PPL 10-K Fiscal year ended Dec. 31, 2022

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

(All Registrants)

General

Capitalized terms and abbreviations appearing in the combined notes to financial statements are defined in the glossary. Dollars are in millions, except per share data, unless otherwise noted. The specific Registrant to which disclosures are applicable is identified in parenthetical headings in italics above the applicable disclosure or within the applicable disclosure for each Registrants' related activities and disclosures. Within combined disclosures, amounts are disclosed for any Registrant when significant.

Business and Consolidation

(PPL)

PPL is a utility holding company that, through its regulated subsidiaries, is primarily engaged in: 1) the generation, transmission, distribution and sale of electricity and the distribution and sale of natural gas, primarily in Kentucky; 2) the transmission, distribution and sale of electricity in Pennsylvania; and 3) the transmission, distribution and sale of electricity and the distribution and sale of natural gas in Rhode Island. Headquartered in Allentown, PA, PPL's principal subsidiaries are LG&E, KU, RIE and PPL Electric. PPL's corporate level financing subsidiary is PPL Capital Funding.

---

On March 17, 2021, PPL WPD Limited entered into a share purchase agreement to sell PPL's U.K. utility business, which prior to its sale substantially represented PPL's U.K. Regulated segment, to a subsidiary of National Grid plc. The sale was completed on June 14, 2021. The results of operations of the U.K. utility business are classified as Discontinued Operations on PPL's Statements of Income for all periods presented. PPL has elected to separately report the cash flows of continuing and discontinued operations on the Statements of Cash Flows for all periods presented. Unless otherwise noted, the notes to these financial statements exclude amounts related to discontinued operations. See Note 9 for additional information.

On May 25, 2022, PPL Rhode Island Holdings, a wholly owned subsidiary of PPL, acquired 100% of the outstanding shares of common stock of Narragansett Electric from National Grid U.S., a subsidiary of National Grid plc. Narragansett Electric, whose service area covers substantially all of Rhode Island, is primarily engaged in the transmission, distribution and sale of electricity and the distribution and sale of natural gas. The results of Narragansett Electric are included in the consolidated results of PPL from the date of the acquisition. Following the closing of the acquisition, Narragansett Electric provides services doing business under the name Rhode Island Energy (RIE). See Note 9 for additional information.

(PPL and PPL Electric)

PPL Electric's principal business is the transmission and distribution of electricity to serve retail customers in its franchised territory in eastern and central Pennsylvania and the regulated supply of electricity to retail customers in that territory as a PLR.

(PPL, LG&E and KU)

LG&E and KU are engaged in the generation, transmission, distribution and sale of electricity. LG&E also engages in the distribution and sale of natural gas. LG&E and KU maintain their separate identities and serve customers in Kentucky under their respective names. KU also serves customers in Virginia under the Old Dominion Power name.

(All Registrants)

The financial statements of the Registrants include each company's own accounts as well as the accounts of all entities in which the company has a controlling financial interest. Entities for which a controlling financial interest is not demonstrated through voting interests are evaluated based on accounting guidance for Variable Interest Entities (VIEs). The Registrants consolidate a VIE when they are determined to have a controlling interest in the VIE and, as a result, are the primary beneficiary of the entity. Amounts consolidated under the VIE guidance are not material to the Registrants.

All significant intercompany transactions have been eliminated.

The financial statements of PPL, LG&E and KU include their share of any undivided interests in jointly owned facilities, as well as their share of the related operating costs of those facilities. See Note 13 for additional information.

Regulation

(All Registrants)

PPL Electric, RIE, LG&E and KU are cost-based rate-regulated utilities for which rates are set by regulators to enable PPL Electric, RIE, LG&E and KU to recover the costs of providing electric or gas service, as applicable, and to provide a reasonable return to shareholders. Base rates are generally established based on a future test period. As a result, the financial statements are subject to the accounting for certain types of regulation as prescribed by GAAP and reflect the effects of regulatory actions. Regulatory assets are recognized for the effect of transactions or events where future recovery of underlying costs is probable in regulated customer rates. The effect of such accounting is to defer certain or qualifying costs that would otherwise currently be charged to expense. Regulatory liabilities are recognized for amounts expected to be returned through future regulated customer rates. In certain cases, regulatory liabilities are recorded based on an understanding or agreement with the regulator that rates have been set to recover expected future costs, and the regulated entity is accountable for any amounts charged pursuant to such rates and not yet expended for the intended purpose. The accounting for regulatory assets and regulatory liabilities is based on specific ratemaking decisions or precedent for each transaction or event as prescribed by the FERC or the applicable state regulatory commissions. See Note 7 for additional details regarding regulatory matters.

Accounting Records

The system of accounts for regulated entities is maintained in accordance with the Uniform System of Accounts prescribed by the FERC and adopted by the applicable state regulatory commissions.

---

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Loss Accruals

Potential losses are accrued when (1) information is available that indicates it is "probable" that a loss has been incurred, given the likelihood of uncertain future events and (2) the amount of loss can be reasonably estimated. Accounting guidance defines "probable" as cases in which "the future event or events are likely to occur." The Registrants continuously assess potential loss contingencies for environmental remediation, litigation claims, regulatory penalties and other events. Loss accruals for environmental remediation are discounted when appropriate.

The accrual of contingencies that might result in gains is not recorded, unless realization is assured.

Earnings Per Share (PPL)

EPS is computed using the two-class method, which is an earnings allocation method for computing EPS that treats a participating security as having rights to earnings that would otherwise have been available to common shareowners. Share-based payment awards that provide recipients a non-forfeitable right to dividends or dividend equivalents are considered participating securities.

Price Risk Management

(All Registrants)

Interest rate contracts are used to hedge exposure to changes in the fair value of debt instruments and to hedge exposure to variability in expected cash flows associated with existing floating-rate debt instruments or forecasted fixed-rate issuances of debt. Derivative instruments pursuant to regulator approved plans to manage commodity price risk associated with natural gas purchases to reduce fluctuations in natural gas prices and costs associated with these derivatives instruments are generally recoverable through approved cost recovery mechanism. Similar derivatives may receive different accounting treatment, depending on management's intended use and documentation.

Certain contracts may not meet the definition of a derivative because they lack a notional amount or a net settlement provision. In cases where there is no net settlement provision, markets are periodically assessed to determine whether market mechanisms have evolved to facilitate net settlement. Certain derivative contracts may be excluded from the requirements of derivative accounting treatment because NPNS has been elected. These contracts are accounted for using accrual accounting. Contracts that have been classified as derivative contracts are reflected on the balance sheets at fair value.

Cash inflows and outflows related to derivative instruments are included as a component of operating, investing or financing activities on the Statements of Cash Flows, depending on the classification of the hedged items.

PPL and its subsidiaries have elected not to offset net derivative positions against the right to reclaim cash collateral (a receivable) or the obligation to return cash collateral (a payable) under master netting arrangements.

(PPL)

Processes exist that allow for subsequent review and validation of contract information as it relates to interest rate derivatives and commodity gas contracts. The accounting department provides the treasury department with guidelines on appropriate accounting classifications for various contract types and strategies. Examples of accounting guidelines provided to the treasury department staff include, but are not limited to:

• Transactions to lock in an interest rate prior to a debt issuance can be designated as cash flow hedges, to the extent the forecasted debt issuances remain probable of occurring.

• Transactions to hedge fluctuations in the fair value of existing debt can be designated as fair value hedges.

---

• Derivative transactions that do not qualify for cash flow or net investment hedge treatment are marked to fair value through earnings.

(All Registrants)

Derivative transactions may be marked to fair value through regulatory assets/liabilities at PPL Electric, RIE, LG&E and KU, if approved by the appropriate regulatory body. These transactions generally include the effect of interest rate swaps or commodity gas contracts that are included in customer rates.

(PPL and PPL Electric)

To meet their obligations as last resort providers to their customers, PPL Electric and RIE have entered into certain contracts that meet the definition of a derivative. However, NPNS has been elected for these contracts.

(All Registrants)

See Notes 17 and 18 for additional information on derivatives.

Revenue (All Registrants)

Operating revenues are primarily recorded based on energy deliveries through the end of each calendar month. Unbilled retail revenues result because customers' bills are rendered throughout the month, rather than at the end of the month. For RIE, LG&E and KU, unbilled revenues for a month are calculated by multiplying an estimate of unbilled kWh or Mcf by the estimated average cents per kWh or Mcf. Any difference between estimated and actual revenues is adjusted the following month when the previous unbilled estimate is reversed and actual billings occur. For PPL Electric, unbilled revenues for a month are calculated by multiplying the actual unbilled volumes by the price per tariff. In the fourth quarter of 2022, PPL Electric estimated deliveries to customers due to a temporary technical system issue. The issue has been resolved and unbilled revenues are expected to resume being calculated by multiplying the actual unbilled volumes by the price per tariff in the first quarter of 2023.

PPL Electric's, RIE's, LG&E's and KU's base rates are determined based on cost of service. Some regulators have also authorized the use of additional alternative revenue programs, which enable PPL Electric, RIE, LG&E and KU to adjust future rates based on past activities or completed events. Revenues from alternative revenue programs are recognized when the specific events permitting future billings have occurred. Revenues from alternative revenue programs are required to be presented separately from revenues from contracts with customers. These amounts are, however, presented as revenues from contracts with customers, with an offsetting adjustment to alternative revenue program revenue, when they are billed to customers in future periods. See Note 3 for additional information.

Financing and Other Receivables

(All Registrants)

Accounts receivable are reported on the Balance Sheets at the gross outstanding amount adjusted for an allowance for doubtful accounts. Financing receivables include accounts receivable, with the exception of those items within accounts receivable that are not subject to the current expected credit loss model.

Financing receivable collectability is evaluated using a current expected credit loss model, consisting of a combination of factors, including past due status based on contractual terms, trends in write-offs and the age of the receivable. Specific events, such as bankruptcies, are also considered when applicable. The Registrants also evaluate the impact of observable external factors on the collectability of the financing receivables to determine if adjustments to the allowance for doubtful accounts should be made based on current conditions or reasonable and supportable forecasts. Adjustments to the allowance for doubtful accounts are made based on the results of these analyses. Accounts receivable are written off in the period in which the receivable is deemed uncollectible.

PPL Electric, RIE, LG&E and KU have identified one class of financing receivables, “accounts receivable - customer”, which includes financing receivables for all billed and unbilled sales with customers. All other financing receivables are classified as other.

---

(PPL and PPL Electric)

Within the credit loss model for the residential customer accounts receivables, customers are disaggregated based on their projected propensity to pay, which is derived from historical trends and the current activity of the individual customer accounts. Conversely, the non-residential customer accounts receivables are not further segmented due to the varying nature of the individual customers, which lack readily identifiable risk characteristics for disaggregation.

(All Registrants)

The changes in the allowance for doubtful accounts are included in the following table. Amounts relate to financing receivables, except as noted.

									Additions
			Balance at Beginning of Period						Charged to Income						Deductions (b)						Balance at End of Period
PPL
2022			$	69					$	78					$	52					$	95		(d)
2021			73						26						30						69			(d)
2020 (a)			58			(a)			28						13						73			(d)
PPL Electric
2022			$	35					$	27					$	29					$	33		(c)
2021			41						13						19						35			(c)
2020			30			(a)			19						8						41			(c)
LG&E
2022			$	3					$	6					$	5					$	4
2021			3						4						4						3
2020			1						4						2						3
KU
2022			$	3					$	6					$	6					$	3
2021			2						8						7						3
2020			1						4						3						2

(a) Adjusted for $ 2 million cumulative-effect adjustment upon adoption of current expected credit loss guidance.

(b) Primarily related to uncollectible accounts written off.

(c) Includes $ 3 million related to other accounts receivables at December 31, 2022, 2021 and 2020.

(d) Includes $ 36 million, $ 32 million and $ 30 million related to other accounts receivables at December 31, 2022, 2021 and 2020.

Cash

(All Registrants)

Cash Equivalents

All highly liquid investments with original maturities of three months or less are considered to be cash equivalents.

(PPL)

Restricted Cash and Cash Equivalents

Bank deposits and other cash equivalents that are restricted by agreement or that have been clearly designated for a specific purpose are classified as restricted cash and cash equivalents. On the Balance Sheets, the current portion of restricted cash and cash equivalents is included in "Other current assets," while the noncurrent portion is included in "Other noncurrent assets." See Note 17 for a reconciliation of Cash, Cash Equivalents and Restricted Cash reported within the Balance Sheets to the amounts shown on the Statements of Cash Flows.

---

(All Registrants)

Fair Value Measurements

The Registrants value certain financial and nonfinancial assets and liabilities at fair value. Generally, the most significant fair value measurements relate to price risk management assets and liabilities, investments in securities in defined benefit plans, and cash and cash equivalents. PPL and its subsidiaries use, as appropriate, a market approach (generally, data from market transactions), an income approach (generally, present value techniques and option-pricing models) and/or a cost approach (generally, replacement cost) to measure the fair value of an asset or liability. These valuation approaches incorporate inputs such as observable, independent market data and/or unobservable data that management believes are predicated on the assumptions market participants would use to price an asset or liability. These inputs may incorporate, as applicable, certain risks such as nonperformance risk, which includes credit risk.

The Registrants classify fair value measurements within one of three levels in the fair value hierarchy. The level assigned to a fair value measurement is based on the lowest level input that is significant to the fair value measurement in its entirety. The three levels of the fair value hierarchy are as follows:

• Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities that are accessible at the measurement date. Active markets are those in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

• Level 2 - inputs other than quoted prices included within Level 1 that are either directly or indirectly observable for substantially the full term of the asset or liability.

• Level 3 - unobservable inputs that management believes are predicated on the assumptions market participants would use to measure the asset or liability at fair value.

Assessing the significance of a particular input requires judgment that considers factors specific to the asset or liability. As such, the Registrants' assessment of the significance of a particular input may affect how the assets and liabilities are classified within the fair value hierarchy.

Investments

Generally, the original maturity date of an investment and management's intent and ability to sell an investment prior to its original maturity determine the classification of investments as either short-term or long-term. Investments that would otherwise be classified as short-term, but are restricted as to withdrawal or use for other than current operations or are clearly designated for expenditure in the acquisition or construction of noncurrent assets or for the liquidation of long-term debts, are classified as long-term.

Investments in entities in which a company has the ability to exercise significant influence but does not have a controlling financial interest are accounted for under the equity method. All other investments are carried at cost or fair value. These investments are included in "Other noncurrent assets" on the Balance Sheets. Earnings from these investments are recorded in "Other Income (Expense) - net" on the Statements of Income.

Short-term investments generally include certain deposits as well as securities that are considered highly liquid or provide for periodic reset of interest rates. Investments with original maturities greater than three months and less than a year, as well as investments with original maturities of greater than a year that management has the ability and intent to sell within a year, are included in "Other current assets" on the Balance Sheets.

Long-Lived and Intangible Assets

Property, Plant and Equipment

(All Registrants)

PP&E is recorded at original cost, unless impaired. If impaired, the asset is written down to fair value at that time, which becomes the new cost basis of the asset. PP&E acquired in business combinations is recorded at fair value at the time of acquisition. Original cost for constructed assets includes material, labor, contractor costs, certain overheads and financing costs,

---

where applicable. Included in PP&E are capitalized costs of software projects that were developed or obtained for internal use. The cost of repairs and minor replacements are charged to expense as incurred. The Registrants record costs associated with planned major maintenance projects in the period in which work is performed and costs are incurred.

AFUDC is capitalized at PPL Electric and RIE as part of the construction costs for cost-based rate-regulated projects for which a return on such costs is recovered after the project is placed in service. The debt component of AFUDC is credited to "Interest Expense" and the equity component is credited to "Other Income (Expense) - net" on the Statements of Income. AFUDC capitalized at LG&E and KU is generally not significant because a return is provided on construction work in progress.

(PPL and PPL Electric)

RIE and PPL Electric capitalize interest costs as part of construction costs. Capitalized interest, including the debt component of AFUDC, for the years ended December 31 is as follows:

			2022						2021						2020
PPL			$	7					$	6					$	7
PPL Electric			5						6						7

Depreciation (All Registrants)

Depreciation is recorded over the estimated useful lives of property using various methods including the straight-line, composite and group methods. When a component of PP&E that was depreciated under the composite or group method is retired, the original cost is charged to accumulated depreciation. When all or a significant portion of an operating unit that

was depreciated under the composite or group method is retired or sold, the property and the related accumulated depreciation account is reduced and any gain or loss is included in income, unless otherwise required by regulators. RIE, LG&E and KU accrue costs of removal net of estimated salvage value through depreciation, which is included in the calculation of customer rates over the assets' depreciable lives in accordance with regulatory practices. Cost of removal amounts accrued through depreciation rates are accumulated as a regulatory liability until the removal costs are incurred. For LG&E and KU, all ARO depreciation expenses are reclassified to a regulatory asset or regulatory liability. See "Asset Retirement Obligations" below and Note 7 for additional information. PPL Electric records net costs of removal when incurred as a regulatory asset. The regulatory asset is subsequently amortized through depreciation over a five-year period, which is recoverable in customer rates in accordance with regulatory practices.

Following are the weighted-average annual rates of depreciation, for regulated utility plant, for the years ended December 31:

			2022						2021						2020
PPL			3.21		%				3.61		%				3.53		%
PPL Electric			2.75		%				3.05		%				2.99		%
LG&E			4.16		%				3.99		%				4.00		%
KU			4.01		%				4.17		%				4.00		%

Goodwill and Other Intangible Assets ( All Registrants)

Goodwill represents the excess of the purchase price paid over the fair value of the identifiable net assets acquired in a business combination.

Other acquired intangible assets are initially measured based on their fair value. Intangibles that have finite useful lives are amortized over their useful lives based upon the pattern in which the economic benefits of the intangible assets are consumed or otherwise used. Costs incurred to obtain an initial license and renew or extend terms of licenses are capitalized as intangible assets.

When determining the useful life of an intangible asset, including intangible assets that are renewed or extended, PPL and its subsidiaries consider:

• the expected use of the asset;

• the expected useful life of other assets to which the useful life of the intangible asset may relate;

• legal, regulatory, or contractual provisions that may limit the useful life;

• the company's historical experience as evidence of its ability to support renewal or extension;

• the effects of obsolescence, demand, competition, and other economic factors; and,

---

• the level of maintenance expenditures required to obtain the expected future cash flows from the asset.

Asset Impairment (Excluding Investments)

(All Registrants)

The Registrants review long-lived assets that are subject to depreciation or amortization, including finite-lived intangibles, for impairment when events or circumstances indicate carrying amounts may not be recoverable.

A long-lived asset classified as held and used is impaired when the carrying amount of the asset exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. If impaired, the asset's carrying value is written down to its fair value.

A long-lived asset classified as held for sale is impaired when the carrying amount of the asset (disposal group) exceeds its fair value less cost to sell. If impaired, the asset's (disposal group's) carrying value is written down to its fair value less cost to sell.

PPL, LG&E and KU review goodwill for impairment at the reporting unit level annually or more frequently when events or circumstances indicate that the carrying amount of a reporting unit may be greater than the unit's fair value. Additionally, goodwill must be tested for impairment in circumstances when a portion of goodwill has been allocated to a business to be disposed. PPL's, LG&E's and KU's reporting units are primarily at the operating segment level.

Goodwill recognized upon the acquisition of Narragansett Electric was assigned for impairment testing by PPL to its reporting units expected to benefit from the acquisition, which were the Rhode Island Regulated reporting unit, the Pennsylvania Regulated reporting unit and the Kentucky Regulated reporting unit. See Note 9 for additional information regarding the acquisition.

PPL, for its reporting units, and individually LG&E and KU may elect either to initially make a qualitative evaluation about the likelihood of an impairment of goodwill or to bypass the qualitative evaluation and test goodwill for impairment using a quantitative test. If the qualitative evaluation (referred to as step zero) is elected and the assessment results in a determination that it is not more likely than not that the fair value of a reporting unit is less than the carrying amount, the quantitative impairment test is not necessary. However, the quantitative impairment test is required if management concludes it is more likely than not that the fair value of a reporting unit is less than the carrying amount based on the step zero assessment. If the carrying amount of the reporting unit, including goodwill, exceeds its fair value, an impairment loss is recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit.

As of October 1, 2022, PPL, for its reporting units, and individually, LG&E and KU, elected to perform quantitative annual goodwill impairment tests. There were no indicators of impairment for any of the reporting units as the fair value of each of the reporting units significantly exceeded their carrying values.

( PPL, LG&E and KU )

Asset Retirement Obligations

PPL and its subsidiaries record liabilities to reflect various legal obligations associated with the retirement of long-lived assets. Initially, this obligation is measured at fair value and offset with an increase in the value of the capitalized asset, which is depreciated over the asset's useful life. Until the obligation is settled, the liability is increased through the recognition of accretion expense classified within "Other operation and maintenance" on the Statements of Income to reflect changes in the obligation due to the passage of time. For LG&E and KU, all ARO accretion and depreciation expenses are reclassified as a regulatory asset or regulatory liability. ARO regulatory assets associated with certain CCR projects are amortized to expense in accordance with regulatory approvals. For other AROs, deferred accretion and depreciation expense is recovered through cost of removal.

Estimated ARO costs and settlement dates, which affect the carrying value of the ARO and the related capitalized asset, are reviewed periodically to ensure that any material changes are incorporated into the latest estimate of the ARO. Any change to the capitalized asset, positive or negative, is generally amortized over the remaining life of the associated long-lived asset. See Note 7 and Note 20 for additional information on AROs.

---

Compensation and Benefits

Defined Benefits (All Registrants)

Certain PPL subsidiaries sponsor various defined benefit pension and other postretirement plans. An asset or liability is recorded to recognize the funded status of all defined benefit plans with an offsetting entry to AOCI or, for LG&E, KU, RIE and PPL Electric, to regulatory assets or liabilities. Consequently, the funded status of all defined benefit plans is fully recognized on the Balance Sheets.

The expected return on plan assets is determined based on a market-related value of plan assets, which is calculated by rolling forward the prior year market-related value with contributions, disbursements and long-term expected return on investments. One-fifth of the difference between the actual value and the expected value is added (or subtracted if negative) to the expected value to determine the new market-related value.

PPL uses an accelerated amortization method for the recognition of gains and losses for its defined benefit pension plans. Under the accelerated method, actuarial gains and losses in excess of 30 % of the plan's projected benefit obligation are amortized on a straight-line basis over one-half of the required amortization period. Actuarial gains and losses in excess of 10 % of the greater of the plan's projected benefit obligation or the market-related value of plan assets and less than 30 % of the plan's projected benefit obligation are amortized on a straight-line basis over the full required amortization period.

See Note 7 for a discussion of the regulatory treatment of defined benefit costs and Note 12 for a discussion of defined benefits.

Stock-Based Compensation (PPL and PPL Electric)

PPL has several stock-based compensation plans for purposes of granting stock options, restricted stock, restricted stock units and performance units to certain employees as well as stock units and restricted stock units to directors. PPL grants most stock-based compensation awards in the first quarter of each year. PPL and its subsidiaries recognize compensation expense for stock-based compensation awards based on the fair value method. Forfeitures of awards are recognized when they occur. See Note 11 for a discussion of stock-based compensation. All awards are recorded as equity or a liability on the Balance Sheets. Stock-based compensation expense is primarily included in "Other operation and maintenance" on the Statements of Income.

Taxes

Income Taxes

(All Registrants)

PPL and its domestic subsidiaries file a consolidated U.S. federal income tax return.

Significant management judgment is required in developing the Registrants' provision for income taxes, primarily due to the uncertainty related to tax positions taken or expected to be taken on tax returns and valuation allowances on deferred tax assets.

The Registrants use a two-step process to evaluate tax positions. The first step requires an entity to determine whether, based on the technical merits supporting a particular tax position, it is more likely than not (greater than a 50% chance) that the tax position will be sustained. This determination assumes that the relevant taxing authority will examine the tax position and is aware of all the relevant facts surrounding the tax position. The second step requires an entity to recognize in its financial statements the benefit of a tax position that meets the more-likely-than-not recognition criterion. The benefit recognized is measured at the largest amount of benefit that has a likelihood of realization upon settlement that exceeds 50 %. Unrecognized tax benefits are classified as current to the extent management expects to settle the uncertain tax position by payment or receipt of cash within one year of the reporting date. The amounts ultimately paid upon resolution of issues raised by taxing authorities may differ materially from the amounts accrued and may materially impact the financial statements of the Registrants in future periods. At December 31, 2022, no significant changes in unrecognized tax benefits were projected over the next 12 months.

Deferred income taxes reflect the net future tax effects of temporary differences between the carrying amounts of assets and liabilities for accounting purposes and their basis for income tax purposes, as well as the tax effects of net operating losses and tax credit carryforwards.

The Registrants record valuation allowances to reduce deferred income tax assets to the amounts that are more-likely-than-not to be realized. The need for valuation allowances requires significant management judgment. If the Registrants determine that

---

they are able to realize deferred tax assets in the future in excess of recorded net deferred tax assets, adjustments to the valuation allowances increase income by reducing tax expense in the period that such determination is made. Likewise, if the Registrants determine that they are not able to realize all or part of net deferred tax assets in the future, adjustments to the valuation allowances would decrease income by increasing tax expense in the period that such determination is made. The amount of deferred tax assets ultimately realized may differ materially from the estimates utilized in the computation of valuation allowances and may materially impact the financial statements in the future .

The Registrants defer investment tax credits when the credits are generated and amortize the deferred amounts over the average lives of the related assets.

The Registrants recognize tax-related interest and penalties in "Income Taxes" on their Statements of Income.

The Registrants use the portfolio approach method of accounting for deferred taxes related to pre-tax OCI transactions. The portfolio approach involves a strict period-by-period cumulative incremental allocation of income taxes to the change in income and losses reflected in OCI. Under this approach, the net cumulative tax effect is ignored. The net change in unrealized gains and losses recorded in AOCI under this approach would be eliminated only on the date the investment portfolio is classified as held for sale or is liquidated.

See Note 6 to the Financial Statements for income tax disclosures.

The provision for the Registrants' deferred income taxes related to regulatory assets and liabilities is based upon the ratemaking principles reflected in rates established by relevant regulators. The difference in the provision for deferred income taxes for regulatory assets and liabilities and the amount that otherwise would be recorded under GAAP is deferred and included on the Balance Sheets in noncurrent "Regulatory assets" or "Regulatory liabilities."

(PPL Electric, LG&E and KU)

The income tax provision for PPL Electric, LG&E and KU is calculated in accordance with an intercompany tax sharing agreement, which provides that taxable income be calculated as if PPL Electric, LG&E, KU and any domestic subsidiaries each filed a separate return. Tax benefits are not shared between companies. The entity that generates a tax benefit is the entity that is entitled to the tax benefit. The effect of PPL filing a consolidated tax return is taken into account in the settlement of current taxes and the recognition of deferred taxes.

At December 31, the following intercompany tax receivables (payables) were recorded:

			2022						2021
PPL Electric			$	2					$	( 4 )
LG&E			( 6 )						4
KU			4						1

Taxes, Other Than Income (All Registrants)

The Registrants present sales taxes in "Other current liabilities" on the Balance Sheets. These taxes are not reflected on the Statements of Income. See Note 6 for details of taxes included in "Taxes, other than income" on the Statements of Income.

Other

(All Registrants)

Leases

The Registrants determine whether contractual arrangements contain a lease by evaluating whether those arrangements either implicitly or explicitly identify an asset, whether the Registrants have the right to obtain substantially all of the economic benefits from use of the asset throughout the term of the arrangement, and whether the Registrants have the right to direct the use of the asset. Renewal options are included in the lease term if it is reasonably certain the Registrants will exercise those options. Periods for which the Registrants are reasonably certain not to exercise termination options are also included in the lease term. The Registrants have certain agreements with lease and non-lease components, such as office space leases, which are generally accounted for separately.

---

Short-term leases are leases with a term that is 12 months or less and do not include a purchase option or option to extend the initial term of the lease to greater than 12 months that the Registrants are reasonably certain to exercise. The Registrants have made an accounting policy election to not recognize the right-of-use asset and the lease liability arising from leases classified as short-term.

The discount rate for a lease is the rate implicit in the lease unless that rate cannot be readily determined. In that case, the Registrants are required to use their incremental borrowing rate, which is the rate the Registrants would have to pay to borrow, on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment.

The Registrants receive secured borrowing rates from financial institutions based on their applicable credit profiles. The Registrants use the secured rate which corresponds with the term of the applicable lease. See Note 10 for additional information.

Fuel, Materials and Supplies

Fuel, natural gas stored underground and materials and supplies are valued using the average cost method. Fuel costs for electricity generation are charged to expense as used. For RIE, natural gas supply costs are charged to expense when delivered to customers. For LG&E, natural gas supply costs are charged to expense as delivered to the distribution system. See Note 7 for further discussion of the fuel adjustment clauses and gas supply clause.

"Fuel, materials and supplies" on the Balance Sheets consisted of the following at December 31:

			2022
			PPL						PPL Electric						LG&E						KU
Fuel			$	125					$	—					$	44					$	81
Natural gas stored underground			91						—						68						—
Materials and supplies			227						69						54						86
Total			$	443					$	69					$	166					$	167

			2021
			PPL						PPL Electric						LG&E						KU
Fuel			$	90					$	—					$	32					$	58
Natural gas stored underground			54						—						54						—
Materials and supplies			178						61						51						66
Total			$	322					$	61					$	137					$	124

(PPL)

Renewable Energy Standard Obligation

Purchased Renewable Energy Certificates (RECs) are stated at cost and are used to measure compliance with state renewable energy standards. RECs support new renewable generation standards and are held primarily to be utilized in fulfillment of RIE’s compliance obligations.

(All Registrants)

Guarantees

Generally, the initial measurement of a guarantee liability is the fair value of the guarantee at its inception. However, there are certain guarantees excluded from the scope of accounting guidance and other guarantees that are not subject to the initial recognition and measurement provisions of accounting guidance that only require disclosure. See Note 14 for further discussion of recorded and unrecorded guarantees.

---

(PPL)

Treasury Stock

(PPL)

PPL is organized into three segments: Kentucky Regulated, Pennsylvania Regulated, and Rhode Island Regulated. PPL's segments are segmented by geographic location.

The Kentucky Regulated segment consists primarily of LG&E's and KU's regulated electricity generation, transmission and distribution operations, as well as LG&E's regulated distribution and sale of natural gas. In addition, the Kentucky Regulated segment includes certain financing and other costs at LKE.

The Pennsylvania Regulated segment includes the regulated electricity transmission and distribution operations of PPL Electric.

The Rhode Island Regulated segment includes the regulated electricity transmission and distribution and natural gas distribution operations of RIE, which was acquired on May 25, 2022.

"Corporate and Other" primarily includes financing and other costs incurred at the corporate level that have not been allocated or assigned to the segments, as well as certain non-recoverable costs resulting from commitments made to the Rhode Island Division of Public Utilities and Carriers and the Attorney General of the State of Rhode Island in conjunction with the acquisition of Narragansett Electric.

As a result of the June 14, 2021 sale of the U.K. utility business, PPL determined segment information for the U.K. Regulated segment would no longer be provided beginning with the March 31, 2021 Form 10-Q. See Note 9 for additional information.

Income Statement data for the segments and reconciliation to PPL's consolidated results for the years ended December 31 are as follows:

			2022						2021						2020
Operating Revenues from external customers (a)
Kentucky Regulated			$	3,811					$	3,348					$	3,106
Pennsylvania Regulated			3,030						2,402						2,330
Rhode Island Regulated			1,038						—						—
Corporate and Other			23						33						38
Total			$	7,902					$	5,783					$	5,474
Depreciation
Kentucky Regulated			$	685					$	647					$	606
Pennsylvania Regulated			393						424						403
Rhode Island Regulated			92						—						—
Corporate and Other			11						11						13
Total			$	1,181					$	1,082					$	1,022
Amortization (b)
Kentucky Regulated			$	23					$	15					$	19
Pennsylvania Regulated			22						19						26
Rhode Island Regulated			2						—						—
Corporate and Other			5						5						13
Total			$	52					$	39					$	58

---

			2022						2021						2020
Interest Expense (c)
Kentucky Regulated			$	262					$	249					$	300
Pennsylvania Regulated			171						162						172
Rhode Island Regulated			39						—						—
Corporate and Other (d)			41						507						162
Total			$	513					$	918					$	634
Income Before Income Taxes
Kentucky Regulated			$	621					$	562					$	516
Pennsylvania Regulated			699						599						664
Rhode Island Regulated			( 58 )						—						—
Corporate and Other			( 347 )						( 640 )						( 226 )
Total			$	915					$	521					$	954
Income Taxes (e)
Kentucky Regulated			$	114					$	94					$	98
Pennsylvania Regulated			174						154						167
Rhode Island Regulated			( 14 )						—						—
Corporate and Other			( 73 )						255						49
Total			$	201					$	503					$	314
Deferred income taxes and investment tax credits (f)
Kentucky Regulated			$	6					$	272					$	64
Pennsylvania Regulated			91						79						82
Rhode Island Regulated			39						—						—
Corporate and Other			43						( 264 )						23
Total			$	179					$	87					$	169
Net Income
Kentucky Regulated			$	507					$	468					$	418
Pennsylvania Regulated			525						445						497
Rhode Island Regulated			( 44 )						—						—
Corporate and Other (d)			( 274 )						( 895 )						( 275 )
Discontinued Operations			42						( 1,498 )						829
Total			$	756					$	( 1,480 )					$	1,469

(a) See Note 1 and Note 3 for additional information on Operating Revenues.

(b) Represents non-cash expense items that include amortization of operating lease right-of-use assets, regulatory assets and liabilities, debt discounts and premiums and debt issuance costs.

(c) Beginning in 2021, corporate level financing costs are no longer allocated to the reportable segments and are being reported in Corporate and Other. For the year ended December 31, 2020, corporate level financing costs of $ 32 million, net of $ 8 million of income taxes, were allocated to the Kentucky Regulated segment. For the year ended December 31, 2020, an immaterial amount of financing costs was allocated to the Pennsylvania Regulated segment.

(d) 2021 includes losses from the extinguishment of PPL Capital Funding debt. See Note 8 for additional information.

(e) Represents both current and deferred income taxes, including investment tax credits.

(f) Represents a non-cash expense item that is also included in "Income Taxes."

Cash Flow data for the segments and reconciliation to PPL's consolidated results for the years ended December 31 are as follows:

			2022						2021						2020
Expenditures for long-lived assets
Kentucky Regulated			$	917					$	1,026					$	966
Pennsylvania Regulated			889						904						1,154
Rhode Island Regulated			268						—						—
Corporate and Other			84						49						158
Total			$	2,158					$	1,979					$	2,278

---

The following provides Balance Sheet data for the segments and reconciliation to PPL's consolidated results as of:

			As of December 31,
			2022						2021
Total Assets
Kentucky Regulated			$	16,904					$	16,360
Pennsylvania Regulated			13,565						13,336
Rhode Island Regulated			6,081						—
Corporate and Other (a)			1,287						3,527
Total			$	37,837					$	33,223

(a) Primarily consists of unallocated items, including cash, PP&E, goodwill, and the elimination of inter-segment transactions.

Beginning on January 1, 2023, the Kentucky Regulated segment will consist primarily of the regulated electricity generation, transmission and distribution operations conducted by LG&E and KU, as well as LG&E's regulated distribution and sale of natural gas. Prior to January 1, 2023, the Kentucky Regulated segment also included the financing activities of LKE. The financing activity of LKE will be presented in Corporate and Other beginning on January 1, 2023. As a result of this change, beginning on January 1, 2023, PPL’s segments will consist of the regulated operations of Kentucky, Pennsylvania and Rhode Island and will exclude any incremental financing activities of holding companies, which Management believes is a more meaningful presentation as it provides information on the core regulated operations of PPL.

(PPL Electric, LG&E and KU)

PPL Electric has two operating segments, distribution and transmission, which are aggregated into a single reportable segment. LG&E and KU are individually single operating and reportable segments.

(All Registrants)

The following is a description of the principal activities from which the Registrants and PPL’s segments generate their revenues.

(PPL and PPL Electric)

Pennsylvania Regulated Segment Revenue

The Pennsylvania Regulated segment generates substantially all of its revenues from contracts with customers from PPL Electric’s tariff-based distribution and transmission of electricity.

Distribution Revenue

PPL Electric provides distribution services to residential, commercial, industrial, municipal and governmental end users of energy. PPL Electric satisfies its performance obligation to its distribution customers and revenue is recognized over-time as electricity is delivered and simultaneously consumed by the customer. The amount of revenue recognized is the volume of electricity delivered during the period multiplied by the price per tariff, plus a monthly fixed charge. This method of recognition fairly presents PPL Electric's transfer of electric service to the customer as the calculation is based on volumes delivered, and the price per tariff and the monthly fixed charge are set by the PAPUC. Customers are typically billed monthly and outstanding amounts are normally due within 21 days of the date of the bill.

Distribution customers are "at will" customers of PPL Electric with no term contract and no minimum purchase commitment. Performance obligations are limited to the service requested and received to date. Accordingly, there is no unsatisfied performance obligation associated with PPL Electric’s retail account contracts.

Certain customers have the option to obtain electricity or natural gas from other suppliers. In those circumstances, revenue is only recognized for providing delivery of the commodity to the customer.

---

Transmission Revenue

PPL Electric generates transmission revenues from a FERC-approved PJM Open Access Transmission Tariff. An annual revenue requirement for PPL Electric to provide transmission services is calculated using a formula-based rate. This revenue requirement is converted into a daily rate (dollars per day). PPL Electric satisfies its performance obligation to provide transmission services and revenue is recognized over-time as transmission services are provided and consumed. This method of recognition fairly presents PPL Electric's transfer of transmission services as the daily rate is set by a FERC approved formula-based rate. PJM remits payment on a weekly basis.

PPL Electric's agreement to provide transmission services contains no minimum purchase commitment. The performance obligation is limited to the service requested and received to date. Accordingly, PPL Electric has no unsatisfied performance obligations.

(PPL)

Rhode Island Regulated Segment Revenues

The Rhode Island Regulated segment generates substantially all of its revenues from contracts with customers from RIE’s regulated tariff-based transmission and distribution of electricity and regulated tariff-based distribution of natural gas.

Distribution Revenue

Distribution revenues are primarily from the sale of electricity, natural gas, and related services to retail customers. Distribution sales are regulated by the RIPUC, which is responsible for approving the rates and other terms of services as part of the rate making process. Natural gas and electric distribution revenues are derived from the regulated sale and distribution of electricity and natural gas to residential, commercial, and industrial customers within RIE’s service territory under the tariff rates. The performance obligation related to distribution sales is to provide electricity and natural gas to customers on demand. The performance obligation is satisfied over time because the customer simultaneously receives and consumes the electricity or natural gas as services are provided. RIE records revenues related to the distribution sales based upon the approved tariff rate and the volume delivered to the customers, which corresponds with the amount RIE has the right to invoice.

Distribution revenue also includes estimated unbilled amounts, which represent the estimated amounts due from retail customers as a result of customer's bills rendered throughout the month, rather than bills being rendered at the end of the month. Unbilled revenues are determined based on estimated unbilled sales volumes and then applying tariff rates to those volumes. Any difference between estimated and actual revenues is adjusted the following month when the previous unbilled estimate is reversed and actual billings occur. This method of recognition fairly presents RIE's transfer of electricity and natural gas to the customer as the amount recognized is based on actual and estimated volumes delivered and the tariff rate per unit of energy and any applicable fixed charges or regulatory mechanisms as approved by the respective regulatory body.

Certain customers have the option to obtain electricity or natural gas from other suppliers. In those circumstances, revenue is only recognized for providing delivery of the commodity to the customer.

Transmission Revenue

RIE’s transmission services are regulated by the FERC and coordinated with ISO – New England (ISO-NE). Additionally, RIE makes available its transmission facilities to NEP, for operation and control pursuant to an integrated facilities agreement, Service Agreement No. 23 (Integrated Facilities Agreement or IFA). As of December 31, 2022 these integrated facilities agreements have concluded as RIE is a transmission operator. These revenues arise under tariff/rate agreements and are collected primarily from RIE’s distribution customers. The revenue is recognized over-time as transmission services are provided and consumed. This method of recognition fairly presents RIE’s transfer of transmission services as the daily rate is set by a FERC-approved formula-based rate.

(PPL, LG&E and KU)

Kentucky Regulated Segment Revenue

The Kentucky Regulated Segment generates substantially all of its revenues from contracts with customers from LG&E's and KU's regulated tariff-based sales of electricity and LG&E's regulated tariff-based sales of natural gas.

---

LG&E and KU are engaged in the generation, transmission, distribution and sale of electricity in Kentucky and, in KU's case, Virginia. LG&E also engages in the distribution and sale of natural gas in Kentucky. Revenue from these activities is generated from tariffs approved by applicable regulatory authorities including the FERC, KPSC and VSCC. LG&E and KU satisfy their performance obligations upon LG&E's and KU's delivery of electricity and LG&E's delivery of natural gas to customers. This revenue is recognized over-time as the customer simultaneously receives and consumes the benefits provided by LG&E and KU. The amount of revenue recognized is the billed volume of electricity or natural gas delivered multiplied by a tariff rate per-unit of energy, plus any applicable fixed charges or additional regulatory mechanisms. Customers are billed monthly and outstanding amounts are typically due within 22 days of the date of the bill. Additionally, unbilled revenues are recognized as a result of customers' bills rendered throughout the month, rather than bills being rendered at the end of the month. Unbilled revenues for a month are calculated by multiplying an estimate of unbilled kWh or Mcf delivered but not yet billed by the estimated average cents per kWh or Mcf. Any difference between estimated and actual revenues is adjusted the following month when the previous unbilled estimate is reversed and actual billings occur. This method of recognition fairly presents LG&E's and KU's transfer of electricity and LG&E's transfer of natural gas to the customer as the amount recognized is based on actual and estimated volumes delivered and the tariff rate per-unit of energy and any applicable fixed charges or regulatory mechanisms as set by the respective regulatory body.

LG&E's and KU's customers generally have no minimum purchase commitment. Performance obligations are limited to the service requested and received to date. Accordingly, there is no unsatisfied performance obligation associated with these customers.

(All Registrants)

The following table reconciles "Operating Revenues" included in each Registrant's Statement of Income with revenues generated from contracts with customers for the years ended December 31:

			2022
			PPL						PPL Electric						LG&E						KU
Operating Revenues (a)			$	7,902					$	3,030					$	1,798					$	2,074
Revenues derived from:
Alternative revenue programs (b)			( 92 )						( 56 )						9						5
Other (c)			( 24 )						( 14 )						( 6 )						( 4 )
Revenues from Contracts with Customers			$	7,786					$	2,960					$	1,801					$	2,075

			2021
			PPL						PPL Electric						LG&E						KU
Operating Revenues (a)			$	5,783					$	2,402					$	1,569					$	1,826
Revenues derived from:
Alternative revenue programs (b)			77						83						( 3 )						( 3 )
Other (c)			( 22 )						( 3 )						( 8 )						( 9 )
Revenues from Contracts with Customers			$	5,838					$	2,482					$	1,558					$	1,814

			2020
			PPL						PPL Electric						LG&E						KU
Operating Revenues (a)			$	5,474					$	2,331					$	1,456					$	1,690
Revenues derived from:
Alternative revenue programs (b)			( 24 )						( 12 )						( 8 )						( 4 )
Other (c)			( 21 )						( 3 )						( 7 )						( 10 )
Revenues from Contracts with Customers			$	5,429					$	2,316					$	1,441					$	1,676

(a) PPL includes $ 1,038 million for the twelve months ended December 31, 2022 of revenues from external customers reported by the Rhode Island Regulated segment. PPL Electric represents revenues from external customers reported by the Pennsylvania Regulated segment and LG&E and KU, net of intercompany power sales and transmission revenues, represent revenues from external customers reported by the Kentucky Regulated segment. See Note 2 for additional information.

(b) This line item shows the over/under collection of rate mechanisms deemed alternative revenue programs with over-collections of revenue shown as positive amounts in the table above and under collections as negative amounts. For PPL Electric, revenue in 2022 includes $ 74 million related to the

---

amortization of the regulatory liability primarily recorded in 2021 for a reduction in the transmission formula rate return on equity that is reflected in rates in 2022. Revenue in 2021 was reduced by $ 78 million for a reduction in the transmission formula rate return on equity. See Note 7 for additional information.

(c) Represents additional revenues outside the scope of revenues from contracts with customers such as leases and other miscellaneous revenues.

The following table shows revenues from contracts with customers disaggregated by customer class for the years ended December 31:

			Residential						Commercial						Industrial						Other (a)						Wholesale - municipality						Wholesale - other (b)						Transmission						Revenues from Contracts with Customers
PPL
2022
PA Regulated			$	1,647					$	491					$	85					$	54					$	—					$	—					$	683					$	2,960
RI Regulated			299						101						9						478						—						—						101						988
KY Regulated			1,637						1,068						662						323						28						97						—						3,815
Corp and Other			—						—						—						23						—						—						—						23
Total PPL			$	3,583					$	1,660					$	756					$	878					$	28					$	97					$	784					$	7,786
2021
PA Regulated			$	1,299					$	350					$	53					$	50					$	—					$	—					$	730					$	2,482
RI Regulated			—						—						—						—						—						—						—						—
KY Regulated			1,416						928						586						305						24						66						—						3,325
Corp and Other			—						—						—						31						—						—						—						31
Total PPL			$	2,715					$	1,278					$	639					$	386					$	24					$	66					$	730					$	5,838
2020
PA Regulated			$	1,238					$	314					$	44					$	50					$	—					$	—					$	670					$	2,316
RI Regulated			—						—						—						—						—						—						—						—
KY Regulated			1,347						871						538						261						20						40						—						3,077
Corp and Other			—						—						—						36						—						—						—						36
Total PPL			$	2,585					$	1,185					$	582					$	347					$	20					$	40					$	670					$	5,429
PPL Electric
2022			$	1,647					$	491					$	85					$	54					$	—					$	—					$	683					$	2,960
2021			$	1,299					$	350					$	53					$	50					$	—					$	—					$	730					$	2,482
2020			$	1,238					$	314					$	44					$	50					$	—					$	—					$	670					$	2,316
LG&E
2022			$	835					$	551					$	199					$	141					$	—					$	75					$	—					$	1,801
2021			$	711					$	473					$	180					$	145					$	—					$	49					$	—					$	1,558
2020			$	676					$	444					$	173					$	114					$	—					$	34					$	—					$	1,441
KU
2022			$	802					$	517					$	463					$	182					$	28					$	83					$	—					$	2,075
2021			$	705					$	455					$	406					$	160					$	24					$	64					$	—					$	1,814
2020			$	671					$	427					$	365					$	147					$	20					$	46					$	—					$	1,676

(a) Primarily includes revenues from pole attachments, street lighting, other public authorities and other non-core businesses.

(b) Includes wholesale power and transmission revenues. LG&E and KU amounts include intercompany power sales and transmission revenues, which are eliminated upon consolidation at PPL.

As discussed in Note 2, PPL segments its business by geographic location. Revenues from external customers for each segment/geographic location are reconciled to revenues from contracts with customers in the footnotes to the tables above. PPL Electric's revenues from contracts with customers are further disaggregated by distribution and transmission as indicated in the above tables.

Contract receivables from customers are primarily included in "Accounts receivable - Customer" and "Unbilled revenues" on the Balance Sheets.

---

The following table shows the accounts receivable and unbilled revenues balances that were impaired for the year ended December 31:

			2022						2021						2020
PPL(a)			$	70					$	22					$	25
PPL Electric			21						10						17
LG&E			6						4						4
KU			6						8						4

(a) Includes $ 23 million for the twelve months ended December 31, 2022 related to the commitment to forgive customer arrearages for low-income and protected residential customers at RIE. See Note 9 for additional information.

The following table shows the balances and certain activity of contract liabilities resulting from contracts with customers:

			PPL						PPL Electric						LG&E						KU
Contract liabilities as of December 31, 2022			$	34					$	23					$	5					$	6
Contract liabilities as of December 31, 2021			42						25						6						6
Revenue recognized during the year ended December 31, 2022 that was included in the contract liability balance at December 31, 2021			25						12						6						6
Contract liabilities as of December 31, 2021			$	42					$	25					$	6					$	6
Contract liabilities as of December 31, 2020			40						23						5						6
Revenue recognized during the year ended December 31, 2021 that was included in the contract liability balance at December 31, 2020			24						11						5						6
Contract liabilities as of December 31, 2020			$	40					$	23					$	5					$	6
Contract liabilities as of December 31, 2019			37						21						5						4
Revenue recognized during the year ended December 31, 2020 that was included in the contract liability balance at December 31, 2019			22						9						5						4

Contract liabilities result from recording contractual billings in advance for customer attachments to the Registrants' infrastructure and payments received in excess of revenues earned to date. Advanced billings for customer attachments are recognized as revenue ratably over the billing period. Payments received in excess of revenues earned to date are recognized as revenue as services are delivered in subsequent periods.

(PPL)

PPL is authorized to issue up to 10 million shares of preferred stock. No PPL preferred stock was issued or outstanding in 2022, 2021 or 2020.

RIE has $ 3 million of outstanding preferred stock. See Note 8 for additional information.

(PPL Electric)

PPL Electric is authorized to issue up to 20,629,936 shares of preferred stock. No PPL Electric preferred stock was issued or outstanding in 2022, 2021 or 2020.

(LG&E)

LG&E is authorized to issue up to 1,720,000 shares of preferred stock at a $ 25 par value and 6,750,000 shares of preferred stock without par value. LG&E had no preferred stock issued or outstanding in 2022, 2021 or 2020.

---

(KU)

KU is authorized to issue up to 5,300,000 shares of preferred stock and 2,000,000 shares of preference stock without par value. KU had no preferred or preference stock issued or outstanding in 2022, 2021 or 2020.

(PPL)

Basic EPS is computed by dividing income available to PPL common shareowners by the weighted-average number of common shares outstanding during the applicable period. Diluted EPS is computed by dividing income available to PPL common shareowners by the weighted-average number of common shares outstanding, increased by incremental shares that would be outstanding if potentially dilutive non-participating securities were converted to common shares as calculated using the Treasury Stock Method. Incremental non-participating securities that have a dilutive impact are detailed in the table below.

Reconciliations of the amounts of income and shares of PPL common stock (in thousands) for the periods ended December 31, used in the EPS calculation are:

			2022						2021						2020
Income (Numerator)
Income from continuing operations after income taxes			$	714					$	18					$	640
Less amounts allocated to participating securities			1						—						1
Income from continuing operations after income taxes available to PPL common shareowners - Basic and Diluted			$	713					$	18					$	639
Income (loss) from discontinued operations (net of income taxes) available to PPL common shareowners - Basic and Diluted			$	42					$	( 1,498 )					$	829
Net income (loss) attributable to PPL			$	756					$	( 1,480 )					1,469
Less amounts allocated to participating securities			1						—						1
Net income (loss) available to PPL common shareowners - Basic and Diluted			$	755					$	( 1,480 )					$	1,468
Shares of Common Stock (Denominator)
Weighted-average shares - Basic EPS			736,027						762,902						768,590
Add: Dilutive share-based payment awards (a)			875						1,917						794
Weighted-average shares - Diluted EPS			736,902						764,819						769,384
Basic EPS
Available to PPL common shareowners:
Income from continuing operations after income taxes			$	0.97					$	0.03					$	0.83
Income (loss) from discontinued operations (net of income taxes)			0.06						( 1.96 )						1.08
Net Income (Loss) available to PPL common shareowners			$	1.03					$	( 1.93 )					$	1.91
Diluted EPS
Available to PPL common shareowners:
Income from continuing operations after income taxes			$	0.96					$	0.03					$	0.83
Income (loss) from discontinued operations (net of income taxes)			0.06						( 1.96 )						1.08
Net Income (Loss) available to PPL common shareowners			$	1.02					$	( 1.93 )					$	1.91

(a) The Treasury Stock Method was applied to non-participating share-based payment awards.

For the years ended December 31, PPL issued common stock related to stock-based compensation plans as follows (in thousands):

			2022						2021
Stock-based compensation plans (a)			124						983

---

(a) Includes stock options exercised, vesting of performance units, vesting of restricted stock and restricted stock units and conversion of stock units granted to directors.

For the years ended December 31, the following shares (in thousands) were excluded from the computations of diluted EPS because the effect would have been antidilutive:

			2022						2021						2020
Stock-based compensation awards			93						1,783						452

(PPL)

"Income (Loss) from Continuing Operations Before Income Taxes" is from domestic operations.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for accounting purposes and their basis for income tax purposes and the tax effects of net operating loss and tax credit carryforwards. The provision for PPL's deferred income taxes for regulated assets and liabilities is based upon the ratemaking principles of the applicable jurisdiction. See Notes 1 and 7 for additional information.

Net deferred tax assets have been recognized based on management's estimates of future taxable income.

Significant components of PPL's deferred income tax assets and liabilities were as follows:

			2022						2021
Deferred Tax Assets
Deferred investment tax credits			$	29					$	30
Regulatory liabilities			88						94
Income taxes due to customers			448						422
Accrued pension and postretirement costs			86						75
State loss carryforwards			230						483
Federal and state tax credit carryforwards			68						15
Internal Revenue Code Section 197 intangibles (a)			85						—
Leases			15						67
Contributions in aid of construction			114						120
Other			72						84
Valuation allowances			( 213 )						( 462 )
Total deferred tax assets			1,022						928
Deferred Tax Liabilities
Plant - net			3,609						3,812
Regulatory assets			337						180
Prepayments			46						—
Other			30						75
Total deferred tax liabilities			4,022						4,067
Net deferred tax liability			$	3,000					$	3,139

(a) Certain of the RIE assets acquired in 2022 are treated as intangibles for tax purposes that are amortized over a 15 year period. PPL recorded deferred tax assets on these intangibles, which will reverse as tax deductions are taken.

State deferred taxes are determined by entity and by jurisdiction. As a result, $ 6 million and $ 12 million of net deferred tax assets are shown as "Other noncurrent assets" on the Balance Sheets for 2022 and 2021.

At December 31, 2022, PPL had the following loss and tax credit carryforwards, related deferred tax assets and valuation allowances recorded against the deferred tax assets:

			Gross						Deferred Tax Asset						Valuation Allowance						Expiration
Loss and other carryforwards
State net operating losses			$	5,830					$	230					$	( 213 )					2023-2042

---

			Gross						Deferred Tax Asset						Valuation Allowance						Expiration
Credit carryforwards
Federal investment tax credit									20						—						2042
Federal foreign tax credits									32						—						2027
Federal - other									3						—						2042
State recycling credit									12						—						2028
State - other									1						—						Indefinite

Valuation allowances have been established for the amount that, more likely than not, will not be realized. The changes in deferred tax valuation allowances were as follows:

									Additions
			Balance at Beginning of Period						Charged to Income						Charged to Other Accounts						Deductions						Balance at End of Period
2022			$	462					$	10					$	—					$	259		(a)			$	213
2021			536						48			(b)			—						122			(c)			462
2020			514						26						—						4						536

(a) In 2022, PPL recorded a $ 36 million decrease in a valuation allowance on a 2002 state net operating loss carryforward that expired in 2022 and a $ 213 million decrease in the valuation allowance due to the Pennsylvania rate change. See reconciliation of income tax table below.

(b) In 2021, PPL recorded a $ 31 million increase in a valuation allowance on a state net operating loss carryforward in connection with the loss on extinguishment associated with a tender offer to purchase and retire PPL Capital Funding's outstanding Senior Notes.

(c) In light of the disposition of PPL's U.K. utility business, there was a decrease in the valuation allowance of approximately $ 113 million.

Details of the components of income tax expense, a reconciliation of federal income taxes derived from statutory tax rates applied to "Income Before Income Taxes" to income taxes for reporting purposes, and details of "Taxes, other than income" were as follows:

			2022						2021						2020
Income Tax Expense (Benefit)
Current - Federal			$	( 2 )					$	( 1 )					$	( 8 )
Current - State			24						36						24
Current - Foreign			—						( 1 )						( 2 )
Total Current Expense (Benefit)			22						34						14
Deferred - Federal			122						28						135
Deferred - State			68						105						94
Deferred - Foreign (a)			—						383						101
Total Deferred Expense (Benefit), excluding operating loss carryforwards			190						516						330
Amortization of investment tax credit			( 3 )						( 3 )						( 3 )
Tax expense (benefit) of operating loss carryforwards
Deferred - Federal			2						12						6
Deferred - State			( 10 )						( 56 )						( 33 )
Total Tax Expense (Benefit) of Operating Loss Carryforwards			( 8 )						( 44 )						( 27 )
Total income tax expense (benefit)			$	201					$	503					$	314
Total income tax expense (benefit) - Federal			$	119					$	36					$	130
Total income tax expense (benefit) - State			82						85						85
Total income tax expense (benefit) - Foreign			—						382						99
Total income tax expense (benefit)			$	201					$	503					$	314

(a) The U.K. Finance Act 2021, formally enacted on June 10, 2021, increased the U.K. corporation tax rate from 19% to 25%, effective April 1, 2023. The primary impact of the corporation tax rate increase was an increase in deferred tax liabilities of the U.K. utility business, which was sold on June 14, 2021, and a corresponding deferred tax expense of $ 383 million, which was recognized in continuing operations in 2021.

In 2020, the U.K. Finance Act 2020 cancelled the tax rate reduction from 19% to 17%. The primary impact of the cancellation of the corporation tax rate reduction was an increase in deferred tax liabilities and a corresponding deferred tax expense of $ 106 million.

In the table above, the following income tax expense (benefit) are excluded from income taxes:

---

			2022						2021						2020
Discontinued operations			$	( 42 )					$	759					$	188
Reclassification from AOCI due to sale of UK utility business			—						660						—
Other comprehensive income			11						150						( 19 )
Total			$	( 31 )					$	1,569					$	169

			2022						2021						2020
Reconciliation of Income Tax Expense (Benefit)
Federal income tax on Income Before Income Taxes at statutory tax rate - 21%			$	192					$	109					$	200
State income taxes, net of federal income tax benefit			68						23						48
Valuation allowance adjustments (a)			9						48						24
Federal and state income tax return adjustments			( 1 )						( 3 )						( 9 )
Impact of the U.K. Finance Acts on deferred tax balances (b)			—						383						101
Depreciation and other items not normalized			( 8 )						( 5 )						( 5 )
Amortization of excess deferred federal and state income taxes			( 54 )						( 54 )						( 43 )
Non-deductible officer's salary			5						6						7
Other			( 10 )						( 4 )						( 9 )
Total increase (decrease)			9						394						114
Total income tax expense (benefit)			$	201					$	503					$	314
Effective income tax rate			22.0 %						96.5 %						32.9 %

(a) In 2021, PPL recorded a $ 31 million state deferred tax benefit on a net operating loss and an offsetting valuation allowance in connection with the loss on extinguishment associated with a tender offer to purchase and retire PPL Capital Funding's outstanding Senior Notes.

In 2022, 2021, and 2020, PPL recorded deferred income tax expense of $ 5 million, $ 15 million and $ 24 million for valuation allowances primarily related to increased Pennsylvania net operating loss carryforwards expected to be unutilized.

(b) In 2020, the U.K. Finance Act 2020 cancelled the tax rate reduction to 17%, thereby maintaining the corporation tax rate at 19% for financial years 2020 and 2021. The primary impact of the cancellation of the corporation tax rate reduction was an increase in deferred tax liabilities and a corresponding deferred tax expense of $ 106 million.

The U.K. Finance Act 2021, formally enacted on June 10, 2021, increased the U.K. corporation tax rate from 19% to 25%, effective April 1, 2023. The primary impact of the corporation tax rate increase was an increase in deferred tax liabilities of the U.K. utility business, which was sold on June 14, 2021, and a corresponding deferred tax expense of $ 383 million, which was recognized in continuing operations in 2021.

			2022						2021						2020
Taxes, other than income
State gross receipts (a)			$	175					$	113					$	100
Domestic - other (a)			157						94						80
Total			$	332					$	207					$	180

(a) Increase primarily due to the acquisition of RIE.

(PPL Electric)

The provision for PPL Electric's deferred income taxes for regulated assets and liabilities is based upon the ratemaking principles reflected in rates established by the PAPUC and the FERC. The difference in the provision for deferred income taxes for regulated assets and liabilities and the amount that otherwise would be recorded under GAAP is deferred and included in "Regulatory assets" or "Regulatory liabilities" on the Balance Sheets.

Significant components of PPL Electric's deferred income tax assets and liabilities were as follows:

---

			2022						2021
Deferred Tax Assets
Accrued pension and postretirement costs			$	27					$	14
Contributions in aid of construction			87						95
Regulatory liabilities			36						52
Income taxes due to customers			193						154
Other			18						21
Total deferred tax assets			361						336
Deferred Tax Liabilities
Electric utility plant - net			1,745						1,891
Regulatory assets			93						74
Prepayments			35						—
Other			2						39
Total deferred tax liabilities			1,875						2,004
Net deferred tax liability			$	1,514					$	1,668

PPL Electric expects to have adequate levels of taxable income to realize its recorded deferred income tax assets.

Details of the components of income tax expense, a reconciliation of federal income taxes derived from statutory tax rates applied to "Income Before Income Taxes" to income taxes for reporting purposes, and details of "Taxes, other than income" were as follows:

			2022						2021						2020
Income Tax Expense (Benefit)
Current - Federal			$	63					$	40					$	61
Current - State			20						35						23
Total Current Expense (Benefit)			83						75						84
Deferred - Federal			60						59						45
Deferred - State			31						20						38
Total Deferred Expense (Benefit), excluding operating loss carryforwards			91						79						83
Total income tax expense (benefit)			$	174					$	154					$	167
Total income tax expense (benefit) - Federal			$	123					$	99					$	106
Total income tax expense (benefit) - State			51						55						61
Total income tax expense (benefit)			$	174					$	154					$	167

			2022						2021						2020
Reconciliation of Income Tax Expense (Benefit)
Federal income tax on Income Before Income Taxes at statutory tax rate - 21%			$	147					$	126					$	139
Increase (decrease) due to:
State income taxes, net of federal income tax benefit			54						46						52
Federal and state income tax return adjustments			( 1 )						—						( 4 )
Depreciation and other items not normalized			( 7 )						( 5 )						( 5 )
Amortization of excess deferred federal income taxes (a)			( 12 )						( 14 )						( 16 )
State income tax rate change (b)			( 9 )						—						—
Other			2						1						1
Total increase (decrease)			27						28						28
Total income tax expense (benefit)			$	174					$	154					$	167
Effective income tax rate			24.9 %						25.7 %						25.2 %

(a) In 2022, 2021, and 2020, PPL Electric recorded lower income tax expense for the amortization of excess deferred taxes that primarily resulted from the U.S. federal corporate income tax rate reduction from 35% to 21% enacted by the TCJA. This amortization represents each year's refund amount, prior to a tax gross-up, to be paid to customers for previously collected deferred taxes at higher income tax rates.

(b) On July 8, 2022, the Governor of Pennsylvania signed into law Pennsylvania House Bill 1342 (H.B. 1342). Among other changes to the state tax code, the bill reduces the corporate net income tax rate from 9.99% to 8.99% beginning January 1, 2023, and further reduces the rate annually by half a percentage point until the rate reaches 4.99% in 2031. The income statement impact of the corporate net income tax reduction was a deferred tax benefit of $ 9 million.

---

			2022						2021						2020
Taxes, other than income
State gross receipts			$	142					$	113					$	100
Property and other			7						7						7
Total			$	149					$	120					$	107

(LG&E)

The provision for LG&E's deferred income taxes for regulated assets and liabilities is based upon the ratemaking principles reflected in rates established by the KPSC and the FERC. The difference in the provision for deferred income taxes for regulated assets and liabilities and the amount that otherwise would be recorded under GAAP is deferred and included in "Regulatory assets" or "Regulatory liabilities" on the Balance Sheets.

Significant components of LG&E's deferred income tax assets and liabilities were as follows:

			2022						2021
Deferred Tax Assets
Contributions in aid of construction			$	17					$	15
Regulatory liabilities			18						18
Deferred investment tax credits			8						8
Income taxes due to customers			119						125
State tax credit carryforwards			9						11
Lease liabilities			4						4
Valuation allowances			( 9 )						( 11 )
Other			8						11
Total deferred tax assets			174						181
Deferred Tax Liabilities
Plant - net			869						854
Regulatory assets			69						65
Lease right-of-use assets			3						4
Other			4						9
Total deferred tax liabilities			945						932
Net deferred tax liability			$	771					$	751

At December 31, 2022, LG&E had $ 9 million of state credit carryforwards that expire in 2028 and a $ 9 million valuation allowance related to state credit carryforwards due to insufficient projected Kentucky taxable income.

Details of the components of income tax expense, a reconciliation of federal income taxes derived from statutory tax rates applied to "Income Before Income Taxes" to income taxes for reporting purposes, and details of "Taxes, other than income" were:

			2022						2021						2020
Income Tax Expense (Benefit)
Current - Federal			$	60					$	41					$	53
Current - State			9						5						7
Total Current Expense (Benefit)			69						46						60
Deferred - Federal			( 10 )						1						( 4 )
Deferred - State			5						8						7
Total Deferred Expense (Benefit)			( 5 )						9						3
Amortization of investment tax credit - Federal			( 1 )						( 1 )						( 1 )
Total income tax expense (benefit)			$	63					$	54					$	62
Total income tax expense (benefit) - Federal			$	49					$	41					$	48
Total income tax expense (benefit) - State			14						13						14
Total income tax expense (benefit)			$	63					$	54					$	62

---

			2022						2021						2020
Reconciliation of Income Tax Expense (Benefit)
Federal income tax on Income Before Income Taxes at statutory tax rate - 21%			$	70					$	64					$	64
Increase (decrease) due to:
State income taxes, net of federal income tax benefit			13						12						12
Amortization of excess deferred federal and state income taxes			( 18 )						( 20 )						( 11 )
Other			( 2 )						( 2 )						( 3 )
Total increase (decrease)			( 7 )						( 10 )						( 2 )
Total income tax expense (benefit)			$	63					$	54					$	62
Effective income tax rate			18.8 %						17.8 %						20.3 %

			2022						2021						2020
Taxes, other than income
Property and other			$	48					$	46					$	40
Total			$	48					$	46					$	40

(KU)

The provision for KU's deferred income taxes for regulated assets and liabilities is based upon the ratemaking principles reflected in rates established by the KPSC, the VSCC and the FERC. The difference in the provision for deferred income taxes for regulated assets and liabilities and the amount that otherwise would be recorded under GAAP is deferred and included in "Regulatory assets" or "Regulatory liabilities" on the Balance Sheets.

Significant components of KU's deferred income tax assets and liabilities were as follows:

			2022						2021
Deferred Tax Assets
Contributions in aid of construction			$	9					$	9
Regulatory liabilities			23						23
Deferred investment tax credits			21						22
Income taxes due to customers			136						143
State tax credit carryforwards			4						4
Lease liabilities			5						7
Valuation allowances			( 3 )						( 3 )
Other			4						4
Total deferred tax assets			199						209
Deferred Tax Liabilities
Plant - net			1,028						1,012
Regulatory assets			56						41
Pension and postretirement costs			6						13
Lease right-of-use assets			5						6
Other			—						2
Total deferred tax liabilities			1,095						1,074
Net deferred tax liability			$	896					$	865

At December 31, 2022, KU had $ 4 million of state credit carryforwards of which $ 3 million will expire in 2028 and $ 1 million that has an indefinite carryforward period. At December 31, 2022, KU had a $ 3 million valuation allowance related to state credit carryforwards due to insufficient projected Kentucky taxable income.

---

Details of the components of income tax expense, a reconciliation of federal income taxes derived from statutory tax rates applied to "Income Before Income Taxes" to income taxes for reporting purposes, and details of "Taxes, other than income" were:

			2022						2021						2020
Income Tax Expense (Benefit)
Current - Federal			$	63					$	58					$	40
Current - State			11						8						3
Total Current Expense (Benefit)			74						66						43
Deferred - Federal			( 3 )						( 4 )						11
Deferred - State			7						7						11
Total Deferred Expense (Benefit)			4						3						22
Amortization of investment tax credit - Federal			( 2 )						( 2 )						( 2 )
Total income tax expense (benefit)			$	76					$	67					$	63
Total income tax expense (benefit) - Federal			$	58					$	52					$	49
Total income tax expense (benefit) - State			18						15						14
Total income tax expense (benefit)			$	76					$	67					$	63

			2022						2021						2020
Reconciliation of Income Tax Expense (Benefit)
Federal income tax on Income Before Income Taxes at statutory tax rate - 21%			$	84					$	76					$	72
Increase (decrease) due to:
State income taxes, net of federal income tax benefit			16						14						14
Amortization of investment tax credit			( 2 )						( 2 )						( 2 )
Amortization of excess deferred federal and state income taxes			( 21 )						( 20 )						( 17 )
Other			( 1 )						( 1 )						( 4 )
Total decrease			( 8 )						( 9 )						( 9 )
Total income tax expense (benefit)			$	76					$	67					$	63
Effective income tax rate			19.1 %						18.4 %						18.4 %

			2022						2021						2020
Taxes, other than income
Property and other			$	45					$	41					$	37
Total			$	45					$	41					$	37

(All Registrants)

Unrecognized Tax Benefits

PPL or its subsidiaries file tax returns in four major tax jurisdictions. The income tax provisions for PPL Electric, LG&E and KU are calculated in accordance with an intercompany tax sharing agreement, which provides that taxable income be calculated as if each domestic subsidiary filed a separate consolidated return. PPL Electric or its subsidiaries indirectly or directly file tax returns in three major tax jurisdictions, and LG&E and KU indirectly or directly file tax returns in two major tax jurisdictions. With few exceptions, at December 31, 2022, these jurisdictions, as well as the tax years that are no longer subject to examination, were as follows.

PPL

PPL Electric

LG&E

KU

U.S. (federal)

2018 and prior

2018 and prior

2018 and prior

2018 and prior

Pennsylvania (state)

2017 and prior

2017 and prior

Kentucky (state)

2017 and prior

2017 and prior

2017 and prior

2017 and prior

U.K. (foreign)

2019 and prior

---

Other

Narragansett Electric Acquisition (PPL)

The acquisition of Narragansett Electric was deemed an asset acquisition for federal and state income tax purposes, as a result of PPL and National Grid making a tax election under Internal Revenue Code (IRC) §338(h)(10). Accordingly, the tax bases of substantially all of the assets acquired were increased to fair market value, which equaled net book value, thereby eliminating the related deferred tax assets and liabilities. This election resulted in tax goodwill that will be amortized for tax purposes over 15 years.

Pennsylvania State Tax Reform (PPL and PPL Electric)

On July 8, 2022, the Governor of Pennsylvania signed into law Pennsylvania House Bill 1342 (H.B. 1342). Among other changes to the state tax code, the bill reduces the corporate net income tax rate from 9.99% to 8.99% beginning January 1, 2023, and further reduces the rate annually by half a percentage point until the rate reaches 4.99% in 2031.

GAAP requires that deferred tax assets and liabilities be measured at the enacted tax rate expected to apply when temporary book-to-tax differences are expected to be realized or settled. In 2022, PPL and PPL Electric recorded an increase in regulatory liabilities of $ 270 million for the remeasurement of regulated accumulated deferred tax balances and a deferred tax benefit of $ 5 million and $ 9 million, respectively, associated with the remeasurement of non-regulated accumulated deferred income tax balances. The amounts recorded are estimates that will be updated quarterly to reflect revised forecast, actual activity, and applicable orders from regulatory authorities.

Inflation Reduction Act (All Registrants)

On August 16, 2022, the Inflation Reduction Act (IRA) was signed into law. Among other things, the IRA enacted a new 15% corporate "book minimum tax," which is based on adjusted GAAP pre-tax income and is only applicable to corporations whose pre-tax income exceeds a certain threshold. PPL continues to assess the impacts of the IRA on the financial statements of PPL and the other Registrants and will monitor guidance issued by the U.S. Treasury in the future. In addition, the IRA enacted numerous new tax credits, largely associated with renewable energy. PPL continues to assess the applicability of these provisions to PPL and its subsidiaries.

---

The following table provides information about the regulatory assets and liabilities of cost-based rate-regulated utility operations at December 31:

			PPL												PPL Electric
			2022						2021						2022						2021
Current Regulatory Assets:
Gas supply clause			$	41					$	21					$	—					$	—
Rate adjustment mechanism			96						—						—						—
Derivative Instruments			41						—						—						—
Smart meter rider			5						11						5						11
Universal service rider			3						—						3						—
Fuel adjustment clause			38						11						—						—
Other			34						21						5						11
Total current regulatory assets			$	258					$	64					$	13					$	22
Noncurrent Regulatory Assets:
Defined benefit plans			$	778					$	523					$	353					$	256
Plant outage cost			46						54						—						—
Net Metering			61						—						—						—
Environmental Cost recovery			102						—						—						—
Taxes recoverable through future rates			47						—						—						—
Storm costs			118						11						—						—
Unamortized loss on debt			21						24						3						4
Interest rate swaps			7						18						—						—
Terminated interest rate swaps			63						70						—						—
Accumulated cost of removal of utility plant			212						228						212						228
AROs			295						302						—						—
Other			69						6						—						—
Total noncurrent regulatory assets			$	1,819					$	1,236					$	568					$	488

---

			PPL												PPL Electric
			2022						2021						2022						2021
Current Regulatory Liabilities:
Generation supply charge			$	37					$	10					$	37					$	10
Transmission service charge			14						21						7						21
Universal service rider			—						17						—						17
TCJA customer refund			15						22						15						22
Act 129 compliance rider			14						10						14						10
Transmission formula rate return on equity (b)			—						73						—						73
Economic relief billing rate			—						27						—						—
Transmission formula rate			12						—						12						—
Rate adjustment mechanism			96						—						—						—
Energy efficiency			23						—						—						—
Other			27						2						—						—
Total current regulatory liabilities			$	238					$	182					$	85					$	153
Noncurrent Regulatory Liabilities:
Accumulated cost of removal of utility plant			$	950					$	639					$	—					$	—
Power purchase agreement - OVEC			26						35						—						—
Net deferred taxes			2,094						1,591						775						531
Defined benefit plans			187						95						45						28
Terminated interest rate swaps			60						62						—						—
Energy efficiency			32						—						—						—
Other			63						—						—						—
Total noncurrent regulatory liabilities			$	3,412					$	2,422					$	820					$	559

			LG&E												KU
			2022						2021						2022						2021
Current Regulatory Assets:
Gas supply clause			$	13					$	21					$	—					$	—
Gas line tracker			—						3						—						—
Generation formula rate			—						—						—						2
Fuel adjustment clause			9						4						29						7
Other			1						5						3						—
Total current regulatory assets			$	23					$	33					$	32					$	9
Noncurrent Regulatory Assets:
Defined benefit plans			$	209					$	164					$	140					$	103
Storm costs			7						8						3						3
Unamortized loss on debt			11						12						7						8
Interest rate swaps			7						18						—						—
Terminated interest rate swaps			37						41						26						29
AROs			76						75						219						227
Plant outage costs			12						15						34						39
Other			14						4						13						2
Total noncurrent regulatory assets			$	373					$	337					$	442					$	411

---

			LG&E												KU
			2022						2021						2022						2021
Current Regulatory Liabilities:
Economic relief billing credit			$	—					$	21					$	—					$	6
Other			7						—						6						2
Total current regulatory liabilities			$	7					$	21					$	6					$	8
Noncurrent Regulatory Liabilities:
Accumulated cost of removal of utility plant			$	287					$	262					$	389					$	377
Power purchase agreement - OVEC			18						24						8						11
Net deferred taxes			477						491						546						569
Defined benefit plans			21						10						56						57
Terminated interest rate swaps			30						31						30						31
Total noncurrent regulatory liabilities			$	833					$	818					$	1,029					$	1,045

(a) See “Regulatory Matters - Federal Matters - PPL Electric Transmission Formula Rate Return on Equity” below for additional information.

---

---

---

---

---

---

---

---

---

Credit Arrangements and Short-term Debt

(All Registrants)

The Registrants maintain credit facilities to enhance liquidity, provide credit support and provide a backstop to commercial paper programs. For reporting purposes, on a consolidated basis, the credit facilities and commercial paper programs of PPL Electric, LG&E and KU also apply to PPL. The amounts listed in the borrowed column below are recorded as "Short-term debt" on the Balance Sheets except for borrowings under PPL Electric's term loan agreement due March 2024 and borrowings under LG&E's and KU's term loan agreements due July 2024, which are reflected in "Long-term debt." The following credit facilities were in place at:

			December 31, 2022																														December 31, 2021
			Expiration Date						Capacity						Borrowed						Letters of Credit and Commercial Paper Issued (c)						Unused Capacity						Borrowed						Letters of Credit and Commercial Paper Issued
PPL
PPL Capital Funding
Syndicated Credit Facility (a) (b)			Dec 2026						$	1,250					$	—					$	561					$	689					$	—					$	—
Bilateral Credit Facility (a) (b)			Mar 2023						100						—						—						100						—						—
Bilateral Credit Facility (a) (b)			Mar 2023						100						—						58						42						—						15
Total PPL Capital Funding Credit Facilities									$	1,450					$	—					$	619					$	831					$	—					$	15
PPL Electric
Syndicated Credit Facility (a) (b)			Dec 2026						650						—						146						504						—						1
Term Loan Credit Facility (a) (b)			Mar 2024						250						250						—						—						—						—
Total PPL Electric Credit Facilities									$	900					$	250					$	146					$	504					$	—					$	1

---

			December 31, 2022																														December 31, 2021
			Expiration Date						Capacity						Borrowed						Letters of Credit and Commercial Paper Issued (c)						Unused Capacity						Borrowed						Letters of Credit and Commercial Paper Issued
LG&E
Syndicated Credit Facility (a) (b)			Dec 2026						500						—						180						320						—						69
Term Loan Credit Facility (a) (b)			Jul 2024						300						300						—						—						—						—
Total LG&E Credit Facilities									$	800					$	300					$	180					$	320					$	—					$	69
KU
Syndicated Credit Facility (a) (b)			Dec 2026						400						—						101						299						—						—
Term Loan Credit Facility (a) (b)			Jul 2024						300						300						—						—						—						—
Total KU Credit Facilities									$	700					$	300					$	101					$	299					$	—					$	—

(a) Each company pays customary fees under its respective facility and borrowings generally bear interest at LIBOR-based rates, or applicable secured overnight financing rates, plus an applicable margin.

(b) The facilities contain a financial covenant requiring debt to total capitalization not to exceed 70 % for PPL Capital Funding, PPL Electric, LG&E and KU, as calculated in accordance with the facilities and other customary covenants. Additionally, subject to certain conditions, PPL Capital Funding may request that the capacity of one of its bilateral credit facilities expiring in March 2023 be increased by up to $ 30 million and PPL Capital Funding, PPL Electric, LG&E and KU may each request up to a $ 250 million increase in its syndicated credit facility's capacity. Participation in any such increase is at the sole discretion of each lender.

(c) Commercial paper issued reflects the undiscounted face value of the issuance.

(PPL)

In March 2022, PPL Capital Funding amended and restated its two existing $ 50 million bilateral credit facilities to extend the termination dates from March 9, 2022 to March 6, 2023 and to increase the borrowing capacity under each facility to $ 100 million.

(PPL and LG&E)

In July 2022, LG&E entered into a $ 300 million term loan credit facility expiring in 2024. On July 29, 2022, LG&E borrowed $ 300 million under this facility at an initial interest rate of 3.23 %. The per annum interest rate fluctuates based on the applicable secured overnight financing rate plus a spread. The proceeds were used to repay short-term debt and for general corporate purposes.

(PPL and KU)

In July 2022, KU entered into a $ 300 million term loan credit facility expiring in 2024. On July 29, 2022, KU borrowed $ 300 million under this facility at an initial interest rate of 3.23 %. The per annum interest rate fluctuates based on the applicable secured overnight financing rate plus a spread. The proceeds were used to repay short-term debt and for general corporate purposes.

(PPL and PPL Electric)

In September 2022, PPL Electric entered into a $ 250 million term loan credit facility expiring in 2024. On September 16, 2022, PPL Electric borrowed $ 250 million under this facility at an initial interest rate of 3.77 %. The per annum interest rate fluctuates based on the applicable secured overnight financing rate plus a spread. The proceeds were used to repay long-term debt.

(All Registrants)

The Registrants maintain commercial paper programs to provide an additional financing source to fund short-term liquidity needs. Commercial paper issuances, included in "Short-term debt" on the Balance Sheets, are supported by the respective Registrant's credit facilities. The following commercial paper programs were in place at:

---

			December 31, 2022																								December 31, 2021
			Weighted - Average Interest Rate						Capacity						Commercial Paper Issuances (d)						Unused Capacity						Weighted - Average Interest Rate						Commercial Paper Issuances (d)
PPL Capital Funding (a)			4.84 %						$	1,350					$	561					$	789											$	—
PPL Electric			4.74 %						650						145						505												—
LG&E (b)			4.94 %						500						180						320						0.31 %						69
KU (c)			4.90 %						400						101						299												—
Total									$	2,900					$	987					$	1,913											$	69

(a) PPL Capital Funding's obligations are fully and unconditionally guaranteed by PPL.

(b) In August 2022, LG&E increased the size of their commercial paper program to $ 500 million.

(c) In August 2022, KU increased the size of their commercial paper program to $ 400 million.

(d) Commercial paper issued reflects the undiscounted face value of the issuance.

(PPL Electric, LG&E and KU)

See Note 15 for a discussion of intercompany borrowings.

Long-term Debt (All Registrants)

															December 31,
			Weighted-Average Rate (d)						Maturities (d)						2022						2021
PPL
Senior Unsecured Notes			3.95		%				2026 - 2047						$	3,066					$	1,566
Senior Secured Notes/First Mortgage Bonds (a) (b) (c)			4.06		%				2023 - 2050						8,957						9,205
Junior Subordinated Notes			7.39		%				2067						480						480
Term Loan Credit Facility			5.21		%				2024						850						—
Total Long-term Debt before adjustments															13,353						11,251
Unamortized premium and (discount), net															( 32 )						( 34 )
Unamortized debt issuance costs															( 78 )						( 77 )
Total Long-term Debt															13,243						11,140
Less current portion of Long-term Debt															354						474
Total Long-term Debt, noncurrent															$	12,889					$	10,666
PPL Electric
Senior Secured Notes/First Mortgage Bonds (a) (b)			4.26		%				2023 - 2049						$	4,289					$	4,539
Term Loan Credit Facility			5.17		%				2024						250						—
Total Long-term Debt Before Adjustments															4,539						4,539
Unamortized discount															( 22 )						( 22 )
Unamortized debt issuance costs															( 31 )						( 33 )
Total Long-term Debt															4,486						4,484
Less current portion of Long-term Debt															340						474
Total Long-term Debt, noncurrent															$	4,146					$	4,010

---

															December 31,
			Weighted-Average Rate (d)						Maturities (d)						2022						2021
LG&E
Senior Secured Notes/First Mortgage Bonds (a) (c)			3.70		%				2025 - 2049						$	2,024					$	2,024
Term Loan Credit Facility			5.22		%				2024						300						—
Total Long-term Debt Before Adjustments															2,324						2,024
Unamortized discount															( 4 )						( 4 )
Unamortized debt issuance costs															( 13 )						( 14 )
Total Long-term Debt															2,307						2,006
Less current portion of Long-term Debt															—						—
Total Long-term Debt, noncurrent															$	2,307					$	2,006
KU
Senior Secured Notes/First Mortgage Bonds (a) (c)			4.00		%				2023 - 2050						$	2,642					$	2,642
Term Loan Credit Facility			5.22		%				2024						300						—
Total Long-term Debt Before Adjustments															2,942						2,642
Unamortized premium															5						5
Unamortized discount															( 9 )						( 9 )
Unamortized debt issuance costs															( 18 )						( 20 )
Total Long-term Debt															2,920						2,618
Less current portion of Long-term Debt															13						—
Total Long-term Debt, noncurrent															$	2,907					$	2,618

(a) Includes PPL Electric's senior secured and first mortgage bonds that are secured by the lien of PPL Electric's 2001 Mortgage Indenture, which covers substantially all of PPL Electric’s tangible distribution properties and certain of its tangible transmission properties located in Pennsylvania, subject to certain exceptions and exclusions. The carrying value of PPL Electric's property, plant and equipment was approximately $ 11.8 billion and $ 11.3 billion at December 31, 2022 and 2021.

Includes LG&E's first mortgage bonds that are secured by the lien of the LG&E 2010 Mortgage Indenture which creates a lien, subject to certain exceptions and exclusions, on substantially all of LG&E's real and tangible personal property located in Kentucky and used or to be used in connection with the generation, transmission and distribution of electricity and the storage and distribution of natural gas. The aggregate carrying value of the property subject to the lien was $ 5.8 billion and $ 5.7 billion at December 31, 2022 and 2021.

Includes KU's first mortgage bonds that are secured by the lien of the KU 2010 Mortgage Indenture which creates a lien, subject to certain exceptions and exclusions, on substantially all of KU's real and tangible personal property located in Kentucky and used or to be used in connection with the generation, transmission and distribution of electricity. The aggregate carrying value of the property subject to the lien was $ 7.1 billion and $ 6.9 billion at December 31, 2022 and 2021.

(b) Includes PPL Electric's series of senior secured bonds that secure its obligations to make payments with respect to each series of Pollution Control Bonds that were issued by the LCIDA and the PEDFA on behalf of PPL Electric. These senior secured bonds were issued in the same principal amount, contain payment and redemption provisions that correspond to and bear the same interest rate as such Pollution Control Bonds. These senior secured bonds were issued under PPL Electric's 2001 Mortgage Indenture and are secured as noted in (a) above. The tax-exempt revenue bonds are subject to mandatory redemption upon determination that the interest rate on the bonds would be included in the holders' gross income for federal tax purposes.

Includes $ 250 million of notes that may be called at a redemption price equal to 100% of the principal amount, plus accrued and unpaid interest to, but excluding, the redemption date.

(c) Includes LG&E's and KU's series of first mortgage bonds that were issued to the respective trustees of tax-exempt revenue bonds to secure its respective obligations to make payments with respect to each series of bonds. The first mortgage bonds were issued in the same principal amounts, contain payment and redemption provisions that correspond to and bear the same interest rate as such tax-exempt revenue bonds. These first mortgage bonds were issued under the LG&E 2010 Mortgage Indenture and the KU 2010 Mortgage Indenture and are secured as noted in (a) above. The related tax-exempt revenue bonds were issued by various governmental entities, principally counties in Kentucky, on behalf of LG&E and KU. The related revenue bond documents allow LG&E and KU to convert the interest rate mode on the bonds from time to time to a commercial paper rate, daily rate, weekly rate, term rate of at least one year or, in some cases, an auction rate or a LIBOR index rate. At December 31, 2022, the aggregate tax-exempt revenue bonds issued on behalf of LG&E and KU that were in a term rate mode totaled $ 782 million for PPL, comprised of $ 473 million and $ 309 million for LG&E and KU. At December 31, 2022, the aggregate tax-exempt revenue bonds issued on behalf of LG&E and KU that were in a variable rate mode totaled $ 66 million and $ 33 million for LG&E and KU. These variable rate tax-exempt revenue bonds are subject to tender for purchase by LG&E and KU at the option of the holder and to mandatory tender for purchase by LG&E and KU upon the occurrence of certain events.

(d) The table reflects principal maturities only, based on stated maturities, sinking fund requirements, or earlier put dates, and the weighted-average rates as of December 31, 2022.

---

The aggregate maturities of long-term debt, based on sinking fund requirements, stated maturities or earlier put dates, for the periods 2023 through 2027 and thereafter are as follows:

			PPL						PPL Electric												LG&E						KU
2023			$	354					$	340											$	—					$	13
2024			1,501						900												300						300
2025			551						—												300						250
2026			904						—												90						164
2027			303						108												195						—
Thereafter			9,740						3,191												1,439						2,215
Total			$	13,353					$	4,539											$	2,324					$	2,942

(PPL and PPL Electric)

In August 2022, the Lehigh County Industrial Development Authority remarketed $ 108 million of Pollution Control Revenue Refunding Bonds (PPL Electric Utilities Corporation Project), 2016 Series B due 2027 previously issued on behalf of PPL Electric. The bonds were remarketed at a long-term rate and will bear interest at 2.63 % through their maturity date of February 15, 2027.

In September 2022, the Lehigh County Industrial Development Authority remarketed $ 116 million of Pollution Control Revenue Refunding Bonds (PPL Electric Utilities Corporation Project), 2016 Series A due 2029 previously issued on behalf of PPL Electric. The bonds were remarketed at a long-term rate and will bear interest at 3.00 % through their maturity date of September 1, 2029.

(PPL Electric, LG&E and KU)

See Note 15 for additional information related to intercompany borrowings.

Legal Separateness (All Registrants)

The subsidiaries of PPL are separate legal entities. PPL's subsidiaries are not liable for the debts of PPL. Accordingly, creditors of PPL may not satisfy their debts from the assets of PPL's subsidiaries absent a specific contractual undertaking by a subsidiary to pay PPL's creditors or as required by applicable law or regulation. Similarly, PPL is not liable for the debts of its subsidiaries, nor are its subsidiaries liable for the debts of one another. Accordingly, creditors of PPL's subsidiaries may not satisfy their debts from the assets of PPL or its other subsidiaries absent a specific contractual undertaking by PPL or its other subsidiaries to pay the creditors or as required by applicable law or regulation.

Similarly, the subsidiaries of PPL Electric are each separate legal entities. These subsidiaries are not liable for the debts of PPL Electric. Accordingly, creditors of PPL Electric may not satisfy its debts from the assets of its subsidiaries absent a specific contractual undertaking by a subsidiary to pay the creditors or as required by applicable law or regulation. Similarly, PPL Electric is not liable for the debts of its subsidiaries, nor are its subsidiaries liable for the debts of one another. Accordingly, creditors of these subsidiaries may not satisfy their debts from the assets of PPL Electric (or its other subsidiaries) absent a specific contractual undertaking by PPL Electric or any such other subsidiary to pay such creditors or as required by applicable law or regulation.

(PPL)

Equity Securities

Share Repurchases

In August 2021, PPL's Board of Directors authorized share repurchases of up to $ 3 billion of PPL common shares. In 2021, PPL repurchased approximately $ 1 billion of PPL common shares. There were no share repurchases during the year ended December 31, 2022. Any additional amounts to be repurchased pursuant to this authority will depend on various factors, including PPL’s share price and market conditions. PPL may purchase shares on each trading day subject to market conditions and principles of best execution.

---

Distributions and Related Restrictions

In November 2022, PPL declared its quarterly common stock dividend, payable January 3, 2023, at 22.50 cents per share (equivalent to 0.90 cents per annum). On February 17, 2023, PPL announced a quarterly common stock dividend of 24.00 cents per share, payable April 3, 2023, to shareowners of record as of March 10, 2023. Future dividends will be declared at the discretion of the Board of Directors and will depend upon future earnings, cash flows, financial and legal requirements and other factors.

Neither PPL Capital Funding nor PPL may declare or pay any cash dividend or distribution on its capital stock during any period in which PPL Capital Funding defers interest payments on its 2007 Series A Junior Subordinated Notes due 2067. At December 31, 2022, no interest payments were deferred.

RIE has $ 3 million of certain issues of non-participating cumulative preferred stock outstanding that can be redeemed at the option of RIE. There are no mandatory redemption provisions on the cumulative preferred stock. Dividends on the cumulative preferred stock accrue quarterly and are prior to any dividends on the common stock of RIE. Pursuant to the preferred stock arrangement, as long as any preferred stock is outstanding, certain restrictions on payment of common stock dividends would come into effect if the common stock equity of RIE was, or by reason of payment of such dividends became, less than 25% of total capitalization of RIE. RIE was current on the preferred stock dividends and was in compliance with this covenant and accordingly, was not restricted as to the payment of common stock dividends under the foregoing provisions as of December 31, 2022.

(All Registrants)

PPL relies on dividends or loans from its subsidiaries to fund PPL's dividends to its common shareholders. The net assets of certain PPL subsidiaries are subject to legal restrictions. LG&E, KU and PPL Electric are subject to Section 305(a) of the Federal Power Act, which makes it unlawful for a public utility to make or pay a dividend from any funds "properly included in capital account." The meaning of this limitation has never been clarified under the Federal Power Act. LG&E, KU and PPL Electric believe, however, that this statutory restriction, as applied to their circumstances, would not be construed or applied by the FERC to prohibit the payment from retained earnings of dividends that are not excessive and are for lawful and legitimate business purposes. In February 2012, LG&E and KU petitioned the FERC requesting authorization to pay dividends in the future based on retained earnings balances calculated without giving effect to the impact of purchase accounting adjustments for PPL's 2010 acquisition of LG&E and KU. In May 2012, the FERC approved the petitions with the further condition that each utility may not pay dividends if such payment would cause its adjusted equity ratio to fall below 30 % of total capitalization. Accordingly, at December 31, 2022, net assets of $ 1.4 billion for LG&E and $ 1.9 billion for KU were restricted for purposes of paying dividends to LKE, and net assets of $ 1.8 billion for LG&E and $ 2.1 billion for KU were available for payment of dividends to LKE. LG&E and KU believe they will not be required to change their current dividend practices as a result of the foregoing requirement. In addition, under Virginia law, KU is prohibited from making loans to affiliates without the prior approval of the VSCC. There are no comparable statutes under Kentucky law applicable to LG&E and KU, or under Pennsylvania law applicable to PPL Electric. However, orders from the KPSC require LG&E and KU to obtain prior consent or approval before lending amounts to PPL.

(PPL)

Acquisitions

Acquisition of Narragansett Electric

On May 25, 2022, PPL Rhode Island Holdings acquired 100% of the outstanding shares of common stock of Narragansett Electric from National Grid U.S., a subsidiary of National Grid plc (the Acquisition). Narragansett Electric, whose service area covers substantially all of Rhode Island, is primarily engaged in the transmission and distribution of electricity and distribution of natural gas. The Acquisition expands PPL's portfolio of regulated natural gas and electricity transmission and distribution assets, has improved PPL's credit metrics and is expected to enhance long term earnings growth. Following the closing of the Acquisition, Narragansett Electric provides services doing business under the name Rhode Island Energy (RIE).

The consideration for the Acquisition consisted of approximately $ 3.8 billion in cash and approximately $ 1.5 billion of long-term debt assumed through the transaction. The fair value of the consideration paid for Narragansett Electric was as follows (in billions):

---

Aggregate enterprise consideration																		$	5.3
Less: fair value of assumed long-term debt outstanding																		1.5
Total cash consideration																		$	3.8

The $ 3.8 billion total cash consideration paid was funded with proceeds from PPL's 2021 sale of its U.K. utility business.

In connection with the Acquisition, National Grid USA Service Company, Inc., National Grid U.S. and Narragansett Electric have entered into a transition services agreement (TSA), pursuant to which National Grid has agreed to provide certain transition services to Narragansett Electric to facilitate the transition of the operation of Narragansett Electric to PPL following the Acquisition, as agreed upon in the Narragansett SPA. The TSA is for an initial two-year term and is subject to extension as necessary to complete the successful transition. TSA costs of $ 123 million were incurred for the twelve month period ended December 31, 2022.

Acquisition Approval

The Acquisition required certain approvals or waivers, including, among others, approval of National Grid USA's shareholders, authorizations or waivers from the Rhode Island Division of Public Utilities and Carriers, the Massachusetts Department of Public Utilities, the Federal Communications Commission (FCC), and the FERC, as well as review under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. All such approvals were received prior to closing of the Acquisition.

Commitments to the Rhode Island Division of Public Utilities and Carriers and the Attorney General of the State of Rhode Island

As a condition to the Acquisition, PPL made certain commitments to the Rhode Island Division of Public Utilities and Carriers and the Attorney General of the State of Rhode Island. As a result:

• RIE provided a credit to all its electric and natural gas distribution customers in the total amount of $ 50 million ($ 40 million net of tax benefit). Based on the relative number of electric distribution customers and natural gas distribution customers as of November 1, 2022, RIE refunded, in the form of a bill credit, $ 33 million to electric customers and $ 17 million to natural gas customers of amounts collected from customers since the Acquisition date. Each electric customer received the same credit, and each natural gas customer received the same credit. A reduction of revenue and a regulatory liability of $ 50 million for the amounts refunded were recorded during the quarter ended September 30, 2022. These credits were issued during the fourth quarter of 2022. The amounts refunded will not impact RIE's earnings sharing regulatory mechanism.

• RIE forgave approximately $ 44 million ($ 21 million net of allowance for doubtful accounts) in arrearages for low-income and protected residential customers, which represents 100% of the arrearages over 90 days for those customers as of March 31, 2022. PPL deemed these accounts uncollectible and fully reserved for them as of September 30, 2022, resulting in an increase to "Other operations and maintenance expense" on the Statement of Income of $ 23 million for the year ended December 31, 2022.

• RIE will not file a base rate case seeking an increase in base distribution rates for natural gas and/or electric service sooner than three years from the Acquisition date, and RIE will not submit a request for a change in base rates unless and until there is at least twelve months of operating experience under PPL's exclusive leadership and after the TSA with National Grid terminates.

• RIE will forgo potential recovery of any and all transition costs which PPL estimates will be approximately $ 408 million through June 30, 2024, and includes (1) the installation of certain information technology systems; (2) modification and enhancements to physical facilities in Rhode Island; and (3) incurring costs related to severance payments, communications and branding changes, and other transition related costs. These costs, which are being expensed as incurred, were $ 181 million for the year ended December 31, 2022.

• RIE will not seek to recover any transaction costs related to the Acquisition, which were $ 27 million through December 31, 2022, including $ 18 million for the year ended December 31, 2022 recorded in "Other operations and maintenance" on the Statement of Income.

• RIE will not seek to recover in rates any markup charged by National Grid U.S. and/or its affiliates under the TSA. These amounts were $ 3 million as of December 31, 2022.

• In June 2022, RIE expensed $ 20 million of regulatory assets as of the Acquisition date for the Gas Business Enablement (GBE) project and for certain Cybersecurity/IT investments related to GBE. The expense was recorded to "Other operations and maintenance" on the Statements of Income for the year ended December 31, 2022. RIE will not seek to recover these regulatory assets from customers in any future proceedings.

• RIE will exclude all goodwill from the ratemaking capital structure.

---

• RIE will hold harmless Rhode Island customers from any changes to Accumulated Deferred Income Taxes (ADIT) as a result of the Acquisition. RIE reserves the right to seek rate adjustments based on future changes to ADIT that are not related to the Acquisition.

• RIE will not increase its revenue requirement to a level higher than what would exist in the absence of the Acquisition as a result of any restatement of pension and other post-retirement benefits plan assets and liabilities to fair value after the close of the Acquisition.

• Rhode Island Holdings contributed $ 2.5 million to the Rhode Island Commerce Corporation's Renewable Energy Fund and will not use any of the $ 2.5 million to meet its pre-existing renewable energy credit goals in Rhode Island or any other state. This contribution was made during the year ended December 31, 2022 and was recorded in "Other Income (Expense)" on the Statement of Income.

• RIE will make available up to $ 2.5 million for the Rhode Island Attorney General to utilize as needed in evaluating PPL's report on RIE's specific decarbonization goals to support Rhode Island's 2021 Act on Climate or to assess the future of the gas distribution business in Rhode Island. This amount was accrued during the year ended December 31, 2022 and was recorded in "Other Income (Expense) - net" on the Statement of Income.

• Various other operational and reporting commitments have been established.

Purchase Price Allocation

The operations of Narragansett Electric are subject to the accounting for certain types of regulation as prescribed by GAAP. The carrying value of Narragansett Electric’s assets and liabilities subject to rate-setting and cost recovery provisions provide revenues derived from costs, including a return on investment of net assets and liabilities included in rate base. As such, the fair values of these assets and liabilities equal their carrying values. Accordingly, neither the assets acquired or liabilities assumed, nor the unaudited pro forma financial information presented below, reflect any adjustments related to these amounts.

As of December 31, 2022, the excess of the purchase price over the estimated fair values of the assets acquired and liabilities assumed was $ 1,586 million, which has been recorded as goodwill. PPL has elected to not reflect the effects of purchase accounting in the separate financial statements of RIE or PPL's Rhode Island Regulated segment. Accordingly, the Rhode Island Regulated segment includes $ 725 million of acquired legacy goodwill. The remaining excess purchase price of $ 861 million is included in PPL's Corporate and Other category for segment reporting purposes. The goodwill reflects the value paid for the expected continued growth of a rate-regulated business located in a defined service area with a constructive regulatory environment, the ability of PPL to leverage its assembled workforce to take advantage of those growth opportunities and the attractiveness of stable, growing cash flows. The tax goodwill is deductible for income tax purposes over a 15 year period, and as such, deferred taxes will be recorded as the tax deductions are taken.

The table below shows the preliminary allocation of the purchase price to the assets acquired and liabilities assumed that were recorded in PPL’s Consolidated Balance Sheet as of the Acquisition date. The allocation is subject to change during the one-year measurement period as additional information is obtained about the facts and circumstances that existed at closing. As a result, the amount of goodwill included below may change by a material amount as PPL finalizes the allocation of the purchase price. Adjustments to certain assets acquired and liabilities assumed resulted in an increase in goodwill of $ 5 million since the initial purchase price allocation as of the Acquisition date.

																		Purchase Price Allocation as of December 31, 2022
Assets
Current Assets
Cash and Cash Equivalents																		$	154
Accounts Receivable (a)																		195
Unbilled Revenues																		54
Price Risk Management Assets																		99
Regulatory Assets																		75
Other Current Assets																		65
Total Current Assets																		642

---

																		Purchase Price Allocation as of December 31, 2022
Noncurrent Assets
Property, Plant and Equipment, net																		3,988
Regulatory Assets																		395
Goodwill																		1,586
Other Noncurrent Assets																		166
Total Noncurrent Assets																		6,135
Total Assets																		$	6,777
Liabilities
Current Liabilities
Long-Term Debt Due Within One Year																		$	14
Accounts Payable																		180
Taxes Accrued																		44
Regulatory Liabilities																		239
Other Current Liabilities																		198
Total Current Liabilities																		675
Noncurrent Liabilities
Long-Term Debt																		1,496
Regulatory Liabilities																		643
Other Deferred Credits and Noncurrent Liabilities																		143
Noncurrent Liabilities																		2,282
Total Purchase Price (Balance Sheet Net Assets)																		$	3,820

(a) Amounts represent fair value as of May 25, 2022. The gross contractual amount is $ 255 million. Cash flows not expected to be collected as of May 25, 2022 were $ 60 million.

Pro Forma Financial Information

The actual RIE Operating Revenues and Net income attributable to PPL included in PPL's Statement of Income for the period ended December 31, 2022, and PPL's unaudited pro forma 2022 and 2021 Operating Revenues and Net Income (Loss) attributable to PPL, including RIE, as if the Acquisition had occurred on January 1, 2021 are as follows.

																		Operating Revenues						Net Income (Loss)
Actual RIE results included from May 25, 2022 - December 31, 2022 (a)																		$	1,038					$	( 44 )
PPL Pro Forma for the year ended 2022																		8,667						790
PPL Pro Forma for the year ended 2021																		7,478						159

(a) Net Income (Loss) includes expenses of $ 98 million (pre-tax) related to commitments made as a condition of the Acquisition.

The pro forma financial information presented above has been derived from the historical consolidated financial statements of PPL and Narragansett Electric. Non-recurring items included in the 2022 pro forma financial information include: (a) $ 18 million (pre-tax) of transaction costs related to the Acquisition, primarily for advisory, accounting and legal fees incurred, (b) $ 223 million (pre-tax) of Acquisition integration costs, (c) a $ 50 million reduction of revenue (pre-tax), write-offs of $ 43 million (pre-tax) of certain accounts receivable and regulatory assets of RIE and $ 5 million (pre-tax) of expenses accrued in support of Rhode Island's decarbonization goals, all of which were conditions of the Acquisition, and (d) the income tax effect of these items, which was tax effected at the statutory federal income tax rate of 21%.

Non-recurring items included in the 2021 pro forma financial information include: (a) $ 38 million (pre-tax) of Acquisition integration costs and (b) the income tax effect of this item, which was tax effected at the statutory federal income tax rate of

---

21%. Losses from the discontinued operations (net of income taxes) of PPL of $ 1,498 million in 2021 were excluded from the pro forma amount above.

Divestitures

Sale of Safari Holdings

On September 29, 2022, PPL signed a definitive agreement to sell all of Safari Holdings membership interests to Aspen Power Services, LLC (Aspen Power). On November 1, 2022, PPL completed the sale (the Transaction).

A loss on sale of $ 60 million ($ 46 million net of tax benefit) was recorded in "Other operation and maintenance" on the Statement of Income for the year ended December 31, 2022. As a result of the Transaction, $ 53 million of goodwill previously presented in the Corporate and Other category for segment reporting purposes was written-off.

The accounting for the closing of the Transaction was substantially completed in the fourth quarter of 2022. Final closing adjustments are expected to be completed in the first quarter of 2023.

In connection with the closing of the Transaction, PPL provided certain guarantees and other assurances. See Note 14 to the Financial Statements for additional information.

Discontinued Operation s

Sale of the U.K. Utility Business

On June 14, 2021, PPL WPD Limited completed the sale of PPL's utility business to National Grid Holdings One plc (National Grid U.K.), a subsidiary of National Grid plc. The transaction resulted in cash proceeds of $ 10.7 billion inclusive of foreign currency hedges executed by PPL. PPL received net proceeds, after taxes and fees, of $ 10.4 billion. PPL WPD Limited agreed to indemnify National Grid U.K. for certain tax related matters. See Note 14 for additional information. PPL has not had and will not have any significant involvement with the U.K. utility business since completion of the sale.

Summarized Results of Discontinued Operations

The operations of the U.K. utility business are included in "Income (Loss) from Discontinued Operations (net of income taxes)" on the Statements of Income. Following are the components of discontinued operations in the Statements of Income for the years ended December 31:

			2022						2021						2020
Operating Revenues			$	—					$	1,344					$	2,133
Operating Expenses			—						467						916
Other Income (Expense) - net			—						202						167
Interest Expense (a)			—						209						367
Income before income taxes			—						870						1,017
Loss on sale			—						( 1,609 )						—
Income tax (benefit) expense			( 42 )						759						188
Income (Loss) from Discontinued Operations (net of income taxes)			$	42					$	( 1,498 )					$	829

(a) No interest from corporate level debt was allocated to discontinued operations.

(All Registrants)

LG&E and KU have entered into various operating leases primarily for office space, vehicles and railcars. The leases generally have fixed payments with expiration dates ranging from 2023 to 2040, some of which have options to extend the leases from one year to ten years and some have options to terminate at LG&E's and KU's discretion.

PPL has also entered into various operating leases primarily for office and warehouse space. These leases generally have fixed payments with expiration dates ranging from 2024 through 2030. RIE has various operating leases, primarily related to a transmission line, buildings, land, and fleet vehicles used to support the electric and gas operations, with lease terms ranging between 1 and 50 years. In measuring lease liabilities, the Company excludes variable lease payments, other than those that

---

depend on an index or rate, or are in substance fixed payments, and includes lease payments made at or before the commencement date. The variable lease payments were not material for the year ended December 31, 2022.

PPL Electric also has operating leases which do not have a significant impact to its operations.

(PPL, LG&E and KU)

Lessee Transactions

The following table provides the components of lease cost for the Registrants' operating leases for the years ended December 31:

			2022						2021						2020
PPL
Lease cost:
Operating lease cost			$	20					$	24					$	28
Short-term lease cost			6						6						7
Total lease cost			$	26					$	30					$	35
LG&E
Lease cost:
Operating lease cost			$	6					$	6					$	8
Short-term lease cost			1						1						1
Total lease cost			$	7					$	7					$	9
KU
Lease cost:
Operating lease cost			$	9					$	10					$	13
Short-term lease cost			2						1						1
Total lease cost			$	11					$	11					$	14

The following table provides other key information related to the Registrants' operating leases at December 31:

			2022						2021						2020
PPL
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases			$	26					$	23					$	24
Right-of-use asset obtained in exchange for new operating lease liabilities			15						12						17
LG&E
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases			$	8					$	6					$	7
Right-of-use asset obtained in exchange for new operating lease liabilities			4						4						6
KU
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases			$	12					$	10					$	11
Right-of-use asset obtained in exchange for new operating lease liabilities			5						7						9

The following table provides the total future minimum rental payments for operating leases, as well as a reconciliation of these undiscounted cash flows to the lease liabilities recognized on the Balance Sheets as of December 31, 2022.

---

			PPL						LG&E						KU
2023			$	24					$	6					$	9
2024			17						5						7
2025			12						3						4
2026			5						1						1
2027			4						1						—
Thereafter			7						—						—
Total			$	69					$	16					$	21
Weighted-average discount rate			3.1 %						3.17 %						3.4 %
Weighted-average remaining lease term (in years)			4						3						3
Current lease liabilities (a)			$	22					$	6					$	8
Non-current lease liabilities (a)			42						9						12
Right-of-use assets (b)			60						13						19

(a)    Current lease liabilities are included in " Other Current Liabilities " on the Balance Sheets. Non-current lease liabilities are included in " Other deferred credits and noncurrent liabilities " on the Balance Sheets. The difference between the total future minimum lease payments and the recorded lease liabilities is due to the impact of discounting.

(b)    Right-of-use assets are included in " Other noncurrent assets " on the Balance Sheets.

Lessor Transactions

Third parties leased land from LG&E and KU at certain generation plants to produce refined coal used to generate electricity. The leases were operating leases and expired in 2021. Payments were allocated among lease and non-lease components as stated in the agreements. Lease payments were fixed or determined based on the amount of refined coal used in electricity generation at the facility. Payments received were primarily recorded as a regulatory liability and amortized in accordance with regulatory approvals. There are certain leases in which RIE is the lessor. Revenue under such leases was immaterial for the year ended December 31, 2022.

The following table shows the lease income recognized for the years ended December 31:

			2022						2021						2020
PPL			$	6					11						16
LG&E			2						5						6
KU			—						5						9

(PPL and PPL Electric)

Under the SIP and the ICPKE (together, the Plans), restricted shares of PPL common stock, restricted stock units, performance units and stock options may be granted to officers and other key employees of PPL, PPL Electric and other affiliated companies. Awards under the Plans are made by the Compensation Committee of the PPL Board of Directors, in the case of the SIP, and by the PPL Corporate Leadership Council (CLC), in the case of the ICPKE.

The following table details the award limits under each of the Plans.

Total Plan

Annual Grant Limit Total As % of Outstanding

Annual Grant

Annual Grant Limit For Individual Participants - Performance Based Awards

Award Limit

PPL Common Stock On First Day of

Limit Options

For awards denominated in

For awards denominated in

Plan

(Shares)

Each Calendar Year

(Shares)

shares (Shares)

cash (in dollars)

SIP

15,000,000

2,000,000

750,000

$

15,000,000

ICPKE

14,199,796

2

%

3,000,000

Any portion of these awards that has not been granted may be carried over and used in any subsequent year. If any award lapses, the rights of the participant terminate, or, with respect to certain awards, is forfeited, and the shares of PPL common stock underlying such an award are again available for grant. Shares delivered under the Plans may be in the form of authorized

---

and unissued PPL common stock, common stock held in treasury by PPL or PPL common stock purchased on the open market (including private purchases) in accordance with applicable securities laws.

Restricted Stock Units

Restricted stock units represent the right to receive shares of PPL common stock in the future, generally three years after the date of grant, in an amount based on the fair value of PPL common stock on the date of grant.

Under the SIP, each restricted stock unit entitles the grant recipient to accrue additional restricted stock units equal to the amount of quarterly dividends paid on PPL stock. These additional restricted stock units are deferred and payable in shares of PPL common stock at the end of the restriction period. Dividend equivalents on restricted stock unit awards granted under the ICPKE are currently paid in cash when dividends are declared by PPL.

The fair value of restricted stock units granted is recognized on a straight-line basis over the restriction period or through the date at which the employee reaches retirement eligibility. The fair value of restricted stock units granted to retirement-eligible employees is recognized as compensation expense immediately upon the date of grant. Recipients of restricted stock units granted under the ICPKE may also be granted the right to receive dividend equivalents through the end of the restriction period or until the award is forfeited. Restricted stock units are subject to forfeiture or accelerated payout under the plan provisions for termination, retirement, disability and death of employees. Restrictions lapse on restricted stock units fully, in certain situations, as defined by each of the Plans.

The weighted-average grant date fair value of restricted stock units granted was:

			2022						2021						2020
PPL			$	27.52					$	28.00					$	35.30
PPL Electric			26.66						27.96						35.37

Restricted stock unit activity for 2022 was:

			Restricted Shares/Units						Weighted- Average Grant Date Fair Value Per Share
PPL
Nonvested, beginning of period			1,004,583						$	31.19
Granted			620,708						27.52
Vested			( 427,095 )						31.55
Forfeited			( 15,779 )						29.61
Nonvested, end of period			1,182,417						29.16
PPL Electric
Nonvested, beginning of period			131,287						$	31.50
Transfer between registrants			( 30,353 )						30.03
Granted			51,832						26.66
Vested			( 41,233 )						32.19
Forfeited			( 1,747 )						32.19
Nonvested, end of period			109,786						28.91

Substantially all restricted stock unit awards are expected to vest.

The total fair value of restricted stock units vesting for the years ended December 31 was:

			2022						2021						2020
PPL			$	12					$	8					$	19
PPL Electric			1						1						3

---

Performance Units - Total Shareowner Return

Performance units based on relative Total Shareowner Return (TSR) are intended to encourage and reward future corporate performance. Performance units represent a target number of shares (Target Award) of PPL's common stock that the recipient would receive upon PPL's attainment of the applicable performance goal. Performance is determined based on TSR during a three -year performance period. At the end of the period, payout is determined by comparing PPL's performance to the TSR of the companies included in the PHLX Utility Sector Index. Awards are payable on a graduated basis based on thresholds that measure PPL's performance relative to peers that comprise the applicable index on which each year's awards are measured. Awards can be paid up to 200 % of the Target Award or forfeited with no payout if performance is below a minimum established performance threshold. Dividends payable during the performance cycle accumulate and are converted into additional performance units and are payable in shares of PPL common stock upon completion of the performance period based on the Compensation Committee's determination of achievement of the performance goals. Under the plan provisions, TSR performance units are subject to forfeiture upon termination of employment other than retirement, one year or more from commencement of the performance period, disability or death of an employee.

The fair value of TSR performance units granted to retirement-eligible employees is recognized as compensation expense on a straight-line basis over a one -year period, the minimum vesting period required for an employee to be entitled to payout of the awards with no proration. For employees who are not retirement-eligible, compensation expense is recognized over the shorter of the three -year performance period or the period until the employee is retirement-eligible, with a minimum vesting and recognition period of one -year. If an employee retires before the one-year vesting period, the performance units are forfeited. Performance units vest on a pro rata basis, in certain situations, as defined by each of the Plans.

The fair value of each performance unit granted was estimated using a Monte Carlo pricing model that considers stock beta, a risk-free interest rate, expected stock volatility and expected life. The stock beta was calculated comparing the risk of the individual securities to the average risk of the companies in the index group. The risk-free interest rate reflects the yield on a U.S. Treasury bond commensurate with the expected life of the performance unit. Volatility over the expected term of the performance unit is calculated using daily stock price observations for PPL and all companies in the index group and is evaluated with consideration given to prior periods that may need to be excluded based on events not likely to recur that had impacted PPL and the companies in the index group. PPL uses a mix of historic and implied volatility to value awards.

The weighted-average assumptions used in the model were:

			2022						2021						2020
Expected stock volatility			22.79 %						27.81 %						15.64 %
Expected life			3 years						3 years						3 years

The weighted-average grant date fair value of TSR performance units granted was:

			2022						2021						2020
PPL			$	34.27					$	32.44					$	37.63
PPL Electric			34.42						32.92						38.64

TSR performance unit activity for 2022 was:

			TSR Performance Units						Weighted- Average Grant Date Fair Value Per Share
PPL
Nonvested, beginning of period			633,773						$	34.68
Granted			298,795						34.27
Forfeited (a)			( 245,861 )						35.48
Nonvested, end of period			686,707						34.21

---

			TSR Performance Units						Weighted- Average Grant Date Fair Value Per Share
PPL Electric
Nonvested, beginning of period			15,354						$	34.36
Granted			14,238						34.42
Forfeited (a)			( 3,113 )						35.58
Nonvested, end of period			26,479						34.25

(a) Primarily related to the forfeiture of 2019 domestic performance units as performance during the period was below the minimum established performance threshold, which resulted in no payout.

For the year ended December 31, 2021, $ 2 million of TSR performance units vested. All awards vested were associated with the sale of the U.K. utility business. See Note 9 for additional information on the sale of the U.K. utility business. No TSR performance units vested for the years ended December 31, 2022 and 2020. Amounts for PPL Electric are insignificant.

Performance Units - Return on Equity

In 2017, PPL changed its executive compensation mix to add performance units based on achievement of a corporate Return on Equity (ROE). ROE performance units were intended to further align compensation with the company’s strategy and reward for future corporate performance. The Compensation Committee, eliminated the use of ROE performance units due to changes in its long-term incentive mix beginning in January 2022 .

Payout of these performance units will be based on the calculated average of the annual corporate ROE for each year of the three -year performance period for PPL Corporation. In light of the transformational nature of the sale of the U.K. utility business in 2021, PPL’s ROE-based performance units issued for 2021 were based on a one-year performance period from January 1, 2021 to December 31, 2021; however, these units retained the three year vesting schedule and other characteristics. ROE performance units represent a target number of shares (Target Award) of PPL's common stock that the recipient would receive upon PPL's attainment of the applicable ROE performance goal. ROE performance units can be paid up to 200 % of the Target Award or forfeited with no payout if performance is below a minimum established performance threshold. Dividends payable during the performance cycle accumulate and are converted into additional performance units and are payable in shares of PPL common stock upon completion of the performance period based on the Compensation Committee's determination of achievement of the performance goals. Under the plan provisions, these performance units are subject to forfeiture upon termination of employment other than retirement, disability or death of an employee.

The fair value of each ROE performance unit is based on the closing price of PPL Common Stock on the date of grant. The fair value of ROE performance units is recognized on a straight-line basis over the service period or through the date at which the employee reaches retirement eligibility. The fair value awards granted to retirement-eligible employees is recognized as compensation expense immediately upon the date of grant. As these awards are based on performance conditions, the level of attainment is monitored each reporting period and compensation expense is adjusted based on the expected attainment level.

The weighted-average grant date fair value of ROE performance units granted was:

			2022						2021						2020
PPL			$	30.81					$	30.08					$	34.95
PPL Electric			30.70						29.39						35.59

---

ROE performance unit activity for 2022 was:

			ROE Performance Unit						Weighted- Average Grant Date Fair Value Per Share
PPL
Nonvested, beginning of period			722,353						$	31.28
Granted (a)			257,199						30.81
Vested			( 470,182 )						30.76
Nonvested, end of period			509,370						31.53
PPL Electric
Nonvested, beginning of period			15,354						$	30.27
Granted (a)			3,663						30.70
Vested			( 6,311 )						30.78
Nonvested, end of period			12,706						30.14

(a) Represents attainment updates to the 2019 awards that paid out at 200% of target, as well as dividend equivalents that accumulated on outstanding 2020 and 2021 awards.

The total fair value of ROE performance units vesting for the years ended December 31 was:

			2022						2021						2020
PPL			$	12					$	16					$	8
PPL Electric			—						—						1

Performance Units - Earnings Growth

Beginning in 2022, PPL changed its executive compensation mix to add performance units based on achievement of corporate earnings growth (EG) metrics. EG performance units are intended to further align executive compensation with the company’s future strategy.

Payout of these performance units will be based on the earnings growth above the projected midpoint of ongoing earnings for the three -year performance period for PPL Corporation. EG performance units represent a target number of shares (Target Award) of PPL's common stock that the recipient would receive upon PPL's attainment of the applicable EG performance goal. EG performance units can be paid up to 200 % of the Target Award or forfeited with no payout if performance is below a minimum established performance threshold. Dividends payable during the performance cycle accumulate and are converted into additional performance units and are payable in shares of PPL common stock upon completion of the performance period based on the Compensation Committee's determination of achievement of the performance goals. Under the plan provisions, these performance units are subject to forfeiture upon termination of employment other than retirement, disability or death of an employee.

The fair value of each EG performance unit is based on the closing price of PPL Common Stock on the date of grant. The fair value of EG performance units is recognized on a straight-line basis over the service period or through the date at which the employee reaches retirement eligibility. The fair value awards granted to retirement-eligible employees is recognized as compensation expense immediately upon the date of grant. As these awards are based on performance conditions, the level of attainment is monitored each reporting period and compensation expense is adjusted based on the expected attainment level.

The weighted-average grant date fair value of EG performance units granted was:

			2022
PPL			$	29.29
PPL Electric			29.35

---

EG performance unit activity for 2022 was:

			EG Performance Unit						Weighted- Average Grant Date Fair Value Per Share
PPL
Nonvested, beginning of period			—						$	—
Granted			141,880						29.29
Nonvested, end of period			141,880						29.29
PPL Electric
Nonvested, beginning of period			—						$	—
Granted			6,888						29.35
Nonvested, end of period			6,888						29.35

Performance Units - Environmental, Social and Governance

Beginning in 2022, PPL changed its executive compensation mix to add performance units based on environmental, social and governance (ESG) metrics. ESG performance units are tied to climate-related performance and intended to further align executive compensation with the company’s future strategy.

Payout of these performance units will be based on the attainment of reductions in company vehicle emissions and building energy use, as well as the retirement of Mill Creek Unit 1, a coal-fired generating facility in Kentucky. ESG performance units can be paid up to 200 % of the Target Award or forfeited with no payout if performance is below a minimum established performance threshold. Dividends payable during the performance cycle accumulate and are converted into additional performance units and are payable in shares of PPL common stock upon completion of the performance period based on the Compensation Committee's determination of achievement of the performance goals. Under the plan provisions, these performance units are subject to forfeiture upon termination of employment other than retirement, disability or death of an employee.

The fair value of each ESG performance unit is based on the closing price of PPL Common Stock on the date of grant. The fair value of ESG performance units is recognized on a straight-line basis over the service period or through the date at which the employee reaches retirement eligibility. The fair value awards granted to retirement-eligible employees is recognized as compensation expense immediately upon the date of grant. As these awards are based on performance conditions, the level of attainment is monitored each reporting period and compensation expense is adjusted based on the expected attainment level.

The weighted-average grant date fair value of ESG performance units granted was:

			2022
PPL			$	29.29
PPL Electric			29.35

---

ESG performance unit activity for 2022 was:

			ESG Performance Unit						Weighted- Average Grant Date Fair Value Per Share
PPL
Nonvested, beginning of period			—						$	—
Granted			141,880						29.29
Nonvested, end of period			141,880						29.29
PPL Electric
Nonvested, beginning of period			—						$	—
Granted			6,888						29.35
Nonvested, end of period			6,888						29.35

Stock Options

PPL's Compensation, Governance and Nominating Committee, now known as the Compensation Committee, eliminated the use of stock options due to changes in its long-term incentive mix beginning in January 2014 .

Under the Plans, stock options had been granted with an option exercise price per share not less than the fair value of PPL's common stock on the date of grant. Options outstanding at December 31, 2022, are fully vested. All options expire no later than 10 years from the grant date. The options become exercisable immediately in certain situations, as defined by each of the Plans.

Stock option activity for 2022 was:

			Number of Options						Weighted Average Exercise Price Per Share						Weighted- Average Remaining Contractual Term (years)						Aggregate Total Intrinsic Value
PPL
Outstanding at beginning of period			766,002						$	26.57
Exercised			( 594,450 )						26.44
Outstanding and exercisable at end of period			171,552						27.04						0.1						$	—

For 2022, 2021 and 2020, PPL received $ 18 million, $ 10 million and $ 8 million in cash from stock options exercised. The total intrinsic value of stock options exercised was insignificant in each of those years. The related income tax benefits realized were not significant.

Compensation Expense

Compensation expense for restricted stock, restricted stock units, performance units and stock options accounted for as equity awards was:

			2022						2021						2020
PPL			$	36					$	34					$	28
PPL Electric			2						11						10

The income tax benefit related to above compensation expense was as follows:

			2022						2021						2020
PPL			$	10					$	10					$	8
PPL Electric			1						3						3

At December 31, 2022, unrecognized compensation expense related to nonvested stock awards was:

---

(All Registrants)

Defined Benefits

Certain employees of PPL's subsidiaries are eligible for pension benefits under non-contributory defined benefit pension plans with benefits based on length of service and final average pay, as defined by the plans. Effective January 1, 2012, PPL's primary defined benefit pension plan was closed to all newly hired salaried employees. Effective July 1, 2014, PPL's primary defined benefit pension plan was closed to all newly hired bargaining unit employees. Newly hired employees are eligible to participate in the PPL Retirement Savings Plan, a 401(k) savings plan with enhanced employer contributions.

The defined benefit pension plans of LKE and its subsidiaries were closed to new salaried and bargaining unit employees hired after December 31, 2005. Employees hired after December 31, 2005 receive additional company contributions above the standard matching contributions to their savings plans. The pension plans sponsored by LKE and LG&E were merged effective January 1, 2020 into the LG&E and KU Pension Plan. The merged plan is sponsored by LKE. LG&E and KU participate in this plan.

The Rhode Island defined benefit plans provide most union employees, as well as non-union employees hired before January 1, 2011, with a retirement benefit. Supplemental non-qualified, non-contributory executive retirement programs provide additional defined pension benefits for certain executives.

PPL and certain of its subsidiaries also provide supplemental retirement benefits to executives and other key management employees through unfunded nonqualified retirement plans.

Certain employees of PPL's subsidiaries are eligible for certain health care and life insurance benefits upon retirement through contributory plans. Effective January 1, 2014, the PPL Postretirement Medical Plan was closed to all newly hired salaried employees. Effective July 1, 2014, the PPL Postretirement Medical Plan was closed to all newly hired bargaining unit employees. Postretirement health benefits may be paid from 401(h) accounts established as part of the PPL Retirement Plan and the LG&E and KU Pension Plan within the PPL Services Corporation Master Trust, funded VEBA trusts and company funds.

The Rhode Island postretirement benefit plans provide health care and life insurance coverage to eligible retired employees. Eligibility is based on age and length of service requirements and, in most cases, retirees must contribute to the cost of their coverage.

---

(PPL)

The following table provides the components of net periodic defined benefit costs (credits) for PPL's pension and other postretirement benefit plans for the years ended December 31.

			Pension Benefits																		Other Postretirement Benefits
			2022						2021						2020						2022						2021						2020
Net periodic defined benefit costs (credits):
Service cost			$	51					$	56					$	56					$	7					$	6					$	6
Interest cost			144						121						146						20						16						19
Expected return on plan assets			( 276 )						( 255 )						( 246 )						( 28 )						( 23 )						( 21 )
Amortization of:
Prior service cost (credit)			8						8						9						1						1						1
Actuarial (gain) loss			51						93						89						( 5 )						( 1 )						—
Net periodic defined benefit costs (credits) prior to settlements and termination benefits			( 22 )						23						54						( 5 )						( 1 )						5
Settlements (a)			23						18						23						—						—						—
Net periodic defined benefit costs (credits)			$	1					$	41					$	77					$	( 5 )					$	( 1 )					$	5
Other Changes in Plan Assets and Benefit Obligations Recognized in OCI and Regulatory Assets/Liabilities - Gross:
Net (loss)/gain allocated at acquisition			$	33					$	—					$	—					$	( 49 )					$	—					$	—
Settlement			( 23 )						( 18 )						( 23 )						—						—						—
Net (gain) loss			242						42						( 221 )						—						( 53 )						( 6 )
Prior service cost (credit)			—						3						1						—						—						5
Amortization of:
Prior service (cost) credit			( 8 )						( 8 )						( 9 )						( 1 )						( 1 )						( 1 )
Actuarial gain (loss)			( 51 )						( 93 )						( 89 )						5						1						—
Total recognized in OCI and regulatory assets/liabilities			193						( 74 )						( 341 )						( 45 )						( 53 )						( 2 )
Total recognized in net periodic defined benefit costs, OCI and regulatory assets/liabilities			$	194					$	( 33 )					$	( 264 )					$	( 50 )					$	( 54 )					$	3

(a) Settlement charges incurred as a result of the amount of lump sum payment distributions, primarily from the LKE qualified pension plan. In accordance with existing regulatory accounting treatment, LG&E and KU have primarily maintained the settlement charge in regulatory assets to be amortized in accordance with existing regulatory practice. The portion of the settlement attributed to LKE's operations outside of the jurisdiction of the KPSC has been charged to expense.

For PPL's pension and postretirement benefits, the amounts recognized in OCI and regulatory assets/liabilities for the years ended December 31 were as follows:

			Pension Benefits																		Other Postretirement Benefits
			2022						2021						2020						2022						2021						2020
OCI			$	142					$	( 70 )					$	( 428 )					$	13					$	( 42 )					$	( 12 )
Regulatory assets/liabilities			51						( 4 )						87						( 58 )						( 11 )						10
Total recognized in OCI and regulatory assets/liabilities			$	193					$	( 74 )					$	( 341 )					$	( 45 )					$	( 53 )					$	( 2 )

(PPL and LG&E)

PPL and LG&E use base mortality tables issued by the Society of Actuaries for all defined benefit pension and other postretirement benefit plans. The Pri-2012 base table and the MP-2020 projection scale with varying adjustment factors based on the underlying demographic and geographic differences and experience of the plan participants was used for all periods.

---

The following weighted-average assumptions were used in the valuation of the benefit obligations at December 31.

			Pension Benefits												Other Postretirement Benefits
			2022						2021						2022						2021
PPL
Discount rate			5.80		%				3.15		%				5.81		%				3.13		%
Rate of compensation increase			3.77		%				3.76		%				3.78		%				3.77		%

The following weighted-average assumptions were used to determine the net periodic defined benefit costs for the years ended December 31.

			Pension Benefits																		Other Postretirement Benefits
			2022						2021						2020						2022						2021						2020
PPL
Discount rate			3.35		%				2.92		%				3.64		%				3.54		%				2.84		%				3.60		%
Rate of compensation increase			3.74		%				3.76		%				3.79		%				2.84		%				3.75		%				3.76		%
Expected return on plan assets			7.25		%				7.25		%				7.25		%				6.52		%				6.48		%				6.44		%

(a) The expected long-term rates of return for pension and other postretirement benefits are based on management's projections using a best-estimate of expected returns, volatilities and correlations for each asset class. Each plan's specific current and expected asset allocations are also considered in developing a reasonable return assumption.

(PPL)

The following table provides the assumed health care cost trend rates for the years ended December 31:

			2022						2021						2020
PPL
Health care cost trend rate assumed for next year
– obligations			6.50		%				6.25		%				6.50		%
– cost			6.25		%				6.50		%				6.60		%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)
– obligations			5.00		%				5.00		%				5.00		%
– cost			5.00		%				5.00		%				5.00		%
Year that the rate reaches the ultimate trend rate
– obligations			2029						2027						2027
– cost			2027						2027						2024

---

The funded status of PPL's plans at December 31 was as follows:

			Pension Benefits												Other Postretirement Benefits
			2022						2021						2022						2021
Change in Benefit Obligation
Benefit Obligation, beginning of period			$	3,989					$	4,251					$	504					$	573
Service cost			51						56						7						6
Interest cost			144						121						20						16
Participant contributions			—						—						9						14
Plan amendments			—						2						—						—
Actuarial (gain) loss			( 1,026 )						( 88 )						( 114 )						( 50 )
Acquisition (a)			553						—						163						—
Settlements			( 111 )						( 106 )						—						—
Gross benefits paid			( 267 )						( 247 )						( 55 )						( 55 )
Benefit Obligation, end of period			3,333						3,989						534						504
Change in Plan Assets
Plan assets at fair value, beginning of period			3,887						4,068						367						367
Actual return on plan assets			( 992 )						125						( 86 )						25
Employer contributions			9						47						19						18
Participant contributions			—						—						7						11
Acquisition (a)			623						—						160						—
Settlements			( 111 )						( 106 )						—						—
Gross benefits paid			( 267 )						( 247 )						( 50 )						( 54 )
Plan assets at fair value, end of period			3,149						3,887						417						367
Funded Status, end of period			$	( 184 )					$	( 102 )					$	( 117 )					$	( 137 )
Amounts recognized in the Balance Sheets consist of:
Noncurrent asset			$	33					$	91					$	9					$	—
Current liability			( 10 )						( 10 )						( 14 )						( 15 )
Noncurrent liability			( 207 )						( 183 )						( 112 )						( 122 )
Net amount recognized, end of period			$	( 184 )					$	( 102 )					$	( 117 )					$	( 137 )
Amounts recognized in AOCI and regulatory assets/liabilities (pre-tax) consist of:
Prior service cost (credit)			$	14					$	22					$	11					$	12
Net actuarial (gain) loss			827						626						( 95 )						( 51 )
Total			$	841					$	648					$	( 84 )					$	( 39 )
Total accumulated benefit obligation for defined benefit pension plans			$	3,197					$	3,786

(a) Related to the pension and other postretirement plans assumed for the employees of Rhode Island Energy. See Note 9 for additional details on the acquisition of Narragansett Electric.

For PPL's pension and other postretirement benefit plans, the amounts recognized in AOCI and regulatory assets/liabilities at December 31 were as follows:

			Pension Benefits												Other Postretirement Benefits
			2022						2021						2022						2021
AOCI			$	183					$	239					$	13					$	( 2 )
Regulatory assets/liabilities			658						409						( 97 )						( 37 )
Total			$	841					$	648					$	( 84 )					$	( 39 )

The actuarial gain for pension plans in 2022 was primarily related to a change in the discount rate used to measure the benefit obligations of those plans. The actuarial gain for pension plans in 2021 was related to a change in the discount rate used to measure the benefit obligations of those plans.

---

The following tables provide information on pension plans where the projected benefit obligation (PBO) or accumulated benefit obligation (ABO) exceed the fair value of plan assets:

			PBO in excess of plan assets
			2022						2021
Projected benefit obligation			$	2,818					$	193
Fair value of plan assets			2,601						—
			ABO in excess of plan assets
			2022						2021
Accumulated benefit obligation			$	1,720					$	177
Fair value of plan assets			1,581						—

(PPL Electric)

Although PPL Electric does not directly sponsor any defined benefit plans, it is allocated a portion of the funded status and costs of plans sponsored by PPL Services based on its participation in those plans, which management believes are reasonable. The actuarially determined obligations of current active employees and retirees are used as a basis to allocate total plan activity, including active and retiree costs and obligations. Allocations to PPL Electric resulted in assets/(liabilities) at December 31 as follows:

			2022						2021
Pension			$	( 34 )					$	42
Other postretirement benefits			( 60 )						( 78 )

(LG&E)

Although LG&E does not directly sponsor any defined benefit plans, it is allocated a portion of the funded status and costs of plans sponsored by LKE. LG&E is also allocated costs of defined benefits plans from LKS for defined benefit plans sponsored by LKE. See Note 15 for additional information on costs allocated to LG&E from LKS. These allocations are based on LG&E's participation in those plans, which management believes are reasonable. The actuarially determined obligations of current active employees and retired employees of LG&E are used as a basis to allocate total plan activity, including active and retiree costs and obligations. Allocations to LG&E resulted in assets/(liabilities) at December 31 as follows:

			2022						2021
Pension			$	41					$	85
Other postretirement benefits			( 41 )						( 51 )

(KU)

Although KU does not directly sponsor any defined benefit plans, it is allocated a portion of the funded status and costs of plans sponsored by LKE. KU is also allocated costs of defined benefit plans from LKS for defined benefit plans sponsored by LKE. See Note 15 for additional information on costs allocated to KU from LKS. These allocations are based on KU's participation in those plans, which management believes are reasonable. The actuarially determined obligations of current active employees and retired employees of KU are used as a basis to allocate total plan activity, including active and retiree costs and obligations. Allocations to KU resulted in assets/(liabilities) at December 31 as follows.

			2022						2021
Pension			$	44					$	75
Other postretirement benefits			( 9 )						( 6 )

Plan Assets - Pension Plans

(PPL)

PPL's primary legacy pension plan and the pension plan sponsored by LKE are invested in the PPL Services Corporation Master Trust (the Master Trust) that also includes 401(h) accounts that are restricted for certain other postretirement benefit obligations of PPL and LKE. The investment strategy for the Master Trust is to achieve a risk-adjusted return on a mix of assets that, in combination with PPL's funding policy, will ensure that sufficient assets are available to provide long-term growth and

---

liquidity for benefit payments, while also managing the duration of the assets to complement the duration of the liabilities. The Master Trust benefits from a wide diversification of asset types, investment fund strategies and external investment fund managers, and therefore has no significant concentration of risk.

The investment policy of the Master Trust outlines investment objectives and defines the responsibilities of the EBPB, external investment managers, investment advisor and trustee and custodian. The investment policy is reviewed annually by PPL's Board of Directors.

The EBPB created a risk management framework around the trust assets and pension liabilities. This framework considers the trust assets as being composed of three sub-portfolios: growth, immunizing and liquidity portfolios. The growth portfolio is comprised of investments that generate a return at a reasonable risk, including equity securities, certain debt securities and alternative investments. The immunizing portfolio consists of debt securities, generally with long durations, and derivative positions. The immunizing portfolio is designed to offset a portion of the change in the pension liabilities due to changes in interest rates. The liquidity portfolio consists primarily of cash and cash equivalents.

Target allocation ranges have been developed for each portfolio based on input from external consultants with a goal of limiting funded status volatility. The EBPB monitors the investments in each portfolio and seeks to obtain a target portfolio that emphasizes reduction of risk of loss from market volatility. In pursuing that goal, the EBPB establishes revised guidelines from time to time. EBPB investment guidelines as of the end of 2022 are presented below.

The asset allocation for the trust and the target allocation by portfolio at December 31 are as follows:

			Percentage of trust assets												2022
			2022						2021						Target Asset Allocation
Growth Portfolio			55		%				55		%				55		%
Equity securities			31		%				32		%
Debt securities (a)			13		%				13		%
Alternative investments			11		%				10		%
Immunizing Portfolio			43		%				43		%				43		%
Debt securities (a)			33		%				35		%
Derivatives (b)			10		%				8		%
Liquidity Portfolio			2		%				2		%				2		%
Total			100		%				100		%				100		%

(a) Includes commingled debt funds, which PPL treats as debt securities for asset allocation purposes.

(b) Includes posted collateral to support derivative instruments subject to counterparty risk.

---

(PPL)

The fair value of net assets in the Master Trust by asset class and level within the fair value hierarchy was:

			December 31, 2022																								December 31, 2021
			Fair Value Measurements Using																								Fair Value Measurements Using
			Total						Level 1						Level 2						Level 3						Total						Level 1						Level 2						Level 3
PPL Services Corporation Master Trust
Cash and cash equivalents			$	306					$	306					$	—					$	—					$	266					$	266					$	—					$	—
Equity securities:
U.S. Equity			34						34						—						—						41						41						—						—
U.S. Equity fund measured at NAV (a)			574						—						—						—						754						—						—						—
International equity fund at NAV (a)			403						—						—						—						511						—						—						—
Commingled debt measured at NAV (a)			526						—						—						—						677						—						—						—
Debt securities:
U.S. Treasury and U.S. government sponsored agency			153						153						—						—						281						280						1						—
Corporate			834						—						818						16						1,039						—						1,019						20
Other			14						—						14						—						14						—						14						—
Alternative investments:
Real estate measured at NAV (a)			60						—						—						—						69						—						—						—
Private equity measured at NAV (a)			96						—						—						—						92						—						—						—
Private credit partnerships measured at NAV (a)			6						—						—						—						2						—						—						—
Hedge funds measured at NAV (a)			194						—						—						—						236						—						—						—
Derivatives			8						—						8						—						35						—						35						—
PPL Services Corporation Master Trust assets, at fair value			3,208						$	493					$	840					$	16					4,017						$	587					$	1,069					$	20
Receivables and payables, net (b)			67																								25
401(h) accounts restricted for other postretirement benefit obligations			( 126 )																								( 155 )
Total PPL Services Corporation Master Trust pension assets			$	3,149																							$	3,887

(a) In accordance with accounting guidance, certain investments that are measured at fair value using the net asset value per share (NAV), or its equivalent, have not been classified in the fair value hierarchy. The fair value amounts presented in the table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the statement of financial position.

(b) Receivables and payables, net represents amounts for investments sold/purchased but not yet settled along with interest and dividends earned but not yet received.

A reconciliation of the Master Trust assets classified as Level 3 at December 31, 2022 is as follows:

			Corporate debt
Balance at beginning of period			$	20
Actual return on plan assets:
Relating to assets still held at the reporting date			( 2 )
Relating to assets sold during the period			2
Purchases, sales and settlements			( 4 )
Balance at end of period			$	16

A reconciliation of the Master Trust assets classified as Level 3 at December 31, 2021 is as follows:

			Corporate debt
Balance at beginning of period			$	15
Purchases, sales and settlements			5
Balance at end of period			$	20

The fair value measurements of cash and cash equivalents are based on the amounts on deposit.

---

The market approach is used to measure fair value of equity securities. The fair value measurements of equity securities (excluding commingled funds), which are generally classified as Level 1, are based on quoted prices in active markets. These securities represent actively and passively managed investments that are managed against various equity indices.

Investments in commingled equity and debt funds are categorized as equity securities. Investments in commingled equity funds include funds that invest in U.S. and international equity securities. Investments in commingled debt funds include funds that invest in a diversified portfolio of emerging market debt obligations, as well as funds that invest in investment grade long-duration fixed-income securities.

The fair value measurements of debt securities are generally based on evaluations that reflect observable market information, such as actual trade information for identical securities or for similar securities, adjusted for observable differences. The fair value of debt securities is generally measured using a market approach, including the use of pricing models, which incorporate observable inputs. Common inputs include benchmark yields, relevant trade data, broker/dealer bid/ask prices, benchmark securities and credit valuation adjustments. When necessary, the fair value of debt securities is measured using the income approach, which incorporates similar observable inputs as well as payment data, future predicted cash flows, collateral performance and new issue data. For the Master Trust, these securities represent investments in securities issued by U.S. Treasury and U.S. government sponsored agencies; investments securitized by residential mortgages, auto loans, credit cards and other pooled loans; investments in investment grade and non-investment grade bonds issued by U.S. companies across several industries; investments in debt securities issued by foreign governments and corporations.

Investments in real estate represent an investment in a partnership whose purpose is to manage investments in core U.S. real estate properties diversified geographically and across major property types (e.g., office, industrial, retail, etc.). The strategy is focused on properties with high occupancy rates with quality tenants. This results in a focus on high income and stable cash flows with appreciation being a secondary factor. Core real estate generally has a lower degree of leverage when compared with more speculative real estate investing strategies. The partnership has limitations on the amounts that may be redeemed based on available cash to fund redemptions. Additionally, the general partner may decline to accept redemptions when necessary to avoid adverse consequences for the partnership, including legal and tax implications, among others. The fair value of the investment is based upon a partnership unit value.

Investments in private equity represent interests in partnerships in multiple early-stage venture capital funds and private equity fund of funds that use a number of diverse investment strategies. The partnerships have limited lives of at least 10 years, after which liquidating distributions will be received. Prior to the end of each partnership's life, the investment cannot be redeemed with the partnership; however, the interest may be sold to other parties, subject to the general partner's approval. Fair value is based on an ownership interest in partners' capital to which a proportionate share of net assets is attributed.

Investments in private credit represent pools of actively managed loans that span capital structure and borrower type. Strategies carry different types and levels of risk. Returns from those strategies will vary in terms of yield, fees generated, loan loss rates and the pace of principal repayment. Investments have limited lives of approximately 2-8 years. The investment cannot be redeemed with the general partner; however, the interest may be sold to other parties, subject to the general partner’s approval. Fair value is based on an ownership interest in partners’ capital to which a proportionate share of net assets is attributed.

At December 31, 2022, the Master Trust had unfunded commitments of $ 116 million that may be required during the lives of the partnerships.

Investments in hedge funds represent investments in a fund of hedge funds. Hedge funds seek a return utilizing a number of diverse investment strategies. The strategies, when combined aim to reduce volatility and risk while attempting to deliver positive returns under most market conditions. Major investment strategies for the fund of hedge funds include long/short equity, tactical trading, event driven, and relative value. Shares may be redeemed with 45 days prior written notice. The fund is subject to short term lockups and other restrictions. The fair value for the fund has been estimated using the net asset value per share.

The fair value measurements of derivative instruments utilize various inputs that include quoted prices for similar contracts or market-corroborated inputs. In certain instances, these instruments may be valued using models, including standard option valuation models and standard industry models. These securities primarily represent investments in treasury futures, total return swaps, interest rate swaps and swaptions (the option to enter into an interest rate swap), which are valued based on quoted prices, changes in the value of the underlying exposure or on the swap details, such as swap curves, notional amount, index and term of index, reset frequency, volatility and payer/receiver credit ratings.

---

Plan Assets - Other Postretirement Benefit Plans

The investment strategy with respect to other postretirement benefit obligations is to fund VEBA trusts and/or 401(h) accounts with voluntary contributions and to invest in a tax efficient manner. Excluding the 401(h) accounts included in the Master Trust, other postretirement benefit plans are invested in a mix of assets for long-term growth with an objective of earning returns that provide liquidity as required for benefit payments. These plans benefit from diversification of asset types, investment fund strategies and investment fund managers and, therefore, have no significant concentration of risk. Equity securities include investments in domestic large-cap commingled funds. Ownership interests in commingled funds that invest entirely in debt securities are classified as equity securities, but treated as debt securities for asset allocation and target allocation purposes. Ownership interests in money market funds are treated as cash and cash equivalents for asset allocation and target allocation purposes. The asset allocation for the PPL VEBA trusts and the target allocation, by asset class, at December 31 are detailed below.

			Percentage of plan assets												Target Asset Allocation
			2022						2021						2022
Asset Class
Equity securities			45		%				45		%				44		%
Debt securities (a)			48		%				52		%				50		%
Cash and cash equivalents (b)			7		%				3		%				6		%
Total			100		%				100		%				100		%

(a) Includes commingled debt funds and debt securities.

(b) Includes money market funds.

The fair value of assets in the other postretirement benefit plans by asset class and level within the fair value hierarchy was:

			December 31, 2022																								December 31, 2021
			Fair Value Measurement Using																								Fair Value Measurement Using
			Total						Level 1						Level 2						Level 3						Total						Level 1						Level 2						Level 3
Money market funds			$	19					$	19					$	—					$	—					$	6					$	6					$	—					$	—
Equity securities:
Large-cap equity fund measure at NAV (a)			71						—						—						—						96						—						—						—
Commingled debt fund measured at NAV (a)			77						—						—						—						75						—						—						—
Global equity exchange-traded fund			61						61						—						—						—						—						—						—
Long-term bond exchange-traded fund			65						65						—						—						—						—						—						—
Debt securities:
Corporate bonds			—						—						—						—						38						—						38						—
Total VEBA trust assets, at fair value			293						$	145					$	—					$	—					215						$	6					$	38					$	—
Receivables and payables, net (b)			( 2 )																								( 3 )
401(h) account assets			126																								155
Total other postretirement benefit plan assets			$	417																							$	367

(a) In accordance with accounting guidance certain investments that are measured at fair value using the net asset value per share (NAV), or its equivalent, have not been classified in the fair value hierarchy. The fair value amounts presented in the table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the statement of financial position.

(b) Receivables and payables represent amounts for investments sold/purchased but not yet settled along with interest and dividends earned but not yet received.

Investments in money market funds represent investments in funds that invest primarily in a diversified portfolio of investment grade money market instruments, including, but not limited to, commercial paper, notes, repurchase agreements and other evidences of indebtedness with a maturity not exceeding 13 months from the date of purchase. The primary objective of the fund is a level of current income consistent with stability of principal and liquidity. Redemptions can be made daily on this fund.

Investments in large-cap equity securities represent investments in a passively managed equity index fund that invests in securities and a combination of other collective funds. Fair value measurements are not obtained from a quoted price in an active market but are based on firm quotes of net asset values per share as provided by the trustee of the fund. Redemptions can be made daily on this fund.

---

Investments in commingled debt securities represent investments in a fund that invests in a diversified portfolio of investment grade long-duration fixed income securities. Redemptions can be made daily on these funds.

Investments in global equity exchange-traded fund represents a passively-managed pooled investment vehicle that invests in developed market equities and is designed to track the performance of the MSCI World Index. Fair value measurements can be obtained from a quoted price on the exchange. Redemptions can be made daily on this fund.

Investments in long-term bond exchange-traded fund represents a passively-managed pooled investment vehicle that is designed to track the performance of the Bloomberg U.S. Long Government/Credit Float Adjusted Index, which includes all medium and larger issues of U.S. Government, investment-grade corporate and investment-grade international dollar-denominated bonds that have maturities of greater than 10 years. Fair value measurements can be obtained from a quoted price on the exchange. Redemptions can be made daily on this fund.

Investments in corporate bonds represent investment in a diversified portfolio of investment grade long-duration fixed income securities. The fair value of debt securities are generally based on evaluations that reflect observable market information, such as actual trade information for identical securities or for similar securities, adjusted for observable differences.

Expected Cash Flows - Defined Benefit Plans (PPL)

PPL does not plan to contribute to its pension plans in 2023, as PPL's defined benefit pension plans have the option to utilize available prior year credit balances to meet current and future contribution requirements.

PPL sponsors various non-qualified supplemental pension plans for which no assets are segregated from corporate assets. PPL expects to make approximately $ 10 million of benefit payments under these plans in 2023.

PPL is not required to make contributions to its other postretirement benefit plans but has historically funded these plans in amounts equal to the postretirement benefit costs recognized. Continuation of this past practice would cause PPL to contribute $ 27 million to its other postretirement benefit plans in 2023.

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid by the plans and the following federal subsidy payments are expected to be received by PPL.

									Other Postretirement
			Pension						Benefit Payment						Expected Federal Subsidy
2023			$	282					$	51					$	—
2024			281						50						—
2025			283						49						—
2026			280						48						—
2027			275						48						—
2028-2032			1,327						225						1

Savings Plans (All Registrants)

Substantially, all employees of PPL's subsidiaries are eligible to participate in deferred savings plans (401(k)s). Employer contributions to the plans were:

			2022						2021						2020
PPL			$	36					$	29					$	29
PPL Electric			6						5						6
LG&E			7						7						6
KU			5						5						5

(PPL, LG&E and KU)

At December 31, 2022 and 2021, the Balance Sheets reflect the owned interests in the generating plants listed below.

---

						Ownership Interest						Electric Plant						Accumulated Depreciation						Construction Work in Progress
PPL
			December 31, 2022
			Trimble County Unit 1			75.00		%				$	455					$	94					$	1
			Trimble County Unit 2			75.00		%				1,372						276						148
			December 31, 2021
			Trimble County Unit 1			75.00		%				$	457					$	79					$	—
			Trimble County Unit 2			75.00		%				1,360						247						121
LG&E
			December 31, 2022
			E.W. Brown Units 6-7			38.00		%				$	53					$	25					$	—
			Paddy's Run Unit 13 & E.W. Brown Unit 5			53.00		%				51						27						—
			Trimble County Unit 1			75.00		%				455						94						1
			Trimble County Unit 2			14.25		%				384						66						78
			Trimble County Units 5-6			29.00		%				36						16						—
			Trimble County Units 7-10			37.00		%				81						36						—
			Cane Run Unit 7			22.00		%				126						21						2
			E.W. Brown Solar Unit			39.00		%				10						3						—
			Solar Share			44.00		%				3						—						—
			December 31, 2021
			E.W. Brown Units 6-7			38.00		%				$	53					$	24					$	—
			Paddy's Run Unit 13 & E.W. Brown Unit 5			53.00		%				51						25						—
			Trimble County Unit 1			75.00		%				457						79						—
			Trimble County Unit 2			14.25		%				379						57						64
			Trimble County Units 5-6			29.00		%				36						15						—
			Trimble County Units 7-10			37.00		%				81						34						—
			Cane Run Unit 7			22.00		%				125						19						—
			E.W. Brown Solar Unit			39.00		%				10						2						—
			Solar Share			44.00		%				2						—						—
KU
			December 31, 2022
			E.W. Brown Units 6-7			62.00		%				$	87					$	42					$	—
			Paddy's Run Unit 13 & E.W. Brown Unit 5			47.00		%				45						23						—
			Trimble County Unit 2			60.75		%				987						210						70
			Trimble County Units 5-6			71.00		%				84						38						—
			Trimble County Units 7-10			63.00		%				133						61						—
			Cane Run Unit 7			78.00		%				446						77						6
			E.W. Brown Solar Unit			61.00		%				16						5						—
			Solar Share			56.00		%				4						—						—
			December 31, 2021
			E.W. Brown Units 6-7			62.00		%				$	88					$	40					$	—
			Paddy's Run Unit 13 & E.W. Brown Unit 5			47.00		%				45						22						—
			Trimble County Unit 2			60.75		%				981						190						57
			Trimble County Units 5-6			71.00		%				84						36						—
			Trimble County Units 7-10			63.00		%				133						57						—
			Cane Run Unit 7			78.00		%				444						70						—
			E.W. Brown Solar Unit			61.00		%				16						4						—
			Solar Share			56.00		%				3						—						—

Each subsidiary owning these interests provides its own funding for its share of the facility. Each receives a portion of the total output of the generating plants equal to its percentage ownership. The share of fuel and other operating costs associated with the plants is included in the corresponding operating expenses on the Statements of Income.

---

LG&E and KU enter into purchase contracts to supply the coal and natural gas requirements for generation facilities and LG&E's retail natural gas supply operations. These contracts include the following commitments:

Contract Type			Maximum Maturity Date
Natural Gas Fuel			2024
Natural Gas Retail Supply			2023
Coal			2027
Coal Transportation and Fleeting Services			2027
Natural Gas Transportation			2030

			LG&E						KU						Total
2023			$	24					$	10					$	34
2024			22						10						32
2025			22						10						32
2026			22						10						32
2027			22						10						32
Thereafter			184						81						265
Total			$	296					$	131					$	427

LG&E and KU had total energy purchases under the OVEC PPA for the years ended December 31 as follows:

			2022						2021						2020
LG&E			$	21					$	13					$	12
KU			9						6						6
Total			$	30					$	19					$	18

---

---

---

---

---

---

---

			Exposure at December 31, 2022						Expiration Date
PPL
Indemnifications related to certain tax liabilities related to the sale of the U.K. utility business			£	50		(a)			2028
PPL guarantee of Safari payment obligations under certain sale/leaseback financing transactions related to the sale of Safari Holdings			$	148		(b)			2028
PPL guarantee of Safari payment obligations under certain PPAs related to the sale of Safari Holdings			55			(c)
Indemnifications for losses suffered related to items not covered by Aspen Power's representation and warranty insurance associated with the sale of Safari Holdings			140			(d)			Various
LG&E and KU
LG&E and KU obligation of shortfall related to OVEC						(e)

(a) PPL WPD Limited entered into a Tax Deed dated June 9, 2021 in which it agreed to a tax indemnity regarding certain potential tax liabilities of the entities sold with respect to periods prior to the completion of the sale, subject to customary exclusions and limitations. Because National Grid Holdings One plc, the buyer, agreed to purchase indemnity insurance, the amount of the cap on the indemnity for these liabilities is £1, except with respect to certain surrenders of tax losses, for which the amount of the cap on the indemnity is £ 50 million.

(b) PPL guaranteed the payment obligations of Safari under certain sale/leaseback financing transactions executed by Safari. These guarantees will remain in place until Safari exercises its option to buy-out the projects under the sale/leaseback financings by the year 2028. Safari will indemnify PPL for any payments made by PPL or claims against PPL under the sale/leaseback transaction guarantees up to $ 25 million. The estimated maximum exposure of this guarantee is $ 148 million.

(c) PPL guaranteed the payment obligations of Safari under certain PPAs executed by Safari. Aspen Power is expected to replace these guarantees and retain liability for any payments made by PPL or claims against PPL under any guarantee that is not replaced. The estimated maximum exposure of this guarantee is $ 55 million.

(d) Aspen Power has obtained representation and warranty insurance, therefore, PPL generally has no liability for its representations and warranties under the agreement except for losses suffered related to items not covered. Expiration of these indemnifications range from 18 months to 6 years from the date of the closing of the transaction, and PPL’s aggregate liability for these claims will not exceed $ 140 million subject to certain adjustments plus the support obligations provided by PPL under sale-leaseback financings and PPAs that will be replaced by Aspen Power.

---

Wholesale Sales and Purchases (LG&E and KU)

LG&E and KU jointly dispatch their generation units with the lowest cost generation used to serve their retail customers. When LG&E has excess generation capacity after serving its own retail customers and its generation cost is lower than that of KU, KU purchases electricity from LG&E and vice versa. These transactions are reflected in the Statements of Income as "Electric revenue from affiliate" and "Energy purchases from affiliate" and are recorded at a price equal to the seller's fuel cost plus any split savings. Savings realized from such intercompany transactions are shared equally between both companies. The volume of energy each company has to sell to the other is dependent on its retail customers' needs and its available generation.

Support Costs (PPL Electric, LG&E and KU)

PPL Services and LKS provide and, prior to its merger into PPL Services on December 31, 2021, PPL EU Services provided the Registrants and each other with administrative, management and support services. For all services companies, the costs of directly assignable and attributable services are charged to the respective recipients as direct support costs. General costs that cannot be directly attributed to a specific entity are allocated and charged to the respective recipients as indirect support costs. PPL Services and PPL EU Services use a three-factor methodology that includes the applicable recipients' invested capital, operation and maintenance expenses and number of employees to allocate indirect costs. PPL Services may also use a ratio of overall direct and indirect costs or a weighted average cost ratio. LKS bases its indirect allocations on the subsidiaries' number of employees, total assets, revenues, number of customers and/or other statistical information. PPL Services, PPL EU Services and LKS charged the following amounts for the years ended December 31, including amounts applied to accounts that are further distributed between capital and expense on the books of the recipients, based on methods that are believed to be reasonable.

			2022						2021						2020
PPL Electric from PPL Services			$	241					$	54					$	50
PPL Electric from PPL EU Services			—						222						176
LG&E from LKS			153						169						170
LG&E from PPL Services			13						3						2
KU from LKS			171						179						180
KU from PPL Services			14						3						2

In addition to the charges for services noted above, LKS makes payments on behalf of LG&E and KU for fuel purchases and other costs for products or services provided by third parties. LG&E and KU also provide services to each other and to LKS. Billings between LG&E and KU relate to labor and overheads associated with union and hourly employees performing work for the other company, charges related to jointly-owned generating units and other miscellaneous charges. Tax settlements between PPL and LG&E and KU are reimbursed through LKS.

---

Intercompany Borrowings

(PPL Electric)

PPL Energy Funding maintains a $ 1,200 million revolving line of credit with a PPL Electric subsidiary. At December 31, 2022, PPL Energy Funding had no borrowings outstanding. At December 31, 2021, $ 499 million was outstanding. This balance is reflected in "Notes receivable from affiliate" on the PPL Electric balance sheet. The interest rates on borrowings are equal to one-month LIBOR plus a spread. Interest income is reflected in "Interest Income from Affiliate" on the Income Statements.

CEP Reserves maintains a $ 500 million revolving line of credit with a PPL Electric subsidiary. At December 31, 2022 and 2021, CEP Reserves had no borrowings outstanding. The interest rates on borrowings are equal to one-month LIBOR plus a spread. Interest income is reflected in "Interest Income from Affiliate" on the Income Statements.

(LG&E)

LG&E participates in an intercompany money pool agreement whereby LKE and/or KU make available to LG&E funds up to the difference between LG&E's FERC borrowing limit and LG&E's commercial paper limit at an interest rate based on the lower of a market index of commercial paper issues and two additional rate options based on LIBOR. At December 31, 2022, LG&E's money pool unused capacity was $ 250 million. At December 31, 2022, LG&E had no borrowings outstanding from KU and/or LKE. At December 31, 2021, LG&E had borrowings of $ 324 million outstanding from LKE. These balances are reflected in "Notes payable to affiliates" on the LG&E Balance Sheets.

(KU)

KU participates in an intercompany money pool agreement whereby LKE and/or LG&E make available to KU funds up to the difference between KU's FERC borrowing limit and KU's commercial paper limit at an interest rate based on the lower of a market index of commercial paper issues and two additional rate options based on LIBOR. At December 31, 2022, KU's money pool unused capacity was $ 250 million. At December 31, 2022, KU had no borrowings outstanding from LG&E and/or LKE. At December 31, 2021, KU had borrowings of $ 294 million outstanding from LKE. These balances are reflected in "Notes payable to affiliates" on the KU Balance Sheets.

VEBA Funds Receivable (PPL Electric)

In May 2018, PPL received a favorable private letter ruling from the IRS permitting a transfer of excess funds from the PPL Bargaining Unit Retiree Health Plan VEBA to a new subaccount within the VEBA, to be used to pay medical claims of active bargaining unit employees. Based on PPL Electric's participation in PPL’s Other Postretirement Benefit plan, PPL Electric was allocated a portion of the excess funds from PPL Services. These funds have been recorded as an intercompany receivable on the Balance Sheets. The receivable balance decreases as PPL Electric pays incurred medical claims and is reimbursed by PPL Services. The intercompany receivable balance associated with these funds was immaterial as of December 31, 2022. The intercompany receivable balance associated with these funds was $ 11 million as of December 31, 2021, of which $ 10 million was reflected in "Accounts receivable from affiliates" and $ 1 million was reflected in "Other noncurrent assets" on the Balance Sheets.

Other (PPL Electric, LG&E and KU)

See Note 1 for discussions regarding the intercompany tax sharing agreement (for PPL Electric, LG&E and KU) and intercompany allocations of stock-based compensation expense (for PPL Electric). For PPL Electric, LG&E and KU, see Note 12 for discussions regarding intercompany allocations associated with defined benefits.

(PPL)

The components of "Other Income (Expense) - net" for the years ended December 31, were:

---

			2022						2021						2020
Defined benefit plans - non-service credits (Note 12)			$	47					$	21					$	( 2 )
Interest income			4						12						9
AFUDC - equity component			22						18						20
Charitable contributions			( 14 )						( 14 )						( 3 )
Miscellaneous			( 5 )						( 22 )						( 22 )
Other Income (Expense) - net			$	54					$	15					$	2

(PPL Electric)

The components of "Other Income (Expense) - net" for the years ended December 31, were:

			2022						2021						2020
Defined benefit plans - non-service credits (Note 12)			$	15					$	9					$	4
Interest income			3						—						2
AFUDC - equity component			16						18						19
Charitable contributions			( 3 )						( 3 )						( 3 )
Miscellaneous			( 1 )						( 3 )						( 4 )
Other Income (Expense) - net			$	30					$	21					$	18

(All Registrants)

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). A market approach (generally, data from market transactions), an income approach (generally, present value techniques and option-pricing models), and/or a cost approach (generally, replacement cost) are used to measure the fair value of an asset or liability, as appropriate. These valuation approaches incorporate inputs such as observable, independent market data and/or unobservable data that management believes are predicated on the assumptions market participants would use to price an asset or liability. These inputs may incorporate, as applicable, certain risks such as nonperformance risk, which includes credit risk. The fair value of a group of financial assets and liabilities is measured on a net basis. See Note 1 for information on the levels in the fair value hierarchy.

Recurring Fair Value Measurements

The assets and liabilities measured at fair value were:

			December 31, 2022																								December 31, 2021
			Total						Level 1						Level 2						Level 3						Total						Level 1						Level 2						Level 3
PPL
Assets
Cash and cash equivalents			$	356					$	356					$	—					$	—					$	3,571					$	3,571					$	—					$	—
Restricted cash and cash equivalents (a)			1						1						—						—						1						1						—						—
Total Cash, Cash Equivalents and Restricted Cash (b)			357						357						—						—						3,572						3,572						—						—
Special use funds (a):
Money market fund			1						1						—						—						2						2						—						—
Commingled debt fund measured at NAV (c)			13						—						—						—						22						—						—						—
Commingled equity fund measured at NAV (c)			11						—						—						—						21						—						—						—
Total special use funds			25						1						—						—						45						2						—						—
Price risk management assets (d):
Gas contracts			25						—						25						—						—						—						—						—
Total assets			$	407					$	358					$	25					$	—					$	3,617					$	3,574					$	—					$	—
Liabilities
Price risk management liabilities (d):
Interest rate swaps			$	7					$	—					$	7					$	—					$	18					$	—					$	18					$	—
Gas contracts			66						—						10						56						—						—						—						—
Total price risk management liabilities			$	73					$	—					$	17					$	56					$	18					$	—					$	18					$	—

---

			December 31, 2022																								December 31, 2021
			Total						Level 1						Level 2						Level 3						Total						Level 1						Level 2						Level 3
PPL Electric
Assets
Cash and cash equivalents			$	25					$	25					$	—					$	—					$	21					$	21					$	—					$	—
Total assets			$	25					$	25					$	—					$	—					$	21					$	21					$	—					$	—
LG&E
Assets
Cash and cash equivalents			$	93					$	93					$	—					$	—					$	9					$	9					$	—					$	—
Total assets			$	93					$	93					$	—					$	—					$	9					$	9					$	—					$	—
Liabilities
Price risk management liabilities:
Interest rate swaps			$	7					$	—					$	7					$	—					$	18					$	—					$	18					$	—
Total price risk management liabilities			$	7					$	—					$	7					$	—					$	18					$	—					$	18					$	—
KU
Assets
Cash and cash equivalents			$	21					$	21					$	—					$	—					$	13					$	13					$	—					$	—
Total assets			$	21					$	21					$	—					$	—					$	13					$	13					$	—					$	—

(a) Current portion is included in "Other current assets" and long-term portion is included in "Other noncurrent assets" on the Balance Sheets.

(b) Total Cash, Cash Equivalents and Restricted Cash provides a reconciliation of these items reported within the Balance Sheets to the sum shown on the Statements of Cash Flows.

(c) In accordance with accounting guidance, certain investments that are measured at fair value using net asset value per share (NAV), or its equivalent, have not been classified in the fair value hierarchy. The fair value amounts presented in the table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the statement of financial position.

(d) Current portion is included in "Other current liabilities" and noncurrent portion is included in "Other deferred credits and noncurrent liabilities" on the Balance Sheets.

A reconciliation of net assets and liabilities classified as Level 3 for the year ended December 31 is as follows:

			Gas Contracts
2022
Balance at beginning of period			$	—
Total realized/unrealized gains (losses):
Included in regulatory assets			56
Balance at end of period			$	56

Special Use Funds (PPL)

The special use funds are investments restricted for paying active union employee medical costs. In 2018, PPL received a favorable private letter ruling from the IRS permitting a transfer of excess funds from the PPL Bargaining Unit Retiree Health Plan VEBA to a new subaccount within the VEBA to be used to pay medical claims of active bargaining unit employees. The funds are invested primarily in commingled debt and equity funds measured at NAV and are classified as investments in equity securities. Changes in the fair value of the funds are recorded to the Statements of Income.

Price Risk Management Assets/Liabilities

Interest Rate Swaps ( PPL, LG&E and KU)

To manage interest rate risk, PPL, LG&E and KU use interest rate contracts such as forward-starting swaps, floating-to-fixed swaps and fixed-to-floating swaps. An income approach is used to measure the fair value of these contracts, utilizing readily observable inputs, such as forward interest rates (e.g., LIBOR, SOFR, and government security rates), as well as inputs that may not be observable, such as credit valuation adjustments. In certain cases, market information cannot practicably be obtained to value credit risk and therefore internal models are relied upon. These models use projected probabilities of default and estimated recovery rates based on historical observances. When the credit valuation adjustment is significant to the overall valuation, the contracts are classified as Level 3.

---

Gas Contracts (PPL)

To manage gas commodity price risk associated with natural gas purchases, RIE utilizes over-the-counter (OTC) gas swaps contracts with pricing inputs obtained from the New York Mercantile Exchange (NYMEX) and the Intercontinental Exchange (ICE), except in cases where the ICE publishes seasonal averages or where there were no transactions within the last seven days. RIE may utilize discounting based on quoted interest rate curves, including consideration of non-performance risk, and may include a liquidity reserve calculated based on bid/ask spread. Substantially all of these price curves are observable in the marketplace throughout at least 95% of the remaining contractual quantity, or they could be constructed from market observable curves with correlation coefficients of 95% or higher. These contracts are classified as Level 2.

RIE also utilizes gas option and purchase and capacity transactions, which are valued based on internally developed models. Industry-standard valuation techniques, such as the Black-Scholes pricing model, are used for valuing such instruments. For valuations that include both observable and unobservable inputs, if the unobservable input is determined to be significant to the overall inputs, the entire valuation is classified as Level 3. This includes derivative instruments valued using indicative price quotations whose contract tenure extends into unobservable periods. In instances where observable data is unavailable, consideration is given to the assumptions that market participants would use in valuing the asset or liability. This includes assumptions about market risks such as liquidity, volatility, and contract duration. Such instruments are classified as Level 3 as the model inputs generally are not observable. RIE considers non-performance risk and liquidity risk in the valuation of derivative instruments classified as Level 2 and Level 3.

The significant unobservable inputs used in the fair value measurement of the gas derivative instruments are implied volatility and gas forward curves. A relative change in commodity price at various locations underlying the open positions can result in significantly different fair value estimates.

Financial Instruments Not Recorded at Fair Value (All Registrants)

The carrying amounts of long-term debt on the Balance Sheets and their estimated fair values are set forth below. Long-term debt is classified as Level 2. The effect of third-party credit enhancements is not included in the fair value measurement.

			December 31, 2022												December 31, 2021
			Carrying Amount (a)						Fair Value						Carrying Amount (a)						Fair Value
PPL			$	13,243					$	12,239					$	11,140					$	12,955
PPL Electric			4,486						4,259						4,484						5,272
LG&E			2,307						2,128						2,006						2,363
KU			2,920						2,616						2,618						3,120

(a) Amounts are net of debt issuance costs.

The carrying amounts of other current financial instruments (except for long-term debt due within one year) approximate their fair values because of their short-term nature.

18. Derivative Instruments and Hedging Activities

Risk Management Objectives

(All Registrants)

PPL has a risk management policy approved by the Board of Directors to manage market risk associated with commodities, interest rates on debt issuances (including price, liquidity and volumetric risk) and credit risk (including non-performance risk and payment default risk). The Risk Management Committee, comprised of senior management and chaired by the Senior Director-Risk Management, oversees the risk management function. Key risk control activities designed to ensure compliance with the risk policy and detailed programs include, but are not limited to, credit review and approval, validation of transactions, verification of risk and transaction limits, value-at-risk analyses (VaR, a statistical model that attempts to estimate the value of potential loss over a given holding period under normal market conditions at a given confidence level) and the coordination and reporting of the Enterprise Risk Management program.

---

Market Risk

Market risk includes the potential loss that may be incurred as a result of price changes associated with a particular financial or commodity instrument as well as market liquidity and volumetric risks. Forward contracts, futures contracts, options, swaps and structured transactions are utilized as part of risk management strategies to minimize unanticipated fluctuations in earnings caused by changes in commodity prices and interest rates. Many of these contracts meet the definition of a derivative. All derivatives are recognized on the Balance Sheets at their fair value, unless NPNS is elected.

The following summarizes the market risks that affect PPL and its subsidiaries.

Interest Rate Risk

• PPL and its subsidiaries are exposed to interest rate risk associated with forecasted fixed-rate and existing floating-rate debt issuances. PPL and LG&E utilize over-the-counter interest rate swaps to limit exposure to market fluctuations on floating-rate debt. PPL, LG&E and KU utilize forward starting interest rate swaps to hedge changes in benchmark interest rates, when appropriate, in connection with future debt issuance.

• PPL and its subsidiaries are exposed to interest rate risk associated with debt securities and derivatives held by defined benefit plans. This risk is significantly mitigated to the extent that the plans are sponsored at, or sponsored on behalf of, the regulated utilities due to the recovery methods in place.

Commodity Price Risk

PPL is exposed to commodity price risk through its subsidiaries as described below.

• PPL Electric is required to purchase electricity to fulfill its obligation as a PLR. Potential commodity price risk is mitigated through its PAPUC-approved cost recovery mechanism and full-requirement supply agreements to serve its PLR customers which transfer the risk to energy suppliers.

• LG&E's and KU's rates include certain mechanisms for fuel, fuel-related expenses and energy purchases. In addition, LG&E's rates include a mechanism for natural gas supply costs. These mechanisms generally provide for timely recovery of market price fluctuations associated with these costs.

• RIE utilizes derivative instruments pursuant to its RIPUC-approved plan to manage commodity price risk associated with its natural gas purchases. RIE's commodity price risk management strategy is to reduce fluctuations in firm gas sales prices to its customers. RIE's costs associated with derivatives instruments are recoverable through its RIPUC- approved cost recovery mechanisms. RIE is required to purchase electricity to fulfill its obligation to provide Last Resort Service (LRS). Potential commodity price risk is mitigated through its RIPUC-approved cost recovery mechanisms and full requirements service agreements to serve LRS customers, which transfer the risk to energy suppliers. RIE is required to contract through long-term agreements for clean energy supply under the Rhode Island Renewable Energy Growth program and Long-term Clean Energy Standard. Potential commodity price risk is mitigated through its RIPUC-approved cost recovery mechanisms, which true-up cost differences between contract prices and market prices.

Volumetric Risk

Volumetric risk is the risk related to the changes in volume of retail sales due to weather, economic conditions or other factors. PPL is exposed to volumetric risk through its subsidiaries as described below:

• PPL Electric, LG&E and KU are exposed to volumetric risk on retail sales, mainly due to weather and other economic conditions for which there is limited mitigation between rate cases.

• RIE is exposed to volumetric risk, which is significantly mitigated by regulatory mechanisms. RIE's electric and gas distribution rates both have a revenue decoupling mechanism, which allows for annual adjustments to RIE's delivery rates.

Equity Securities Price Risk

• PPL and its subsidiaries are exposed to equity securities price risk associated with the fair value of the defined benefit plans' assets. This risk is significantly mitigated due to the recovery methods in place.

• PPL is exposed to equity securities price risk from future stock sales and/or purchases.

Credit Risk

Credit risk is the potential loss that may be incurred due to a counterparty's non-performance.

---

PPL is exposed to credit risk from "in-the-money" transactions with counterparties, as well as additional credit risk through certain of its subsidiaries, as discussed below.

In the event a supplier of PPL, PPL Electric, LG&E or KU defaults on its contractual obligation, those Registrants would need to seek replacement power or replacement fuel in the market. In general, subject to regulatory review or other processes, appropriate incremental costs incurred by these entities would be recoverable from customers through applicable rate mechanisms, thereby mitigating the financial risk for these entities.

PPL and its subsidiaries have credit policies in place to manage credit risk, including the use of an established credit approval process, daily monitoring of counterparty positions and the use of master netting agreements or provisions. These agreements generally include credit mitigation provisions, such as margin, prepayment or collateral requirements. PPL and its subsidiaries may request additional credit assurance, in certain circumstances, in the event that the counterparties' credit ratings fall below investment grade, their tangible net worth falls below specified percentages or their exposures exceed an established credit limit.

Master Netting Arrangements (PPL, LG&E and KU)

Net derivative positions on the balance sheets are not offset against the right to reclaim cash collateral (a receivable) or the obligation to return cash collateral (a payable) under master netting arrangements.

PPL had $ 4 million cash collateral posted under master netting arrangements at December 31, 2022 and no cash collateral posted at December 31, 2021.

PPL had no obligation to return cash collateral under master netting arrangements at December 31, 2022 and 2021.

LG&E and KU had no cash collateral posted or obligation to return cash collateral under master netting arrangements at December 31, 2022 and 2021.

See "Offsetting Derivative Instruments" below for a summary of derivative positions presented in the balance sheets where a right of setoff exists under these arrangements.

Interest Rate Risk

(All Registrants)

PPL and its subsidiaries issue debt to finance their operations, which exposes them to interest rate risk. A variety of financial derivative instruments are utilized to adjust the mix of fixed and floating interest rates in their debt portfolios, adjust the duration of the debt portfolios and lock in benchmark interest rates in anticipation of future financing, when appropriate. Risk limits under PPL's risk management program are designed to balance risk exposure to volatility in interest expense and changes in the fair value of the debt portfolio due to changes in benchmark interest rates. In addition, the interest rate risk of certain subsidiaries is potentially mitigated as a result of the existing regulatory framework or the timing of rate case.

Cash Flow Hedges (PPL)

Interest rate risks include exposure to adverse interest rate movements for outstanding variable rate debt and for future anticipated financings. Financial interest rate swap contracts that qualify as cash flow hedges may be entered into to hedge floating interest rate risk associated with both existing and anticipated debt issuances. PPL had no such contracts at December 31, 2022.

Cash flow hedges are discontinued if it is no longer probable that the original forecasted transaction will occur by the end of the originally specified time period and any amounts previously recorded in AOCI are reclassified into earnings once it is determined that the hedged transaction is not probable of occurring.

For 2022, 2021 and 2020, PPL had no cash flow hedges reclassified into earnings associated with discontinued cash flow hedges.

---

At December 31, 2022, the amount of accumulated net unrecognized after-tax gains (losses) on qualifying derivatives expected to be reclassified into earnings during the next 12 months is insignificant. Amounts are reclassified as the hedged interest expense is recorded.

Economic Activity (PPL and LG&E)

LG&E enters into interest rate swap contracts that economically hedge interest payments. Because realized gains and losses from the swaps, including terminated swap contracts, are recoverable through regulated rates, any subsequent changes in fair value of these derivatives are included in regulatory assets or liabilities until they are realized as interest expense. Realized gains and losses are recognized in "Interest Expense" on the Statements of Income at the time the underlying hedged interest expense is recorded. At December 31, 2022, LG&E held contracts with a notional amount of $ 64 million that mature in 2033.

Commodity Price Risk (PPL)

Economic Activity

RIE enters into financial and physical derivative contracts that economically hedge natural gas purchases. Realized gains and losses from the derivatives are recoverable through regulated rates, therefore subsequent changes in fair value are included in regulatory assets or liabilities until they are realized as purchased gas. Realized gains and losses are recognized in "Energy Purchases" on the Statements of Income upon settlement of the contracts. At December 31, 2022, RIE held contracts with a notional amount of $ 15 million that mature in 2024.

Accounting and Reporting

(All Registrants)

All derivative instruments are recorded at fair value on the Balance Sheet as an asset or liability unless the NPNS is elected. NPNS contracts include certain full-requirement purchase contracts and other physical purchase contracts. Changes in the fair value of derivatives not designated as NPNS are recognized in earnings unless specific hedge accounting criteria are met and designated as such, except for the changes in fair values of LG&E's interest rate swaps that are recognized as regulatory assets or regulatory liabilities. See Note 7 for amounts recorded in regulatory assets and regulatory liabilities at December 31, 2022 and 2021.

See Note 1 for additional information on accounting policies related to derivative instruments.

(PPL)

The following table presents the fair value and location of derivative instruments recorded on the Balance Sheets:

			December 31, 2022																								December 31, 2021
			Derivatives designated as hedging instruments												Derivatives not designated as hedging instruments												Derivatives designated as hedging instruments												Derivatives not designated as hedging instruments
			Assets						Liabilities						Assets						Liabilities						Assets						Liabilities						Assets						Liabilities
Current:
Price Risk Management
Assets/Liabilities (a):
Interest rate swaps (b)			$	—					$	—					$	—					$	1					$	—					$	—					$	—					$	1
Gas contracts			—						—						20						62						—						—						—						—
Total current			—						—						20						63						—						—						—						1
Noncurrent:
Price Risk Management
Assets/Liabilities (a):
Interest rate swaps (b)			—						—						—						6						—						—						—						17
Gas contracts			—						—						5						4						—						—						—						—
Total noncurrent			—						—						5						10						—						—						—						17
Total derivatives			$	—					$	—					$	25					$	73					$	—					$	—					$	—					$	18

(a) Current portion is included in "Other current assets" and "Other current liabilities" and noncurrent portion is included in "Other noncurrent assets" and "Other deferred credits and noncurrent liabilities" on the Balance Sheets.

---

(b) Excludes accrued interest, if applicable.

The following tables present the pre-tax effect of derivative instruments recognized in income, OCI or regulatory assets and regulatory liabilities:

Derivative Relationships						Derivative Gain (Loss) Recognized in OCI						Location of Gain (Loss) Recognized in Income on Derivative						Gain (Loss) Reclassified from AOCI into Income
2022
Cash Flow Hedges:
Interest rate swaps						$	—					Interest Expense						$	( 3 )
Total						$	—											$	( 3 )
2021
Cash Flow Hedges:
Interest rate swaps						$	—					Interest Expense						$	11
												Income (Loss) from Discontinued operations (net of taxes)						( 2 )
Cross-currency swaps						( 50 )						Income (Loss) from Discontinued operations (net of taxes)						( 39 )
Total						$	( 50 )											$	( 30 )
Net Investment Hedges:
Foreign currency contracts in Discontinued operations						$	1
2020
Cash Flow Hedges:
Interest rate swaps						$	( 9 )					Interest Expense						$	( 8 )
												Income(Loss) from Discontinued operations(net of taxes)						( 2 )
Cross-currency swaps						( 15 )						Income (Loss) from Discontinued operations (net of taxes)						( 22 )
Total						$	( 24 )											$	( 32 )
Net Investment Hedges:
Foreign currency contracts in Discontinued operations						$	1

Derivatives Not Designated as Hedging Instruments						Location of Gain (Loss) Recognized in Income on Derivative						2022						2021						2020
Foreign currency contracts						Income (Loss) from Discontinued Operations (net of taxes)						$	—					$	( 266 )					$	( 98 )
Interest rate swaps						Interest Expense						( 2 )						( 2 )						( 5 )
Gas contracts						Energy Purchases						41						—						—
						Total						$	39					$	( 268 )					$	( 103 )

Derivatives Not Designated as Hedging Instruments						Location of Gain (Loss) Recognized as Regulatory Liabilities/Assets						2022						2021						2020
Gas contracts						Regulatory assets - current						$	39					$	—					$	—
Interest rate swaps						Regulatory assets - noncurrent						11						5						( 2 )
						Total						$	50					$	5					$	( 2 )

The following table presents the effect of cash flow hedge activity on the Statement of Income for the year ended December 31, 2022:

---

			Location and Amount of Gain (Loss) Recognized in Income on Hedging Relationships
			Interest Expense						Other Income (Expense) - net
Total income and expense line items presented in the income statement in which the effect of cash flow hedges are recorded			$	513					$	54
The effects of cash flow hedges:
Gain (Loss) on cash flow hedging relationships:
Interest rate swaps:
Amount of gain (loss) reclassified from AOCI to income			( 3 )						—
Cross-currency swaps:
Hedged items			—						—
Amount of gain (loss) reclassified from AOCI to income			—						—

The following table presents the effect of cash flow hedge activity on the Statement of Income for the year ended December 31, 2021:

			Location and Amount of Gain (Loss) Recognized in Income on Hedging Relationships
			Interest Expense						Income (Loss) from Discontinued Operations (net of income taxes)
Total income and expense line items presented in the income statement in which the effect of cash flow hedges are recorded			$	918					$	( 1,498 )
The effects of cash flow hedges:
Gain (Loss) on cash flow hedging relationships:
Interest rate swaps:
Amount of gain (loss) reclassified from AOCI to income			11						( 2 )
Cross-currency swaps:
Hedged items			—						39
Amount of gain (loss) reclassified from AOCI to income			—						( 39 )

The following table presents the effect of cash flow hedge activity on the Statement of Income for the year ended December 31, 2020:

			Location and Amount of Gain (Loss) Recognized in Income on Hedging Relationships
			Interest Expense						Income (Loss) from Discontinued Operations (net of income taxes)
Total income and expense line items presented in the income statement in which the effect of cash flow hedges are recorded			$	634					$	829
The effects of cash flow hedges:
Gain (Loss) on cash flow hedging relationships:
Interest rate swaps:
Amount of gain (loss) reclassified from AOCI to income			( 8 )						( 2 )
Cross-currency swaps:
Hedged items			—						22
Amount of gain (loss) reclassified from AOCI to income			—						( 22 )

---

(LG&E)

The following table presents the fair value and the location on the Balance Sheets of derivatives not designated as hedging instruments:

						December 31, 2022												December 31, 2021
						Assets						Liabilities						Assets						Liabilities
Current:
Price Risk Management
Assets/Liabilities:
Interest rate swaps						$	—					$	1					$	—					$	1
Total current						—						1						—						1
Noncurrent:
Price Risk Management
Assets/Liabilities:
Interest rate swaps						—						6						—						17
Total noncurrent						—						6						—						17
Total derivatives						$	—					$	7					$	—					$	18

The following tables present the pre-tax effect of derivatives not designated as cash flow hedges that are recognized in income or regulatory assets:

Derivative Instruments						Location of Gain (Loss)						2022						2021						2020
Interest rate swaps						Interest Expense						$	( 2 )					$	( 2 )					$	( 5 )

Derivative Instruments						Location of Gain (Loss)						2022						2021						2020
Interest rate swaps						Regulatory assets - noncurrent						$	11					$	5					$	( 2 )

(PPL, LG&E and KU)

Offsetting Derivative Instruments

PPL, LG&E and KU or certain of their subsidiaries have master netting arrangements in place and also enter into agreements pursuant to which they purchase or sell certain energy and other products. Under the agreements, upon termination of the agreement as a result of a default or other termination event, the non-defaulting party typically would have a right to set off amounts owed under the agreement against any other obligations arising between the two parties (whether under the agreement or not), whether matured or contingent and irrespective of the currency, place of payment or place of booking of the obligation.

PPL, LG&E and KU have elected not to offset derivative assets and liabilities and not to offset net derivative positions against the right to reclaim cash collateral pledged (an asset) or the obligation to return cash collateral received (a liability) under derivatives agreements. The table below summarizes the derivative positions presented in the balance sheets where a right of setoff exists under these arrangements and related cash collateral received or pledged.

						Assets																								Liabilities
												Eligible for Offset																								Eligible for Offset
						Gross						Derivative Instruments						Cash Collateral Received						Net						Gross						Derivative Instruments						Cash Collateral Pledged						Net
December 31, 2022
Derivatives
PPL						$	25					$	20					$	—					$	5					$	73					$	62					$	—					$	11
LG&E						—						—						—						—						7						—						—						7
December 31, 2021
Derivatives
PPL						$	—					$	—					$	—					$	—					$	18					$	—					$	—					$	18
LG&E						—						—						—						—						18						—						—						18

---

Credit Risk-Related Contingent Features

Certain derivative contracts contain credit risk-related contingent features which, when in a net liability position, would permit the counterparties to require the transfer of additional collateral upon a decrease in the credit ratings of PPL, LG&E and KU or certain of their subsidiaries. Most of these features would require the transfer of additional collateral or permit the counterparty to terminate the contract if the applicable credit rating were to fall below investment grade. Some of these features also would allow the counterparty to require additional collateral upon each downgrade in credit rating at levels that remain above investment grade. In either case, if the applicable credit rating were to fall below investment grade, and assuming no assignment to an investment grade affiliate were allowed, most of these credit contingent features require either immediate payment of the net liability as a termination payment or immediate and ongoing full collateralization on derivative instruments in net liability positions.

Additionally, certain derivative contracts contain credit risk-related contingent features that require adequate assurance of performance be provided if the other party has reasonable concerns regarding the performance of PPL's, LG&E's and KU's obligations under the contracts. A counterparty demanding adequate assurance could require a transfer of additional collateral or other security, including letters of credit, cash and guarantees from a creditworthy entity. This would typically involve negotiations among the parties. However, amounts disclosed below represent assumed immediate payment or immediate and ongoing full collateralization for derivative instruments in net liability positions with "adequate assurance" features.

(PPL)

At December 31, 2022, there were an insignificant amount of derivative contracts in a net liability position that contain credit risk-related contingent features, collateral posted on those positions and the related effect of a decrease in credit ratings below investment grade.

19. Goodwill and Other Intangible Assets

Goodwill

(PPL)

The changes in the carrying amount of goodwill by segment were:

			Kentucky Regulated												Rhode Island Regulated												Corporate and Other												Total
			2022						2021						2022						2021						2022						2021						2022						2021
Balance at beginning of period (a)			$	662					$	662					$	—					$	—					$	53					$	53					$	715					$	715
Goodwill recognized during the period (b)			—						—						725						—						861						—						1,586						—
Sale of Safari Holdings (c)			—						—						—						—						( 53 )						—						( 53 )						—
Total			$	662					$	662					$	725					$	—					$	861					$	53					$	2,248					$	715

(a) There were no accumulated impairment losses related to goodwill.

(b) Recognized as a result of the acquisition of RIE. See Note 9 for additional information.

(c) See Note 9 for additional information.

Other Intangible Assets

(PPL)

The gross carrying amount and the accumulated amortization of other intangible assets were:

---

			December 31, 2022												December 31, 2021
			Gross Carrying Amount						Accumulated Amortization						Gross Carrying Amount						Accumulated Amortization
Subject to amortization:
Contracts (a)			$	125					$	99					$	125					$	90
Renewable Energy Credits			14						—						—						—
Land rights and easements			407						138						406						135
Licenses and other			2						1						20						6
Total subject to amortization			548						238						551						231
Not subject to amortization due to indefinite life:
Land rights and easements			17						—						17						—
Other			—						—						6						—
Total not subject to amortization due to indefinite life			17						—						23						—
Total			$	565					$	238					$	574					$	231

(a) Gross carrying amount in 2022 and 2021 includes the fair value at the acquisition date of the OVEC power purchase contract with terms favorable to market recognized as a result of the 2010 acquisition of LKE by PPL.

Current intangible assets are included in "Other current assets" and long-term intangible assets are included in "Other intangibles" on the Balance Sheets.

Amortization expense was as follows:
			2022						2021						2020
Intangible assets with no regulatory offset			$	5					$	9					$	7
Intangible assets with regulatory offset			9						8						8
Total			$	14					$	17					$	15

Amortization expense for each of the next five years is estimated to be:

			2023						2024						2025						2026						2027
Intangible assets with no regulatory offset			$	5					$	5					$	5					$	4					$	4
Intangible assets with regulatory offset			9						8						8						2						—
Total			$	14					$	13					$	13					$	6					$	4

(PPL Electric)

The gross carrying amount and the accumulated amortization of other intangible assets were:

			December 31, 2022												December 31, 2021
			Gross Carrying Amount						Accumulated Amortization						Gross Carrying Amount						Accumulated Amortization
Subject to amortization:
Land rights and easements			$	385					$	134					$	382					$	130
Licenses and other			2						1						2						1
Total subject to amortization			387						135						384						131
Not subject to amortization due to indefinite life:
Land rights and easements			17						—						17						—
Total			$	404					$	135					$	401					$	131

Intangible assets are shown as "Intangibles" on the Balance Sheets.

Amortization expense was as follows:

			2022						2021						2020
Intangible assets with no regulatory offset			$	4					$	4					$	4

---

Amortization expense for each of the next five years is estimated to be:

			2023						2024						2025						2026						2027
Intangible assets with no regulatory offset			$	4					$	4					$	4					$	4					$	4

(LG&E)

The gross carrying amount and the accumulated amortization of other intangible assets were:

			December 31, 2022												December 31, 2021
			Gross Carrying Amount						Accumulated Amortization						Gross Carrying Amount						Accumulated Amortization
Subject to amortization:
Land rights and easements			$	7					$	1					$	7					$	1
OVEC power purchase agreement (a)			86						68						86						62
Total subject to amortization			$	93					$	69					$	93					$	63

(a)    Gross carrying amount represents the fair value at the acquisition date of the OVEC power purchase contract recognized as a result of the 2010 acquisition by PPL. An offsetting regulatory liability was recorded related to this contract, which is being amortized over the same period as the intangible asset, eliminating any income statement impact. See Note 7 for additional information.

Long-term intangible assets are presented as "Other intangibles" on the Balance Sheets.

Amortization expense was as follows:

			2022						2021						2020
Intangible assets with regulatory offset			$	6					$	5					$	6

Amortization expense for each of the next five years is estimated to be:

			2023						2024						2025						2026						2027
Intangible assets with regulatory offset			$	6					$	6					$	6					$	1					$	—

(KU)

The gross carrying amount and the accumulated amortization of other intangible assets were:

			December 31, 2022												December 31, 2021
			Gross Carrying Amount						Accumulated Amortization						Gross Carrying Amount						Accumulated Amortization
Subject to amortization:
Land rights and easements			$	16					$	3					$	16					$	4
OVEC power purchase agreement (a)			39						31						39						28
Total subject to amortization			$	55					$	34					$	55					$	32

(a)    Gross carrying amount represents the fair value at the acquisition date of the OVEC power purchase contract recognized as a result of the 2010 acquisition by PPL. An offsetting regulatory liability was recorded related to this contract, which is being amortized over the same period as the intangible asset, eliminating any income statement impact. See Note 7 for additional information.

Long-term intangible assets are presented as "Other intangibles" on the Balance Sheets.

Amortization expense was as follows:

			2022						2021						2020
Intangible assets with no regulatory offset			$	—					$	1					$	—
Intangible assets with regulatory offset			3						3						2

Amortization expense for each of the next five years is estimated to be:

---

(PPL and PPL Electric)

PPL Electric has identified legal retirement obligations for the retirement of certain transmission assets that could not be reasonably estimated due to indeterminable settlement dates. These assets are located on rights-of-way that allow the grantor to require PPL Electric to relocate or remove the assets. Since this option is at the discretion of the grantor of the right-of-way, PPL Electric is unable to determine when these events may occur.

(PPL, LG&E and KU)

PPL's, LG&E's and KU's ARO liabilities are primarily related to CCR closure costs. See Note 14 for information on the CCR rule. LG&E also has AROs related to natural gas mains and wells. LG&E's and KU's transmission and distribution lines largely operate under perpetual property easement agreements, which do not generally require restoration upon removal of the property. Therefore, no material AROs are recorded for transmission and distribution assets. For LG&E and KU, all ARO accretion and depreciation expenses are reclassified as a regulatory asset or regulatory liability. ARO regulatory assets associated with certain CCR projects are amortized to expense in accordance with regulatory approvals. For other AROs, deferred accretion and depreciation expense is recovered through cost of removal.

The changes in the carrying amounts of AROs were as follows:

			PPL												LG&E												KU
			2022						2021						2022						2021						2022						2021
ARO at beginning of period			$	189					$	182					$	84					$	67					$	105					$	115
Acquisition of RIE (a)			10						—						—						—						—						—
Accretion			6						16						3						5						3						11
Obligations incurred			2						—						2						—						—						—
Changes in estimated timing or cost			15						56						12						40						4						16
Obligations settled			( 45 )						( 65 )						( 15 )						( 28 )						( 30 )						( 37 )
ARO at end of period			$	177					$	189					$	86					$	84					$	82					$	105

(PPL)

The after-tax changes in AOCI by component for the years ended December 31 were as follows:

																											Defined benefit plans
			Foreign currency translation adjustments												Unrealized gains (losses) on qualifying derivatives						Equity investees' AOCI						Prior service costs						Actuarial gain (loss)						Total
PPL
December 31, 2019			$	( 1,425 )											$	( 5 )					$	—					$	( 18 )					$	( 2,910 )					$	( 4,358 )
Amounts arising during the year			267												( 19 )						—						( 1 )						( 341 )						( 94 )
Reclassifications from AOCI			—												24						—						3						205						232
Net OCI during the year			267												5						—						2						( 136 )						138
December 31, 2020			$	( 1,158 )											$	—					$	—					$	( 16 )					$	( 3,046 )					$	( 4,220 )
Amounts arising during the year			372												( 39 )						—						—						( 1 )						332
Reclassifications from AOCI			—												25						—						2						126						153
Reclassifications from AOCI due to the sale of the U.K. utility business (Note 9)			786												15						—						8						2,769						3,578
Net OCI during the year			1,158												1						—						10						2,894						4,063
December 31, 2021			$	—											$	1					$	—					$	( 6 )					$	( 152 )					$	( 157 )

---

																											Defined benefit plans
			Foreign currency translation adjustments												Unrealized gains (losses) on qualifying derivatives						Equity investees' AOCI						Prior service costs						Actuarial gain (loss)						Total
Amounts arising during the year			—												—						2						( 1 )						11						12
Reclassifications from AOCI			—												2						—						2						17						21
Net OCI during the year			—												2						2						1						28						33
December 31, 2022			$	—											$	3					$	2					$	( 5 )					$	( 124 )					$	( 124 )

The following table presents PPL's gains (losses) and related income taxes for reclassifications from AOCI for the years ended December 31, 2022, 2021 and 2020. The defined benefit plan components of AOCI are not reflected in their entirety in the statement of income; rather, they are included in the computation of net periodic defined benefit costs (credits) and subject to capitalization. See Note 12 for additional information.

						PPL
Details about AOCI						2022						2021						2020						Affected Line Item on the Statements of Income
Qualifying derivatives
Interest rate swaps						$	( 3 )					$	11					$	( 8 )					Interest Expense
						—						( 2 )						( 2 )						Income (Loss) from Discontinued Operations (net of income taxes)
Cross-currency swaps						—						( 39 )						( 22 )						Income (Loss) from Discontinued Operations (net of income taxes)
Total Pre-tax						( 3 )						( 30 )						( 32 )
Income Taxes						1						5						8
Total After-tax						( 2 )						( 25 )						( 24 )
Defined benefit plans
Prior service costs						( 3 )						( 3 )						( 4 )
Net actuarial loss						( 24 )						( 159 )						( 256 )
Total Pre-tax						( 27 )						( 162 )						( 260 )
Income Taxes						8						34						52
Total After-tax						( 19 )						( 128 )						( 208 )
Sale of the U.K. utility business (Note 9)
Foreign currency translation adjustments						—						( 646 )						—						Income (Loss) from Discontinued Operations (net of income taxes)
Qualifying derivatives						—						( 15 )						—						Income (Loss) from Discontinued Operations (net of income taxes)
Defined benefit plans						—						( 3,577 )						—						Income (Loss) from Discontinued Operations (net of income taxes)
Total Pre-tax						—						( 4,238 )						—
Income Taxes						—						660						—
Total After-tax						—						( 3,578 )						—
Total reclassifications during the year						$	( 21 )					$	( 3,731 )					$	( 232 )

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---