PPL 2026年第三季財報電話會議：調升每股盈餘成長目標，宣布 QTS 2 GW 專案

重點摘要

• PPL Corporation 公布 2026 年第三季 GAAP 盈餘為 每股 0.49 美元，高於 2025 年第三季的 0.43 美元。持續經營業務盈餘增至 每股 0.54 美元，高於 0.48 美元。
• 管理階層將 2026 年持續經營業務 EPS 財測區間收窄至 1.92 至 1.96 美元，並預期至少達到 1.94 美元的中位數。針對 2027 年，PPL 預估為 2.06 至 2.14 美元，以中位數 2.10 美元計算代表成長 8.2%。
• PPL 調升並延長其年度 EPS 成長目標至 至少到 2030 年前維持 7% 至 9%，且預期自 2027 年起，每年成長幅度將落在該區間的上半部。
• 更新後的資本計畫在 2027 至 2030 年總計達 250 億美元，支撐預期 10% 的費率基礎複合年成長率。費率基礎預估將從 2026 年的約 330 億美元增加至 2030 年的近 480 億美元。
• Invitium Energy 與 QTS 就賓州約 2 GW 發電容量達成關鍵商業條款協議。專案總投資金額估計為 50 億至 70 億美元，包括 PPL 51% 的份額，約 25 億至 35 億美元。
• 額外的肯塔基州發電投資可望使 PPL 到 2030 年的 EPS 複合年成長率提升至 9% 以上，但這些機會並未納入基礎計畫中，且取決於大負載專案的進一步轉化。

關鍵財務數據

第三季持續經營業務盈餘改善，主要受惠於三個司法管轄區的基本費率回收、透過追蹤機制及時回收資本投資，以及銷量增加。這些有利因素被較高的折舊、營運成本和利息支出所部分抵消。

業務與營運表現

賓州與 Invitium Energy

PPL Electric 的後期階段資料中心儲備容量連續第 11 季成長，達到 35.3 GW，較第二季增加 3.5 GW。已簽署的能源服務協議達到約 11.4 GW，同時約有 8.5 GW 正在興建中。PPL 已為 300 MW 的簽約負載通電，預計將逐步增至約 2 GW。

Invitium Energy 與 QTS 針對其 Salem Township 資料中心專案簽署了意向書與成本補償協議，涵蓋約 2 GW。擬議的資產組合包括兩座複循環天然氣電廠，外加燃料電池與電池儲能系統。燃料電池與儲能系統之間的最終配置比例仍在審查中。

燃料電池與電池儲能系統最快可能於 2029 年投入運作。複循環電廠預計分別於 2032 年與 2033 年上線。初始合約期限為 20 年，並附帶多個 5 年期續約選擇權。按年調升的每月固定付款旨在支付投資資本報酬與固定營運成本，而變動付款則在電廠運轉時用於支付燃料與其他營運費用。

管理階層表示，截至 2032 年，Invitium 更廣泛的潛在投資機會可能達到 60 億至 90 億美元，反映出 PPL 51% 的持股比例以及已簽署的 5 GW 渦輪機預訂協議。該估計不包含燃料電池和電池儲能等潛在過渡解決方案。

肯塔基州

肯塔基州的經濟發展儲備專案季增 1 GW，至 2032 年潛在負載成長達到 14.7 GW。其中包括 12.8 GW 的資料中心負載，以及約 2 GW 的非資料中心需求。

受補償協議涵蓋的負載從第二季的 1.3 GW 增至 2.3 GW。評估達成機率在 50% 或更高的專案達到 4 GW，平均達成機率接近 85%。

基礎計畫納入了支撐約 2.4 GW 需求的發電容量。管理階層估計，在 2030 年前滿足剩餘 1.6 GW 的需求可能還需要 35 億至 45 億美元 的投資。PPL 預計在簽署資料中心能源服務協議後，提交下一份公共便利與必要性證明 (CPCN) 申請，目前預計在 2027 年第一季進行。

監管裁決與可負擔性

肯塔基州監管機構批准總計調升約 2.4 億美元 的 LG&E 與 KU 年度電力和天然氣營收，其中包括在部分重新審議後追加的 700 萬美元。由於所申請的暫停調價機制未獲批准，該公用事業公司預計在未來幾個月內提出新的基本費率審查申請。

羅德島能源 (Rhode Island Energy) 的新費率於 9 月 1 日生效，反映出 1.38 億美元 的年度營收增加。PPL 還達成了一項無害承諾和解協議，提供 1.63 億美元 的客戶帳單折抵（自 2026 年 10 月至 2027 年 9 月）。由於所申請的第二年費率調升未獲核准，該公司最快可能於 2027 年再次提交羅德島費率審查申請。

PPL Electric 於 7 月 1 日達成的費率和解協議批准了 2.75 億美元 的調升幅度，並包含為期兩年的暫停調價條款。管理階層表示，所有費率類別的調幅均低於 4%。

管理階層財測

PPL 預期 2026 年持續經營業務 EPS 為 1.92 至 1.96 美元，且業績至少達到 1.94 美元的中位數。該公司預測 2027 年 EPS 為 2.06 至 2.14 美元，並預期至少到 2030 年前，年成長率將維持在其新設定的 7% 至 9% 目標區間上半部。

基礎展望假設為一項 250 億美元 的資本支出計畫，以及約 10% 的年度費率基礎成長。此展望未計入 Invitium Energy 的財務貢獻及肯塔基州額外的發電機會。

管理階層表示，肯塔基州的樂觀情境可望使截至 2030 年的 EPS 複合年成長率提高至 9% 以上。該情境包含額外兩座複循環電廠、266 MW 的 Lewis Ridge 抽蓄水力發電專案，以及 400 MW 的額外電池儲能系統。獲利貢獻可能從 2028 年開始顯現，主要透過興建期間借款利息資本化 (AFUDC) 的方式，因為這些發電機組在當前計畫期內尚不會投入商轉。

PPL 仍將營運現金流量對債務比率 (FFO-to-debt) 目標設定為 16% 至 18%，在計畫期間該比率預計趨向中位數。年度股利成長目標設在公司 4% 至 6% 區間的低標，預計到 2030 年配息率約為 50%。到 2030 年為止，預定的營運與維護費用年成長率維持在約 0.5%。

風險與關注事項

• 與 QTS 的合作安排仍取決於最終長期能源服務供應協議的簽署、最終開工通知 (NTP)、專案核准及其他慣常條件。
• 燃料電池與電池儲能系統之間的最終配置比例尚未確定，營運階段的融資安排仍在制定中。
• 肯塔基州的增量投資機會取決於大負載客戶將儲備專案轉化為正式簽約協議並獲得監管機構核准。
• PPL 預期各業務部門的折舊與融資成本將上升，肯塔基州的營運成本也將增加。
• 管理階層指出，發電設備供應鏈限制與成本壓力，是公司提早鎖定設備與施工價格的原因。
• 更新後的融資計畫包括到 2030 年約 30 億美元的額外股權融資需求，預計將以市價增發 (ATM) 計畫為主要籌資管道。

分析師問答重點

管理階層表示，基礎計畫中納入的額外複循環機組，受到達成機率高於 90% 的肯塔基州負載專案所支撐。隨著大負載協議陸續簽署，進一步的發電投資將被納入正式計畫中。

針對 QTS 專案，管理階層表示，由於具備合約結構，預期報酬率將高於一般公用事業，但低於純獨立發電廠 (IPP) 的報酬率。目前未提供具體的報酬率目標。

在資產投入商轉之前，PPL 預計 Invitium 不會產生獲利或現金流。過渡解決方案可能會在當前計畫期末期提供些微增益，但管理階層預期複循環電廠將貢獻該專案的大部分獲利與價值。

在興建期間，PPL 預計採用類似專案常見的結構，大部分將保留在資產負債表外。最終的營運階段融資結構將在合約條款底定以及與信評機構的討論取得進展後敲定。

針對肯塔基州公用事業的增量資本，管理階層表示，超過 9% 的 EPS 成長示範情境已包含全額融資考量。傳統公用事業資本計畫通常需要約 30% 至 40% 的股權支持，具體取決於專案的時間點與組合配置。

完整法說會逐字稿

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完整財報電話會議逐字稿

管理層陳述

Operator

Good day, and welcome to the PPL Corporation Third Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded.

I would now like to hand the call over to Andy Ludwig, Vice President of Investor Relations. Please go ahead.

Andy Ludwig

Good morning, and thank you for joining PPL Corporation's third quarter investor update. We provided presentation materials on the Investors section of our website. This morning, you'll hear from Vince Sorgi, PPL President and CEO; and Joe Bergstein, Chief Financial Officer. We will conclude with a Q&A session following our prepared remarks.

Before we get started, please turn to Slide 2 for our cautionary statement. Today's presentation contains forward-looking statements subject to risks and uncertainties. Actual results may differ materially. Please refer to our SEC filings and the appendix for additional information. We will also refer to non-GAAP measures, including earnings from ongoing operations. Reconciliations to the corresponding GAAP measures are provided in the appendix.

I'll now turn the call over to Vince.

Vincent Sorgi

Thank you, Andy, and good morning, everyone. Let's begin on Slide 4 with the key takeaways from today's call. Strong execution, a stronger base growth outlook and clear path to meaningful upside, including today's Invitium QTS announcement. We executed a strong third quarter where we delivered on our commitments to shareowners, and Joe will discuss our 2026 results in detail in his remarks.

We also updated our business plan today, which shows an even stronger long-term outlook. The investments we're making across our regulated businesses, combined with continued economic development in our service territories give us even greater confidence in PPL's growth profile. As a result, we're raising and extending our long-term annual EPS growth target to 7% to 9% through at least 2030, with growth expected to be in the top half of that higher range in each year beginning in 2027.

Our new capital plan totals $25 billion from 2027 through 2030, supporting 10% compound annual rate base growth from 2026 through 2030. Importantly, from an affordability perspective, the incremental investment supporting our higher growth outlook is expected to primarily be paid for by the large load customers driving those investments rather than our existing customers.

Beyond the stronger base plan, we also continue to see significant medium- to long-term opportunities. Through 2032, additional capital investment opportunities could reach a total of $12 billion to $16 billion. This includes additional regulated generation investment in Kentucky required to meet continued increases in potential demand growth. This represents $6 billion to $7 billion of incremental investment opportunity through 2032, which includes $3.5 billion to $4.5 billion through 2030. This investment opportunity alone supports meaningful upside that could increase our EPS CAGR to over 9% through 2030.

In addition, we see at least $6 billion to $9 billion of potential future investment from Invitium Energy through 2032. These amounts reflect PPL's 51% ownership share and are based on 5 gigawatts of executed reservation agreements for combined-cycle natural gas turbines. And those investment opportunities exclude any bridge solutions such as fuel cells or battery storage, though Invitium Energy also provides meaningful shareowner value potential.

And focusing on Invitium Energy, we're pleased to announce that Invitium and QTS have agreed to collaborate on about 2 gigawatts of generation capacity in Pennsylvania, which I'll cover in more detail on the next slide. This represents a significant milestone for Invitium and an important step toward converting strong customer demand into tangible generation projects.

Just as importantly, these projects help meet rising energy demand while strengthening the PJM grid and supporting long-term energy affordability. Our updated business plan excludes any financial impacts of Invitium, including the QTS announcement.

Let's turn to Slide 5 to provide some additional details about the Invitium Energy announcement. Invitium signed a letter of intent with QTS to be their generation solution provider in portions of Pennsylvania. Under that LOI, we've agreed with QTS on all key commercial terms for approximately 2 gigawatts of generation capacity for its Salem Township data center project with a 20-year initial term allowing for multiple 5-year renewals.

We also signed a cost reimbursement agreement that provides reimbursement and risk mitigation for specified development costs and commitments in the event certain approvals and conditions for project development are not achieved. The proposed generation portfolio includes 2 combined-cycle natural gas plants, complemented by fuel cells and battery storage or BESS, with the final technology mix between the fuel cells and BESS still being finalized.

Using current cost estimates of $2,500 to $3,500 per kW, 2 gigawatts of generation would represent an estimated $5 billion to $7 billion of total project investment with PPL's 51% share representing approximately $2.5 billion to $3.5 billion. The fuel cell and BESS generation could be online as early as 2029, and the combined-cycle plants are expected to be online in 2032 and 2033. This structure aligns with the White House's Ratepayer Protection Pledge and Governor Shapiro's clean and firm energy requirements under Pennsylvania's GRID standards. The structure provides a regulated like risk profile designed to deliver stable, predictable and growing long-term earnings and cash flows.

A fixed monthly payment with annual escalation covers the return of and on invested capital and fixed operating costs. Variable payments cover fuel and other operating costs when the plants run. The ultimate data center customer will also be required to meet minimum credit ratings or credit support requirements, mitigating counterparty credit risk.

In summary, the combination of the negotiated key commercial terms and the cost reimbursement agreement creates a durable foundation for disciplined investment, attractive long-term returns and meaningful growth with appropriate risk protections and provides for about 2 gigawatts of new generation in Pennsylvania. It demonstrates the strength of the platform we're building and the growing momentum behind Invitium Energy, which is in active discussions with multiple counterparties for additional generation projects in Pennsylvania.

Turning to Slide 6. This slide demonstrates how the updated plan has changed from our prior plan and just as important, what hasn't changed. First, the key change is the 100 basis point increase in our annual EPS growth target. That growth is supported by a larger investment program, primarily paid for by our large load customers. Our base capital plan is $2 billion more than the prior plan, primarily from an additional CCGT in Kentucky.

Rate base CAGR over the plan period remains at about 10%. We're also maintaining strong cost discipline with overall planned O&M growth at roughly 0.5% annually through 2030 to benefit our customers. Our financial foundation also remains strong. We continue to target an FFO to debt ratio of 16% to 18%, and the plan has our credit metrics improving towards the midpoint of that range over the plan period. Our dividend commitment is also unchanged as we're targeting the low end of our 4% to 6% annual dividend growth range while we fund our significant CapEx plan.

The bottom line is that we have a stronger growth outlook, continue to focus on affordability and efficiency for our customers and are exercising the same financial discipline you've come to expect from us. And beyond the strong base plan, we have the additional capital investment opportunities I discussed, stemming from the potential for additional Kentucky generation and Invitium Energy.

Let's turn to Slide 7 for a brief regulatory update. In Kentucky, the Public Service Commission partially granted our request for reconsideration of its decision in LG&E and KU's 2025 rate cases. The commission approved several elements of our request, resulting in an additional $7 million in annual revenues. In total, LG&E and KU received approval for an aggregate increase of approximately $240 million in annual electric and gas revenues. While the commission granted part of our reconsideration request, the sharing mechanism that would have allowed us to stay out through 2028 was not approved. As a result, LG&E and KU expect to file base rate cases in the coming months.

In Rhode Island, new base rates became effective September 1, with the commission approving $138 million annual revenue increase following Rhode Island Energy's first base rate review since 2017. The order is a constructive outcome that supports our capital plan to modernize Rhode Island's electric and gas networks. We were also successful in securing a settlement for our hold harmless commitment, which provides $163 million in bill credits to our electric and gas customers from October 2026 through September of 2027. These are meaningful savings for our customers during the winter heating season and helped to offset the base rate increases.

While the Rhode Island PUC approved an increase in annual revenues, it did not approve our requested second year revenue increase. As a result, Rhode Island Energy plans to file another rate case as early as next year. And as a reminder, PPL Electric's rate case settlement became effective July 1 with a positive outcome for both customers and shareowners. The approved increase of $275 million supported critical investments we're making while reflecting less than a 4% increase across all of our rate classes. The settlement also included a 2-year stay-out provision, but we expect to be able to stay out longer than the 2 years agreed to in the settlement.

Across all our jurisdictions, our focus remains consistent, investing responsibly in the infrastructure needed to support reliability and economic growth, engaging constructively with regulators and maintaining a strong focus on affordability for our customers.

Turning to Slide 8 and speaking of customer affordability. Keeping customer bills affordable remains one of our top priorities, and it shapes how we run our business and execute our plan. Through constructive regulatory outcomes, along with a steady focus on cost efficiency, we've kept the average residential bill at each of our utilities below the relevant state or regional averages. Across our utilities, the portion of the bills that we control are about 10% lower than our state averages. And in Rhode Island, we are lower by about 16% compared to the rest of New England. We expect that trend to continue, even including the results of our recent rate case outcomes.

Importantly, we're also ensuring that growth pays for growth, reducing cost pressures on our existing customers. Our large load tariffs, the first of their kind by investor-owned utilities in Pennsylvania and Kentucky, require data centers to cover the cost of serving them. So existing customers don't bear that burden. And we're looking to build on those protections even further.

In September, PPL Electric filed a proposed Customer Protection Transmission Rider, or CPTR, to further strengthen our protections around large load growth. The benefits of additional load will be felt every year over the next 5 years, and this has measurable affordability value for our existing customers. At the full 11.4 gigawatts currently under ESA, we estimate that our customer protection framework could reduce the average residential customers' annual transmission cost by $300. We expect a decision by the commission on our CPTR filing in the summer of 2027, targeting implementation in Q1 2028.

And finally, we continue to remain focused on cost. This includes holding our O&M growth to about 0.5% on a compound annual basis through 2030. And we're not planning on stopping there. We continue to see AI as a game changer for the utility industry, one that will come with significant cost savings. And while broad deployment of AI is a key part of our utility of the future strategy, we've taken a conservative approach in our planning process and have not baked significant AI-related savings into this updated plan. We see this as a meaningful opportunity, which could further enhance system reliability and the customer experience at a lower cost, further supporting our customer affordability strategy.

Turning to Slide 9. Data center development in Pennsylvania continues to progress. The pipeline of projects in advanced stages increased for the 11th consecutive quarter to 35.3 gigawatts, up 3.5 gigawatts from the second quarter. We're also continuing to see projects advance within that pipeline. Load converting to signed ESAs increased by 300 megawatts from the second quarter to approximately 11.4 gigawatts. Of that data center load, approximately 8.5 gigawatts are now under construction, an increase of 2 gigawatts from last quarter. We've already connected 2 data centers and to date have energized 300 megawatts of that contracted load, which will ultimately ramp to about 2 gigawatts. This progression of the pipeline is critically important. As projects move from initial agreements to ESAs and then into construction, we gain greater visibility into the infrastructure and generation that will ultimately be needed to serve this load. This continued data center interest in Pennsylvania also further supports new generation opportunities at Invitium Energy.

Turning to Slide 10. We're seeing similar momentum in Kentucky with another quarter of strong economic development growth and increasing conversion of projects in the pipeline. Our total economic development pipeline has increased another 1 gigawatt since the second quarter to 14.7 gigawatts of potential load growth through 2032. Data center load has increased to 12.8 gigawatts, while the non-data center load remains at approximately 2 gigawatts.

Importantly, we're also seeing significant progress in converting that pipeline into more committed projects with 2.3 gigawatts of load under reimbursement agreements, up from 1.3 gigawatts at the end of the second quarter. In addition, projects with a probability of success of 50% or greater have increased to 4 gigawatts of additional peak demand with the average probability for these projects sitting at almost 85%.

The generation investments in the updated plan that I discussed earlier support approximately 2.4 gigawatts of that demand. Additional generation needed to serve the remaining 1.6 gigawatts represents $3.5 billion to $4.5 billion of investment needs through 2030.

Bottom line, we continue to see a significant opportunity in Kentucky to support economic development and invest in the generation needed to serve that growth. And importantly, these incremental investments are expected to be primarily paid for by large load customers and not our existing customers.

Our next CPCN filing will occur once we have signed a data center ESA, which is currently anticipated in Q1 2027. These opportunities are good for the state, good for our existing customers and create additional long-term value for our shareowners.

With that, I'll turn the call over to Joe for the financial update.

Joe Bergstein

Thank you, Vince, and good morning, everyone. Let's turn to Slide 12. PPL's third quarter GAAP earnings were $0.49 per share compared to $0.43 per share in Q3 2025. We recorded special items of $0.05 per share during the third quarter, primarily due to system and other integration-related costs and PPL's Rhode Island Hold Harmless commitment.

Adjusting for these special items, third quarter earnings from ongoing operations were $0.54 per share, an improvement of $0.06 per share compared to the same period a year ago. This increase was primarily supported by base rate recovery resulting from rate case outcomes in all 3 of our jurisdictions, timely recovery of capital investments through tracking mechanisms and higher sales volumes. These favorable drivers were partially offset by higher depreciation expense from additional plant in service, higher operating costs and higher interest expense.

As we look at the first 9 months of 2026, our ongoing earnings increased by over 7% compared with the same period in 2025. And as we head into the final quarter of the year, we've narrowed our 2026 ongoing earnings forecast range to $1.92 to $1.96 per share and are on track to achieve at least the midpoint of $1.94 per share.

We also have continued to execute on our capital investment program, having deployed $3.6 billion of investments through the end of the third quarter. This is more than a 20% increase from what we deployed during the first 9 months of 2025, including great progress on our major generation projects in Kentucky, which remain on time and on budget.

Moving to Slide 13. Building off our strong momentum in 2026, our updated business plan supports strong EPS growth heading into next year. For 2027, we are forecasting earnings of $2.06 to $2.14 per share with a midpoint of $2.10 per share, representing 8.2% growth from the midpoint of our current 2026 ongoing earnings forecast. That puts us squarely in the top half of our new 7% to 9% growth target from the outset of the plan, and we expect to be in the top half of the range annually.

Growth in 2027 is expected to be driven by improved rate recovery from rate case outcomes approved earlier this year and higher revenues associated with the recovery of ongoing capital investments. We expect these drivers to be partially offset by higher operating costs in Kentucky as well as higher depreciation and higher financing costs across all segments.

Moving to Slide 14. We have a high degree of confidence in our updated base plan, which supports our higher EPS growth targets. That outlook does not depend on any of the upside opportunities that we discussed this morning. Beyond our updated base plan, we see additional generation investment opportunities to serve 1.6 gigawatts of Kentucky demand. Those investments could support an EPS CAGR over 9% through 2030. The upside case includes 2 additional natural gas combined-cycle plants, the 266-megawatt Lewis Ridge Pumped Storage Project and 400 megawatts of additional battery storage to bridge power to data centers coming online in our territory. Based on this case, we estimate that earnings contributions could start as early as 2028, ramping as the units come online.

Critically, these incremental investments would be primarily paid for by large load customers driving the need and not our existing customers. We'll begin to add these opportunities into the formal plan once we have signed agreements with these large load customers. This provides a visible and credible path to extend growth beyond our updated base plan.

Turning to Slide 15. Our updated capital plan totals $25 billion of customer-focused investments through 2030, approximately $2 billion more than our prior 4-year plan. As we roll the plan forward to 2027 through 2030, the $5.2 billion of capital investments in 2026 rolls off and we add a projected $5.7 billion in 2030. And on a comparable 2027 to 2029 basis, investment is $1.5 billion higher, primarily reflecting the expected need for another natural gas combined-cycle unit with a commercial operation date of 2032.

From a generation standpoint, our business plan now includes 4 NGCCs totaling over 2.5 gigawatts, 240 megawatts of solar projects and 525 megawatts of battery storage. Slide 25 in the appendix of today's presentation provides additional details on the generation units assumed in the business plan.

As Vince noted, continued conversion of the Kentucky economic development pipeline could support another $3.5 billion to $4.5 billion of generation investment through 2030, which could increase our EPS CAGR to 9% plus as discussed on the prior slide.

Turning to Slide 16. Our rate base is projected to grow from about $33 billion this year to nearly $48 billion in 2030, a 10% compound annual rate. That growth is driven by the $25 billion capital plan and is the foundation of our 7% to 9% EPS growth target. This is the base plan only. It does not include the Kentucky generation upside opportunity outlined on the prior slides, which would be incremental.

Moving to Slide 17. Our financing plan is designed to fund our growth while preserving balance sheet strength and strong credit ratings. We continue to target 16% to 18% FFO to debt with the ratio improving towards the midpoint of the range over the plan period, while maintaining holding company debt below 25% of total debt.

We expect approximately $3 billion of equity needs through 2030 beyond the more than $1.5 billion we've already executed on a forward basis. This $3 billion covers the unissued equity under the previous plan and the remaining $2 billion supports our updated capital plan, which includes additional AFUDC versus the prior plan and to support our current credit ratings. We expect to use our ATM program as a primary funding vehicle for this equity while opportunistically evaluating other equity-like structures that offer an attractive cost of capital.

We're also targeting annual dividend growth at the low end of our 4% to 6% range with a payout ratio expected to be about 50% by 2030. Together, these actions provide a balanced path to fund our $25 billion capital plan, maintain strong credit quality and support stronger durable earnings growth. This concludes my prepared remarks. I'll now turn the call back over to Vince.

Vincent Sorgi

Thanks, Joe. Let me close by summarizing the investment proposition we've outlined today. At its foundation is a stronger base business. Our $25 billion capital plan supports 10% annual rate base growth and annual EPS growth of 7% to 9% through at least 2030, with results expected to be in the top half of that range beginning in 2027. We are supporting that growth with disciplined financing and a strong balance sheet.

We also continue to target annual dividend growth at the low end of our 4% to 6% range, retaining capital to help fund all of this growth. Just as importantly, we are delivering this growth while keeping customers at the center of our strategy. Our investments support safe and reliable service and our cost discipline and rate case strategies help maintain affordability. This is demonstrated through the portion of the bills we control being about 10% lower than our state and regional averages. And moving forward, our large load tariff protections are designed to ensure that growth pays for growth, further supporting customer affordability.

Together, these elements support a compelling 10% to 13% total return proposition from the base plan. And beyond that base plan, we have meaningful potential upside. Continued conversion of the Kentucky economic development pipeline could drive further regulated generation investment and support our EPS CAGR to over 9% through 2030.

Invitium provides another source of potentially significant value, beginning with the QTS collaboration we announced today. In short, we have a stronger base plan, a disciplined customer-focused approach to funding growth and significant opportunities to outperform the commitments we made today. We are confident in our ability to execute this plan and are excited about the long-term value these opportunities can create for both our customers and our shareowners.

With that, operator, let's open the line for questions.

Operator

[Operator Instructions] And our first question will come from Shahriar Pourreza of Wells Fargo.

分析師問答

Shahriar Pourreza

So just firstly, obviously, you got the $2 billion increase in the base plan that's driving the CAGR raise. I guess what gives confidence to put that into plan without the CPCN? And at that point, why not the additional $3.5 billion to $4.5 billion? And sort of when these upsides hit, do you stick with the 9%-plus or would you move to a whole new range?

Joe Bergstein

Yes. Well, let me start with the confidence in the plan and why we -- what we put in there. I think adding the additional combined-cycle unit is really -- we did that based on what we're seeing in terms of economic development and the pipeline we have there. So I think it's prudent that we put some of the needed generation in our updated plan. And if you look at that pipeline, what we have in the plan from a generation perspective can meet the load from what we would consider to be very high probability load. So load that has over a 90% probability of coming online.

And then obviously, we discussed a lot in our prepared remarks that we believe we'll have an even greater need from even what's in there in this base plan that obviously drives the upside to the capital and the earnings over 9% that you referenced. So when we do make the regulatory filings, we fully expect to have a load forecast that supports at least the level of generation that we have in this plan, if not some of that upside.

Shahriar Pourreza

Got it. Joe, do you stick with the 9%-plus -- sorry, sorry.

Joe Bergstein

Well, the 9%-plus has been for about an hour now. So we'll assess that as we move through time and see whether we get to a range or keep the plus.

Shahriar Pourreza

Got it. All right. Perfect. And then Vince, congrats on the first deal with gas, at least in PJM. So just on the 2 gigawatts Invitium deal, yes, it's a big announcement. Obviously, we've been -- a lot of people have been waiting on it. So just on the 2-gigawatt deal, you have a term sheet, you have a CRA. I guess, what's left to get you to a full form ESSA? Do you have more than a typical term sheet to get you this comfortable? And there isn't a lot of left out there to do, so you feel good. And then just want to get a sense on the risks there because we've seen these type of announcements in the past, and there's been different market reactions to them. So what gives you confidence in this one?

Vincent Sorgi

Yes. Thanks, Shar. Look, our decision to announce today, it really speaks to the robustness of the negotiations that occurred between the parties, Invitium and QTS. And as I said, all key commercial terms have been agreed to in the term sheet. So again, significant negotiations in coming up with those terms. I would say it also speaks to the commitment that both parties have as it relates to this project and our collective confidence that both parties can complete the CPs that are included in the documents, which I would characterize as very customary CPs for a deal like this.

And then when you look at the CRA, the cost reimbursement agreement, that just adds a whole another level of confidence in moving this project forward. QTS could be on the hook for material dollars, which they would not have signed that CRA if they weren't confident in the overall project. And then, of course, QTS just has an excellent track record, right? They're among the largest data center developers globally. And certainly, based on our experience with them, we think they consistently develop data centers the right way.

We've talked a lot about what it means to do this stuff the right way and they do, including the way they engage effectively with the local communities. In fact, there's a lot in PA that references, in particular, this Salem Township project as the right way to do data center development. So given the extensiveness of the negotiations and then the confidence that all the parties have in moving the project forward, we didn't see a need to wait to get to the formal ESSA for an announcement.

Operator

The next question comes from Michael Lonegan of Barclays.

Michael Lonegan

So you said the data center agreement has a utility risk profile. Just anything you could say about the returns you're expecting on this project? And also whether this is a Phase 1, if there's an expansion opportunity. I know you said you expected one or more data center announcements by year-end. That was your expectation that you laid out last quarter. Are we still looking at that or sometime in 2027?

Vincent Sorgi

Sure. So there's a few different questions there. We're not going to get into disclosing the specific returns as you would expect for competitive reasons, Mike, but I can tell you, right, for Invitium overall and in particular, with this project, we've targeted attractive risk-adjusted returns. They're higher than utility returns, lower than pure IPP returns given the contracted nature. But we feel very confident that the return profile in this contract is commensurate with the risk profile that we're taking.

In terms of -- I think your second question was, is this Phase 1 or could there be more? I would say the agreements that we announced today really cover QTS' current vision for the Salem Township site. I mean we can't comment whether or not that they're considering upsizing the project or not. And if so, whether that would result in additional generation needs from Invitium. Having said that, I would say our relationship continues to strengthen with QTS. So to the extent that they develop additional data center projects in PA, whether at this site or different sites, I would fully expect that Invitium will have the opportunity to supply the needed generation. Again, not saying there's a guarantee, but certainly, I would expect the opportunity to be part of that discussion. And then was there a third point?

Michael Lonegan

Sorry, you said -- I think previously, you said you expected one or more announcements by year-end. Is that still the expectation?

Vincent Sorgi

Yes. So as I said, we are in active discussions with multiple counterparties. So it's certainly possible that we could have another announcement by year-end, but really not putting a time line on it. This announcement was one of the ones we were contemplating when I made that remark on the second quarter.

Michael Lonegan

And then the capital investment opportunity excludes the bridge solutions, the fuel cells and storage. Just wondering if you could help us understand the investment opportunity set there.

Vincent Sorgi

Yes. So there's a couple of pieces to this, right? The broader $6 billion to $9 billion that we're talking about, the upside opportunity from Invitium overall, let's separate that from the QTS announcement, right? That just has the 5 gigawatts of executed CCGTs at $2,500 to $3,500 per kW. The $2.5 billion to $3.5 billion that we're talking about related -- our share related to Invitium includes all 3 technologies. So the CCGTs and then some mix of batteries and fuel cells. And that mix continues to be finalized in terms of how much would be batteries and how much would be fuel cells. But I think it's safe to say it will be a combination of those 2 in addition to the 2 CCGTs, and that's in the $2.5 billion to $3.5 billion.

Operator

The next question comes from Jeremy Tonet of JPMorgan.

Diana Niles

This is Diana Niles on the call for Jeremy. So for the Invitium LOI looking forward, how should we think about the cash flow assumptions under the current payment structure? And are there -- if you can think about how we should think about implications for financing not incorporated in today's plan?

Joe Bergstein

Yes. So from a financing perspective, as we've talked about, at least during the construction phase, we would expect to use construction period structures that are typical for deals like this that will largely be off balance sheet, and we'll determine the precise financing structure for when the units come online as we move through the full contracting terms and have broader discussions with the rating agencies now that we have a deal to talk to. So I think more to come on the financing front.

Vincent Sorgi

And then just the cash flow. So maybe talk about the delta between, right, this and, say, a regulated, I think you forgot.

Joe Bergstein

Sure. So sorry, on the cash flow and financial structure of this, yes, I mean, it is different than a regulated utility. And so I would say rate-based math doesn't necessarily work for deals like this. The economics are dependent on each of the projects contractual terms, structure, timing of the financing and really the escalation of the fixed payment. And so while it is a regulated like risk profile, it's not a utility subject to utility accounting. So as I said, rate base math doesn't really work here.

And as you know, a traditional utility when an asset is placed in service, that's when it has its highest value and earnings and it declines from there. Given the escalation clause in the contract that we have here, it's effectively the opposite of that where revenues, earnings and cash flows grow throughout the contract term. We'll ultimately give you all of the financial -- relevant financial guidance at the appropriate time once these elements are finalized. So I would just think about from your cash flow perspective that those will grow as we move through the contract period.

Diana Niles

Got it. And am I mistaken that in the prior quarter, there was maybe some upside from solar for Kentucky generation. If I didn't see it in the slides today, is that just the nature of shifting preference and resources? Or does that still represent upside, if I'm not mistaken?

Vincent Sorgi

Yes. We'll continue to assess solar in Kentucky. We are running an RFP for that as we contemplate our next CPCN filing. As you know, solar is more of an energy resource as opposed to resources that are bringing energy and capacity. Of course, we do have the battery strategy there that we can marry up with solar. So we are looking at that in real time, Diana. So I appreciate the comment. I would say if we went that route, that could potentially be upside. But again, we view that as an energy-only product and would look at it as such in the CPCN process.

Operator

The next question comes from Julien Dumoulin-Smith of Jefferies.

Julien Dumoulin-Smith

Nicely done. Got to hand it to you guys. Maybe just -- Vince maybe just a -- and Joe, just to follow up on that last question actually to pick up on it. Can you talk about the profile of earnings and cash flow potentially on the earlier side of this contract in as much as -- as you say, it's not tethered to rate base math. And so conceptually, you could be receiving earnings ahead of in-service these assets. And then maybe if I can layer into that as well, you made allusion in the slide to sort of fuel cell, BESS kind of maybe an interim solution. And I'm not sure that the profile of what that earnings could look like in as much as that could come online as early as '29. So that could boost your -- it's not just the 9%-plus but the timing of when you accelerate your earnings here is critically important, too.

Joe Bergstein

Yes. Sure, Julien. So well, I wouldn't expect any earnings before the units come online. That's not what I was -- or cash flows, that's not what I was suggesting there. But as you think about the bridge solutions that we outlined today, I would say that it's possible that they could provide accretion in the back part of the plan. We still have to finalize some details around those. But really, as we've been saying, that would not be material as the material accretion and value comes really from the CCGTs coming online.

Julien Dumoulin-Smith

Yes. Okay. Duly noted and very much hear that. If I can needle you a little bit further on that, the scope of expansion, maybe one subcomponent here would be, how do you think about that Salem site here? I mean, can it actually accommodate more? I mean 2 gigawatts seems fairly large to begin with. Any thoughts about that? And then separately, the expansion piece, the extent to which Invitium Energy, et cetera. How do you think about timing on any of that? I don't want to get ahead of myself too much, but just if you can speak to how those conversations are going, et cetera. I mean some of these IRs et cetera, have rolled off here. Where are you in being able to advance a multitude of opportunities?

Vincent Sorgi

Yes. So maybe on the site itself, I don't want to speak for GTS, right? They're in the middle of getting their approvals for this phase of the project. So I would say that's probably a better question for them. But as I responded to the earlier question, right, what we announced today really addresses kind of their initial vision for that Salem site. It is a large site. But again, as I said, they do things the right way and making sure we have adequate setbacks and taking the local community stakeholder engagement and feedback into account as they design their data center campuses and how much they want to put on a given site.

I will say to your -- maybe to the point of your comment, if they were to expand or do more on that site. By the way, they could also do other sites, Julien. They're not locked in just to that Salem site. We stand ready to help serve them in any additional generation needs that they may have, whether it's at this site or a different site.

Julien Dumoulin-Smith

Yes, indeed. And are there any other sites that are active already that one should be -- I suppose are publicly disclosed or whatever, whether it's in Pennsylvania or even Kentucky that maybe?

Vincent Sorgi

You're talking about with QTS?

Julien Dumoulin-Smith

Yes, presumably. I don't know if you were trying to get at something there.

Vincent Sorgi

No, no. I was just saying, given the relationship that we continue to develop and strengthen with QTS that if they look to expand on that Salem site and/or develop a different site, I would expect that we would be engaged in that process. That's all I was referring to.

Operator

The next question comes from Steve Fleishman of Wolfe Research.

Steven Fleishman

So just sorry to harp on the Invitium announcement again. But just terms and conditions with these things kind of tend to matter. So like I know you got the commercial terms, but the other noncommercial terms, like what are some of the things that aren't finalized? And what is the rough timing to have a binding agreement?

Vincent Sorgi

Yes. I mean the vast majority of the terms have been agreed to. I would say Steve, really the extensive nature at which we negotiated the term sheet and the CRA will enable and the teams are now working on what we're calling the long-form ESSA. So all of the -- basically all of the major provisions that will make it into the ESSA have been negotiated in the term sheet. This is a very robust term sheet. It covers financial terms as well as nonfinancial terms to your point, whether that's availability requirements, et cetera. So operating parameters as well. We've negotiated all of that. It's been a very robust and extensive negotiation.

In terms of how quickly we can get to the ESSA, I won't put a specific time frame on it other than that the teams will actively work on that. We're confident that we'll be able to finalize an ESSA with QTS, again, given their track record, the CPs that will kind of carry us to the ESSA and what both parties have to do that and our collective confidence in being able to do that. So no concerns that we'll be able to get to the ESSA. And again, those terms have financial and nonfinancial have been negotiated already.

Steven Fleishman

Okay. And then just as we think about -- let's say, you have the ESSA and you get that full run rate 2032, '33. Are you thinking then you might look to kind of move the growth rate out longer term to capture that kind of like NiSource has done? Or are you going to wait for it to get into your window? Like is finalizing that the kind of -- that when you kind of put it into your growth rate plan?

Joe Bergstein

Yes, I think that's right, Steve. When we finalize all of those terms and have all that nailed down, I think that's when we can provide more of the financial guidance around this and then obviously, extending the forecast horizon so that you know what that means from an impact of overall PPL Corporation.

Vincent Sorgi

Yes, Steve, I would say it's probably more in conjunction with the final notice to proceed, right, the FNTP, which we would need the ESSA signed to get to FNTP, right? But that's where we have the equipment contracts locked down the ESA -- sorry, the EPC contracts locked down. That's where we true up the cost of the project based on those contracts being executed. Obviously, the ESSA being executed is a key step in order to then get the financing, which is all needed to get to FNTP. And that's when we kind of lock everything down, right, and then we're finishing the development and the construction of the project.

Steven Fleishman

Got it. And one other question, sorry, different topic. We just had the elections and I think Pennsylvania Senate went Democrat majority. Just any kind of sense on whether the governor is going to bring back the GRID plan law and just how to think about potential legislation next year?

Vincent Sorgi

Yes. Well, first of all, I'd say I don't really have any concerns in terms of the -- at least on the data center side and the pipeline that we have. I actually think that the national election results could actually support our pipelines that we have both in Pennsylvania and Kentucky. Not just Shapiro, but both of our governors have signed executive orders for developing data centers and doing it the right way, right? And they're actually similar in terms of the requirements of those EOs with having a stakeholder engagement at the local level, right, no harm to power and water customers, et cetera. So neither have put a moratorium on data center development. So I don't see that really coming as a result of the election results.

And I say that because I think both of the EOs really protect our existing customers and the communities, especially when you combine them with the larger tariffs that we have in both states. So I do think some of the election results could in some other states potentially have a chilling impact, which could drive some of those projects or future development projects to both Pennsylvania and Kentucky, where we have pretty significant pipelines and have demonstrated the ability to work those. So at least on that side, no major concerns.

I think on just general legislative agendas, in particular, in PA, which I think is what you were hitting at. Again, we just have a long history of working with both Democrats and Republicans in Pennsylvania. Fully expect that, that will continue following the results. I would expect affordability and energy policy to continue to be important issues here in PA. But I think there's policy and legislative areas that we actually have mutual agreement on.

And we've talked about a lot of ideas, some of which we've expressed on these earnings calls on how we could improve affordability in the state of PA. And we believe that the new legislative session may actually provide a more receptive environment to advance some of those ideas. So again, we're open to working with whoever is in power in our states, and we share a lot of the same goals and look forward to engaging with them to achieve what's in the best interest for our states, our customers and our communities. So no overarching concern, Steve.

Operator

The next question comes from Richard Sunderland of Truist.

Richard Sunderland

Following up on some of those points at the end around affordability, there's a lot in motion on the PJM side. Just curious what you have an eye to right now from kind of progress or lack thereof over the past few months, both from a PPL Electric perspective and then also from a competitive landscape for Invitium perspective.

Vincent Sorgi

Yes. Well, look, I think this announcement today, right, we're putting our money where our mouth is on helping to support the affordability concerns in PJM, and ultimately get generation built not just within PJM, but within Pennsylvania. And so I think that's very positively viewed by our governor, our commission, ultimately, the legislature. So again, I think Invitium fits right in with pushing for more generation to improve that supply-demand dynamic that we've been talking a lot about in PJM.

For PPL Electric, just, again, I think EU has been leading the way on affordability, the affordability agenda in Pennsylvania, again, with the large low tariff. We talked about the CPTR filing, which will just take that another level in bringing additional bill support to our customers. Again, the support of the utility-owned generation in the state to try to balance the supply-demand. So again, I think EU continues to play a leadership role.

We have the PUC working group on ratemaking. I expect we'll have an active role in that. Again, I think we're a trusted source in the state. We've earned that position. I would expect us to play a role in that as well. And in fact, we look forward to doing that. Because, again, I think we share the same goals on bringing a reliable service to our customers, making sure that it's affordable, but at the same time, ensuring that the utilities are financially strong to be able to invest in the grids that deliver all of those services for our customers. So we look forward to bringing all of that to the discussion with the PUC working group.

So again, a broader affordability agenda that we've been focused on has been core to our strategy, not just in PA, but across all of our jurisdictions. I would even throw in the hold harmless settlement, which was a way to help with affordability up in Rhode Island on the heels of the rate case increases. So look forward to engaging in all of our states on affordability discussions because I think we lead in each of our jurisdictions on that topic.

Richard Sunderland

Got it. And then switching gears to Kentucky. The 1.6 gigawatts and $3.5 billion to $4.5 billion upside, are those the numbers to key into with the CPCN filing next quarter? I guess I'm trying to read the tea leaves of the data center and economic development pipeline overall relative to what gets you to that 9% plus side of the EPS growth range?

Vincent Sorgi

Yes. I think it's early to know for sure what we're going to put into that CPCN filing, right? We have 4 gigawatts of load that we talked about that has 50% or higher probability. Actually, the overall probability of those projects is close to 85%. So we'll parse through that to determine how comfortable we are putting some or all of that into the next CPCN. Of course, we'll put some of that. The plan has 2 to 2.5 gigawatts that's 90% or above in that group of projects. So feel very confident about what's in the plan going above and beyond that.

Look, I personally think we're going to be building generation for the foreseeable future in Kentucky, just given what we see with the quarter-over-quarter movement in the pipeline, even within the pipeline projects moving to more mature stages, just knowing what other things we have going on in the state that are not in the 14.7 gigawatts of total pipeline. I just think we're going to be building gen for a long time in Kentucky and with the supply chain constraints and the cost pressures, right, the sooner we lock those prices in and get that generation built, the better our customers will be and the less they will have to pay for those assets.

We saw that with the original CPCN we filed. We didn't get everything approved. The second one was about $1 billion more than the first one. So we want to try to stave that off. Of course, the commission is going to be diligent in their review of all of that, but conservatism is not cost free. And sometimes being overly conservative in regulatory outcomes ends up costing our customers, and we've seen that in the past. And I clearly want to try to stave that off in this next CPCN. So we may end up putting more in there than less, but we're still working on that.

Operator

The next question comes from David Arcaro of Morgan Stanley.

David Arcaro

Most of my questions have been answered. I guess I was just going to ask about the O&M growth trajectory. I mean keeping it at 0.5% through 2030 is very low, very impressive considering the inflationary backdrop. Wondering if you could give color around the confidence level in doing that and any kind of any improvements even from there that you're working on.

Joe Bergstein

Yes. Sure, David, it's Joe. So I mean, look, cost discipline is something that the team here has been focused on for a long time, and it's really become part of how we run the business day-to-day. We've worked hard over the last several years, as you've known, to find efficiencies across the organization. And I think that the effort is showing up in the results. And I would say it's really just that relentless focus to improve operating costs and get more efficient and support customer affordability.

Inflation, as you mentioned, it's certainly a factor that we're mindful of, and we've tried to be realistic about that in our planning. But I think given the path that we're on and the focus that the entire organization has had, the success over the last several years in driving cost out of the business that this approach is sustainable. We'll, of course, continue to balance cost management with reliability and service for our customers.

And beyond the 0.5% that we have in here, I think there's further opportunity, as we mentioned during the prepared remarks, from AI deployment, which we don't have anything materially baked into the plan from that perspective, but I think that's another opportunity and one where we're focused across the organization on how we can use AI to drive better results, get more efficient and work at a lower operating cost.

Vincent Sorgi

Yes. David, I would just add that the grid hardening and grid automation parts of the capital, which are significant in the T&D aspect of the plan, they harden the grid, right, which reduces the amount of customers that go out storm event, less truck rolls, less O&M, et cetera. So the capital plan itself continues to drive O&M out of the business in particular, the grid hardening and automation pieces of it.

Operator

The next question comes from Nicolas Woods of Bank of America.

Nicolas Woods

On the incremental Kentucky generation, you mentioned earnings could begin in 2028. How much of the contribution through 2030 would come from AFUDC versus like the earnings coming into service?

Joe Bergstein

Yes. From an incremental perspective, over the last plan, it would be AFUDC as those units don't come online during the plan period.

Nicolas Woods

Got it. And then my second question is on the Kentucky 9% plus EPS CAGR illustration, does that incorporate any associated financing costs and equity dilution for that plan? And if so, like could you give me a broad sense of what the mix is between cash flow, debt and equity?

Joe Bergstein

Yes, it certainly assumes full financing for those assets in that 9% plus. I mean look, from an overall financing perspective, we would keep our credit metrics in mind as we're doing that and making sure that we stay in that 16% to 18% range. It's traditional utility CapEx, expect roughly to 30% to 40% equity to support capital programs. So I don't really think it would be different. Obviously, we'll have to see ultimately the mix of the units when they come online, when they produce cash flows, but that's generally how I think about it today.

Operator

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

Vincent Sorgi

Great. Thanks for joining us, everybody. Really excited about the update we provided today, including the Invitium announcement with QTS. I think that's the start of, again, a lot of momentum within the Invitium business and looking forward to building on that. And look forward to seeing everybody in a couple of days at the EEI Conference. We'll see you soon.

Operator

The conference has now concluded. Thank you for attending today's presentation, and you may now disconnect.