that we can fund our CapEx growth without issuing equity. So, the balance sheet is strong enough to fund all that, Anthony.

Got it. And then just last question. One of the earlier questions talked about the timing of the incremental CapEx, which I think is split evenly between Pennsylvania and Kentucky. I'm curious about how you plan to incorporate that CapEx into rates. I believe in Kentucky you had a pause for a couple of years. Can you discuss how to get that additional CapEx into rates?

Yes. I think Greg mentioned that it's relatively evenly divided across the years, but not between Pennsylvania and Kentucky. The initial billion we've identified is actually leaning more towards Pennsylvania than Kentucky.

Great. Thank you for taking my question, and I look forward to seeing you.

Great. Thanks.

Thanks.

This concludes our question-and-answer session. I'd like to turn the call back over to Vince Sorgi for some closing remarks.

Great, just want to thank everyone for joining us on the call and we're looking forward to engaging with everybody next week at EI. So, thanks, everybody.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.