PPL Corporation — 2024 Q1
Transcript
Each turn shows the speaker, their inferred role, the section, and that turn's net sentiment (×1000).
Good day, and welcome to the PPL Corporation First Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note today's event is being recorded.
Good morning, everyone, and thank you for joining the PPL Conference Call on First Quarter 2024 Financial Results. We have provided slides for this presentation on the Investors section of our website.
Thank you, Andy, and good morning, everyone. Welcome to our first quarter investor update. Let's start with our financial results and a few highlights from the quarter on Slide 4. Today, we reported first quarter GAAP earnings of $0.42 per share. Adjusting for special items, first quarter earnings from ongoing operations were $0.54 per share representing a 12.5% increase over ongoing earnings of $0.48 per share a year ago. This increase was supported by additional returns on capital investments and higher sales volumes as we saw milder weather last year compared to this year.
Thank you, Vince, and good morning, everyone. Let's turn to Slide 9. PPL's first quarter GAAP earnings were $0.42 per share compared to $0.39 per share in Q1 2023. We recorded special items of $0.12 per share during the first quarter primarily due to integration and related expenses associated with the acquisition of Rhode Island Energy.
Thank you, Joe. In closing, our strong performance in the first quarter keeps us squarely on track to deliver on our 2024 commitments to shareowners. As we continue to execute our utility of the future strategy, we're well positioned to achieve or exceed the midpoint of our 2024 ongoing earnings guidance. We're off to a strong start in executing our capital plans, keeping us on track to invest $3.1 billion in infrastructure improvements this year. The newly issued EPA regulations, while they present some real reliability concerns for the industry represent only further upside to our long-term outlook for the business.
[Operator Instructions] And today's first question comes from Shahriar Pourreza with Guggenheim Partners.
It's actually James on for Shar. Maybe starting on the data center side, thanks for all the details on the backdrop across the 2 jurisdictions there. Can you just give us maybe a little bit more color on the timing of the spend for those 3 gigawatts in Pennsylvania as it relates kind of to the current plan through '27? And then secondly, how kind of firm is that advance stage at point -- at this point for those guys?
Yes, sure, James. So just in terms of firmness, we do have signed agreements for that 3 gigawatts. So continuing to work through the process with multiple data center companies would probably be in a position or would not be in a position to make a public announcement either from them or us until kind of late this year, early next year. So still a little bit of ways to go on these, but we do have signed agreements with them all.
Okay. Got you. And then keeping it in Pennsylvania, if the DSIC waiver process were unsuccessful, I guess, how would that impact the rate case cycle plan and any impact to the distribution spend plan as it's laid out today?
Yes, James, this is Joe. First, it wouldn't impact our distribution capital plans. Those are necessary investments that we'll continue to make. What it would do is potentially impact the timing of our next rate case, although as we've said, no rate case in Pennsylvania this year or next. So really likely timing could be as early as '26, but again, we'll have to see the outcome of that petition and what the commission decides on there.
[Operator Instructions] Our next question comes from Durgesh Chopra with Evercore ISI.
Just on the data center topic, I know the opportunity set is in the transmission investment for you. Well, maybe can you help us kind of frame, is there new generation or additional generation attached to these contracts? If you can talk to that? And then secondly, you mentioned '26 to '28 time line, how are you thinking about the construction time line and any sort of risks on approvals, I'm thinking FERC approvals or any other approvals that you may need to get the projects going?
Yes, sure. So the agreements that we've signed basically enable us to start the development work of the projects, and it would result in reimbursement back to the company should we not move forward with the data center. So data center companies are really taking the risk on that. Overall, we feel good about our ability to get these projects approved through the regulatory process. But you're right, we do need to go through that process. But we are currently spending money on the development for the ones that at least we have the signed agreements, we're starting those now to be ready for a 2026 the initial service fee.
That's very, very helpful, Vince. But can I just go back Pennsylvania and the way you structure this transmission agreement, is that tied to a new generation source? I know that's not an opportunity for you, but I'm just curious from a sort of a Pennsylvania state perspective, supply-demand perspective. Is that a new generation source? Or are you basically getting power from an existing generation source? I don't know if that makes sense. Did you get the question I'm asking?
I do. Yes, it is not tied to any specific generation. So ultimately the market through PJM and/or other means needs to continue to build new generation to keep up with this demand. But that will go through the general PJM process.
Got it. That's perfect. And then just one quick one, and I'll get back in the queue. Is there a procedural schedule on the DSIC application, the raising cap or sort of specific time lines for us to watch?
There isn't, although we do expect to basically have a decision on both the DSIC waiver and the LTIP filing by the end of the year. So in general, the LTIP takes about 9 months, those types of filings, and we think it makes sense. Obviously, we requested the DSIC decision to be before the end of the year so that we could apply it for 2025.
Okay. I also want to echo James' thanks and comments on the data center information really helpful. And congrats on a great quarter here. Thank you again.
And our next question comes from Steve Fleishman with Wolfe Research.
So just to kind of -- because we're hearing a lot about data centers. Could you give us any sense of just like how meaningful the deposits are for you to be pursuing this in terms of just the scheme of scale the whole thing, just as it is -- kind of helps to assess just likelihood, I guess?
Yes. So I don't want to get into details around like deposits or anything like that [indiscernible], although I will say the agreement, again, that we are -- that we signed in Pennsylvania, those agreements permit us to start spending on these and then we would get recovery of those for some reason if we don't move forward. So I think the curiousness of the counterparties is there [indiscernible] clearly, right? And for all the reasons I talked about in my prepared remarks, I think we do bring a number of benefits to bear for these folks. Not the least of which is not only our capacity to connect them, but our ability to meet their in-service deadlines. So we can get this work done in time for 2026 in service states for these data centers.
Okay. And then just in terms of -- I mean, we're hearing data center growth in several other parts of the PJM market. And I'm just wondering, do you see the potential need for more transmission, not for necessarily your own data center, but just for all this broader growth potential in PJM that could create more need and obviously move power flows and the like. Any thoughts there.
Yes, absolutely. And you saw some of that. We've won in a FERC 1000 process last year to build into the Dominion zone for some of the data center load down there. So yes, to your point, depending on where these pockets set up, because generally, as we're talking with these data center companies, it's not necessarily just one and done. If they can build one, their intention is to expand upon that. And so I think you'll start to see these data center hubs start to get created around the country. Obviously, there's economies of scale if they're kind of bundling together.
Okay. And then a different topic. Just in Pennsylvania on the DSIC waiver filing. Is this something that -- is something that could be settable thing? Or is this something really where the commission just needs to decide?
Yes. In general, certainly, where we can engage with the commission end up with something in between, sure, certainly.
Ladies and gentlemen, this concludes the questions-and-answer session. I'd like to turn the conference back over to Vince Sorgi for closing remarks.
Thanks a lot. And I just want to thank everybody for joining us on today's call. I do want to remind everyone that this Saturday is the 150th running of the Kentucky Derby, which is the most exciting 2 minutes in sport. So enjoy the race, and we hope to see you soon. Thanks, everybody.
Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines, and have a wonderful day.