Business Context and Reporting Period
This Form 8-K, dated February 16, 2026, reports on regulatory actions by the Kentucky Public Service Commission (KPSC) affecting PPL Corporation's subsidiaries, Louisville Gas and Electric Company (LG&E) and Kentucky Utilities Company (KU). The filing addresses the conclusion of rate proceedings commenced in May 2025 regarding annual electricity and gas revenue increases.
Key Financial Metrics and Regulatory Orders
- Revenue Increases: The KPSC approved annual electricity revenue increases of $59 million for LG&E and $128 million for KU. An annual gas revenue increase of $46 million was approved for LG&E.
- Return on Equity (ROE): Authorized ROE is set at 9.775% for base rate purposes and 9.675% for capital rate adjustment mechanisms.
- Effective Date: Rate changes are retroactive to January 1, 2026. Excess amounts collected prior to this date will be refunded to customers within sixty days.
- Rate Adjustment Mechanisms: A temporary "Pilot Generation Recovery Adjustment Clause" (Adjustment Clause PGR) was approved to recover costs for specific new generation and storage assets, including Mill Creek Unit 5, Brown Battery Energy Storage System, Mercer County Solar, and Marion County Solar. It also covers potential stay-open costs for Mill Creek Unit 2.
Material Changes and Deviations from Proposal
The KPSC orders modified the October 2025 stipulation previously agreed upon with intervenors. Key deviations include:
- Denied Mechanisms: The proposed earnings-sharing mechanism adjustment clause was not approved.
- Stay-Out Offer: The conditional offer to refrain from effective base rate increases prior to August 2028 was not approved.
- Excluded Assets: Costs for Mill Creek Unit 6 and Brown Unit 12 were excluded from the pilot mechanism due to anticipated in-service dates falling outside the mechanism's duration.
- Stipulation Status: Due to modifications and denials, the Companies and stipulating parties retain the right to withdraw from the stipulation.
Outlook, Risks, and Management Commentary
PPL Corporation reaffirms its previously disclosed long-term earnings growth targets in connection with these orders. However, the Companies are currently evaluating the orders and considering next steps, including potential rehearing or appeal requests. The filing notes that the Companies cannot predict the outcome of these potential legal actions. Forward-looking statements are subject to risks including regulatory cost recovery, market demand, and political or economic conditions.
Investor Verification Checklist
- Verify the Companies' decision on whether to withdraw from the October 2025 stipulation or request a rehearing/appeal.
- Monitor the timeline for customer refunds related to the retroactive effective date of January 1, 2026.
- Track the specific scope and duration of the "Pilot Generation Recovery Adjustment Clause" and its impact on future rate cases.
- Review the status of cost recovery for excluded assets (Mill Creek Unit 6 and Brown Unit 12) in future proceedings.