PPL Q2 2023 Earnings Call Transcript

Participants

Corporate Executives

• Andrew Ludwig, Vice President, Investor Relations
• Vincent Sorgi, President and Chief Executive Officer
• Joseph P. Bergstein, Executive Vice President and Chief Financial Officer

Analysts

• Durgesh Chopra, Evercore ISI
• Paul Zimbardo, Bank of America Co.
• David Arcaro, Morgan Stanley
• Shar Pourreza, Guggenheim Partners
• Gregg Orrill, UBS Group AG
• Anthony Crowdell, Mizuho Securities

Presentation

[Operator]

Good day, and welcome to the PPL Corporation Second Quarter 2023 Earnings Conference Call. [Operator Instructions]

I would now like to turn the conference over to Andy Ludwig, Vice President, Investor Relations. Please go ahead.

[Andrew Ludwig, Vice President, Investor Relations at PPL]

Good morning, everyone, and thank you for joining the PPL Corporation conference call on second quarter 2023 financial results. We've provided slides for this presentation on the Investors section of our website. We'll begin today's call with updates from Vince Sorgi, PPL President and CEO; and Joe Bergstein, Chief Financial Officer. And we'll conclude with a Q&A session following our prepared remarks.

Before we get started, I'll draw your attention to Slide 2 and a brief cautionary statement. Our presentation today contains forward-looking statements about future operating results or other future events. Actual results may differ materially from these forward-looking statements. Please refer to the appendix of this presentation and PPL's SEC filings for a discussion of some of the factors that could cause actual results to differ from the forward-looking statements. We will also refer to non-GAAP measures, including earnings from ongoing operations on this call. For reconciliation to the comparable GAAP measures, please refer to the appendix.

I'll now turn the call over to Vince.

[Vincent Sorgi, President and Chief Executive Officer at PPL]

Thank you, Andy, and good morning, everyone. Welcome to our second quarter investor update. Let's start with our financial results and a few highlights from the quarter on Slide 4. Today, we announced second quarter reported earnings of $0.15 per share. Adjusting for special items, second quarter earnings from ongoing operations were $0.29 per share, compared with $0.30 per share a year ago. Overall, second quarter results were in line with our expectations, apart from the continued mild weather and storm activity in Kentucky and Pennsylvania, as this has been one of the most active storm years we've ever experienced.

Between the mild weather and storm O&M, our year-to-date results were negatively impacted by about $0.09 per share compared to our original plan. But despite these impacts, we remain confident in our ability to deliver on our 2023 ongoing earnings forecast of $1.50 to $1.65 per share, with a midpoint of a $1.58 per share. We have identified several areas in which we can offset the headwinds from weather and storms, and Joe will cover that in detail in his financial review.

As you know, one area we remain extremely focused on is O&M, and we are on track to achieve the $50 million to $60 million targeted reductions this year. And despite the incremental storm expenses, we are tracking slightly ahead of our O&M forecast through June. We expect that trend to continue and improve through the second half of the year.

In addition, today, we reaffirmed our projected earnings per share and dividend growth rates of 6% to 8% through at least 2026 as we remain confident in our low-risk business plan. This will be supported by our $12 billion capital investment plan and targeted O&M savings of at least $175 million by 2026 to advance a reliable, resilient, affordable, and clean energy future.

Turning to a few second quarter operational highlights, we continue to deliver excellent reliability for our customers across our jurisdictions, again, despite the increased storm activity in both Kentucky and Pennsylvania. This is a direct result of our ongoing investments not only in system hardening that prevents outages, but also smart grid technology and automation that enables us to respond more quickly when outages do occur.

On the integration of Rhode Island Energy, we remain well positioned to complete our transition services with National Grid next year. We also continue to make progress on an important filing before the Rhode Island Public Utilities Commission as we seek to deploy Advanced Metering Functionality across our service territory and build a smarter grid that supports the state's leading climate goals. Hearings before the Rhode Island PUC were held in late July to review our business case and cost recovery proposals. We expect a decision on our AMF filing later this fall. We also remain on track with the Kentucky CPCN process, which I'll cover in more detail on the next slide.

Finally, we continue to receive awards for our industry-leading approach in grid innovation, as both the Edison Electric Institute and the Southeastern Electric Exchange recognized PPL Electric Utilities for its groundbreaking use of dynamic line rating technology. PPL Electric is the first utility in the nation to integrate this technology with its transmission management system. DLR sensors provide real-time information that enables us to better utilize our existing transmission line capacity and reduce congestion on the grid. Burke [Phonetic] has also recognized the value that this technology can bring to the industry in better managing congestion on the transmission network.

Turning to Slide 5 and an update on the CPCN process in Kentucky. We remain focused on advancing our generation investment plan as we seek to replace 1,500 megawatts of aging coal generation with an affordable, reliable, and cleaner energy mix by 2028. We remain confident our plan represents the best path forward for our Kentucky customers. As proposed, it would replace several 1970's era coal units, with over 1.200 megawatts of new combined cycle natural gas generation, nearly 1,000 megawatts of solar generation and 125 megawatts of battery storage. In addition, it would establish more than a dozen new energy efficiency programs.

In May, the Kentucky Public Service Commission approved our request to consolidate the CPCN filing and our generation retirement request as required by Senate Bill 4. The Commission approved the consolidation, while keeping the CPCN procedural schedule largely unchanged. Per the schedule, intervenor testimony was filed July 14 with no real surprises. Next up is our rebuttal testimony due August 9, followed by an informal conference scheduled for August 15 to explore a potential settlement. Public hearings are then set to begin August 22 and could last several days. Again, we are very confident that the plan we've proposed is in our customers' and the state's best interest, but we are also open to settlement discussions with the parties to the case. Ultimately, with or without a settlement, we anticipate a decision on our filings from the Commission by November 6.

That concludes my strategic and operational update. I'll now turn the call over to Joe for the financial update.

[Joseph P. Bergstein, Executive Vice President and Chief Financial Officer at PPL]

Thank you, Vince, and good morning, everyone. Let's turn to Slide 7. As Vince mentioned, second quarter earnings from ongoing operations were $0.29 per share compared to $0.30 per share in Q2 2022. Primary drivers of the $0.01 per share decline from last year were lower sales volumes in both Kentucky and Pennsylvania, driven by mild weather and, as expected in our plan, higher interest expense due to increased borrowings at higher interest rates to fund our growth. Those factors were partially offset by lower O&M expense, driven by our continued focus on operating efficiency and improved earnings at the Rhode Island segment from two additional months of results in Q2 2023 compared to the prior year.

Overall, our teams performed well for the quarter and results were slightly ahead of expectations, apart from the mild weather, which impacted results by $0.03 per share compared to our forecast. Degree days were lower by more than 20% in our Kentucky service territory and by over 35% in Pennsylvania. This resulted in lower actual electricity sales volumes of 4% in Kentucky and 8% in Pennsylvania compared to normal.

Turning to the ongoing segment drivers for the quarter on Slide 8, our Pennsylvania Regulated segment results decreased by $0.01 year over year. Results were primarily driven by lower sales volumes and higher interest expense, partially offset by higher transmission revenue and higher distribution rider recovery. Our Kentucky segment results decreased by $0.03 per share year over year. Results were impacted primarily by the lower sales volumes and higher interest expense, partially offset by lower O&M expense. Our Rhode Island segment results increased by $0.02 per share year over year, reflecting the additional two months of earnings this quarter. Finally, results at Corporate and Other increased $0.01 per share compared to the prior year, primarily due to lower O&M expense and other factors that were not individually significant, partially offset by higher interest expense.

Moving to Slide 9, our Q2 performance puts PPL's GAAP earnings at $0.54 per share year to date through June 30. Adjusting for special items recorded through the second quarter, earnings from ongoing operations totaled $0.77 per share for the first half of 2023. The mild weather has unfavorably impacted our year-to-date results by a total of about $0.08 per share compared to our plan due to lower sales volumes. In addition, we have experienced higher storm-related costs of about $0.01 per share compared to our plan so far this year due to the significant storm activity. Importantly, we've been able to more than offset these increased storm costs, and we are tracking favorably to plan on O&M through the second quarter.

And we remain confident in achieving our 2023 earnings forecast as we expect to offset the unfavorable weather and storm impacts due to the projected outperformance in several areas. First, the DSIC mechanism in Pennsylvania is projected to offset the lower sales volumes and higher O&M experienced in that segment. Second, we are tracking favorably on our integration of Rhode Island Energy, which we expect to provide upside compared to our plan. Third, the convertible debt financing that we executed in the first quarter will reduce our annual interest expense relative to our plan. And finally, we continue to optimize our discretionary O&M. This includes contractor and consultant spend and the timing of filling open positions and other discretionary O&M spend. In total, these identified offsets present a clear path to achieving the midpoint of our 2023 earnings forecast of $1.50 per share. We have an excellent track record of achieving our financial targets, which we expect to continue in 2023.

Looking ahead and at our plans to achieve at least $175 million of O&M efficiencies by 2026, we established a Transformation Management Office, or TMO, to ensure we achieve our long-term efficiency objectives. The TMO, which I chair with support from our Chief Operating Officer and our Chief Information Officer and with the engagement from our employees across the entire company, is responsible for tracking our progress on savings initiatives as well as identifying and verifying additional areas of possible savings. To date, we have identified over 100 initiatives with savings potential significantly above our $175 million target. This structure and rigorous process gives us even more confidence that we will achieve the targeted savings assumed in our long-term forecast, and it will help us deliver a more affordable clean energy transition for our customers.

That concludes my prepared remarks. I'll turn the call back over to Vince.

[Vincent Sorgi, President and Chief Executive Officer at PPL]

Thank you, Joe. In closing, we remain confident in achieving our goals for 2023. While mild weather and storms have created some headwinds, we have plans in place to overcome those challenges and deliver on our commitments to share owners. We're also on target to complete more than $2.5 billion in infrastructure improvements to provide safe, reliable, and affordable energy for our customers. Our integration of Rhode Island Energy continues to go smoothly. We continue to progress our regulatory filings in both Kentucky and Rhode Island. And last but not least, we're solidly on track to deliver our targeted O&M savings as we execute our utility of the future playbook, incorporate more technology and automation, and centralize various functions across PPL to deliver better value for customers and share owners alike.

With that, operator, let's open it up for questions.

Questions and Answers

[Operator]

We will now begin the question-and-answer session. [Operator Instructions] The first question today comes from Durgesh Chopra with Evercore ISI. Please go ahead.

[Vincent Sorgi, President and Chief Executive Officer at PPL]

Morning, Durgesh.

[Durgesh Chopra, Analyst at Evercore ISI]

Hey. Good morning, guys. Pretty straight-forward quarter here. I had two housekeeping questions. First, can you quantify what's the AMI ask in Rhode Island? How much investment that is?

[Vincent Sorgi, President and Chief Executive Officer at PPL]

In the $200 million range, Durgesh.

[Durgesh Chopra, Analyst at Evercore ISI]

Got it. And over what time frame?

[Vincent Sorgi, President and Chief Executive Officer at PPL]

To $250 million, somewhere around there. Sorry, say that again.

[Durgesh Chopra, Analyst at Evercore ISI]

Sorry. Thank you. Over what time frame is that, $200 million or $250 million?

[Vincent Sorgi, President and Chief Executive Officer at PPL]

Well, we need to get that approved, right? So we just went through the hearings late last month. We expect to have a decision by the Commission up there in the fall of this year, and then that'll kind of dictate the time frame over which we deploy that capital.

[Durgesh Chopra, Analyst at Evercore ISI]

Would that be incremental to your current capex plan, Vince, or do you have some major to...

[Vincent Sorgi, President and Chief Executive Officer at PPL]

No, that's in the current plan.

[Durgesh Chopra, Analyst at Evercore ISI]

Got it. Okay. And then just in terms offsetting the year-to-date headwinds and weather and storm, I think you mentioned -- in prepared remarks, Joe mentioned, like, integration savings. Can you elaborate on that? How big is that pie? Obviously, it sounds like a lot of opportunities in excess of $175 million, but maybe just, like, what's the upside on the integration and -- on Rhode Island and what might be the other opportunities?

[Joseph P. Bergstein, Executive Vice President and Chief Financial Officer at PPL]

Yeah. So the integration in Rhode Island, Durgesh, is going very well. Really, what we are able -- have been able to do is exit TSAs quicker than we expected and at a lower cost, which is driving a lot of the outperformance we're seeing there. We're also mindful of the pace at which we're hiring some of the open positions we have there as we're fully staffing up that operations and looking to take over completely from grid. And so those are the areas that driving the Rhode Island integration. We would expect that to be about $0.01 to $0.02 for the year.

As far as the progress on the $175 million and the establishment of the TMO, that's going extremely well. As I noted, we have over 100 initiatives totaling more than $175 million. Really, it's driven by significant employee engagement as we're developing plans to implement and achieve the $175 million. The TMO also provides a forum for employees to share their ideas as areas that we could save on O&M and be more efficient across the company. So I don't want to give a dollar amount on that yet at this point as to where we are. We've -- part of the process of that brings a lot of rigor to the savings. We got to vet them all to complete business cases where needed. What I can tell you is that we are confident in achieving the $175 million and potentially more than that. And the development of the TMO really has even enhanced that confidence as we're working through this.

[Durgesh Chopra, Analyst at Evercore ISI]

Got it. Solid, guys. Thanks for the time.

[Vincent Sorgi, President and Chief Executive Officer at PPL]

Thanks, Durgesh.

[Operator]

The next question comes from Paul Zimbardo with Bank of America. Please go ahead.

[Vincent Sorgi, President and Chief Executive Officer at PPL]

Hey, Paul.

[Paul Zimbardo, Analyst at Bank of America]

Hi. Good morning, team. Thanks. And just to follow up on that last question from Durgesh quickly, is the TMO and those savings more about derisking and extending the outlook? Or is that something that could be more incremental in the planning period?

[Joseph P. Bergstein, Executive Vice President and Chief Financial Officer at PPL]

Yeah. So we will have to go through all of those items. I mean, it certainly derisks and gives us confidence in the $175 million through the planning period. Whether those items that are in excess of the $175 million, we'll have to see whether they come into this period for execution, whether they're longer dated items. And look, there's headwinds that we have to offset as well. We still see inflation and interest rates. So we have a bank of ideas and opportunities to execute on should we see those headwinds persist or increase. And then that just gives us confidence in the near term to achieve the $175 million and the 6% to 8% earnings growth and it gives us confidence in the longer term to continue to execute on the strategy.

[Vincent Sorgi, President and Chief Executive Officer at PPL]

Yeah. I would reiterate that, Paul. I think it gives us both, right? It certainly shores up the confidence in the $175 million, but likely gives us upside potential looking beyond that.

[Paul Zimbardo, Analyst at Bank of America]

Okay. Great. Thank you. Very clear. And then switching topics, I noticed the weather-normalized sales volumes were decently down in the quarter and now trailing 12 months, both Pennsylvania, Kentucky. Just could you give any color on what you're seeing on the ground and just expectations for the second half of the year?

[Joseph P. Bergstein, Executive Vice President and Chief Financial Officer at PPL]

Yeah. Sure. So well, from a second half of the year, we would expect we have in our forecast normal weather. From our longer-term forecast, we continue [Technical Issues] 50 basis points of sale of load growth in our plans in total, and we continue to believe that that's an achievable growth forecast. Some of the near-term impact that we're seeing, particularly on the residential side, has been due to energy conservation with the rising commodity prices.

I would expect that to be a shorter-term anomaly given that we've seen a significant decline in commodity prices already this year. And we would expect longer term to see growth in residential usage as electric vehicles and electrification becomes more prevalent. Lower industrial sales in Kentucky have not really impacted our margins. Those customers more are demand driven than usage.

As we think about longer term, there's a number of factors that give us confidence in our assumptions. We can continue to see positive economic factors in Pennsylvania and Kentucky, including continued low unemployment rates and strong GDP growth. As we've discussed numerous times in Kentucky, we're coming off of back-to-back record years of economic development of over $10 billion of announced investments in each of '21 and '22. That includes the Ford EV battery plant initiative, which we've talked a lot about. That's broking ground and well under construction.

The state's targeting another $8 billion of investment for 2023. So when we look at the 10 years prior to this period, from 2010 to 2020, there was an average of about $4 billion per year in economic development. So to see $10 billion in each in '21 and '22 and projecting $8 billion this year highlights that Kentucky is a great place to do business and continued economic development there in support of our growth assumptions, but we continue to see strong industrial growth in manufacturing and agricultural sectors as well.

[Vincent Sorgi, President and Chief Executive Officer at PPL]

Yeah. We're not concerned with volumes at all other than the impact on weather. I would say our volume story is really weather driven.

[Paul Zimbardo, Analyst at Bank of America]

Okay. Great. Thanks for the detailed answer. Appreciate it.

[Joseph P. Bergstein, Executive Vice President and Chief Financial Officer at PPL]

Sure.

[Operator]

The next question comes from David Arcaro with Morgan Stanley. Please go ahead.

[Vincent Sorgi, President and Chief Executive Officer at PPL]

Hey, Dave.

[David Arcaro, Analyst at Morgan Stanley]

Hey. Good morning.

[Vincent Sorgi, President and Chief Executive Officer at PPL]

Morning.

[David Arcaro, Analyst at Morgan Stanley]

Hey. Morning. Thanks for taking my questions. Let's see, I think just one here. I was curious, we're starting to see some easing of supply chain pressures in the solar industry, commodity costs coming down, module prices declining somewhat and PPA prices easing. I was just wondering if you think that could impact at all the outlook for your Kentucky, just the generation mix maybe longer term or other opportunities to see lower PPA prices or lower costs in the current CPCN filing, or if your thinking and analysis has evolved at all for the longer-term generation mix there.

[Vincent Sorgi, President and Chief Executive Officer at PPL]

Yeah. Look, I think the bigger issue in getting our solar deployed in Kentucky is more siding and permitting days as opposed to necessarily the supply chain issues. Although you're right, they have been an issue across the industry and that is starting to abate. In our case, though, I think it is more siding and permitting, which I think the company-owned solutions make that much easier, because we can navigate that easier than third-party developers have been able to so far. So as you know, our CPCN has a combination of company owned and PPAs in it. We'll continue to look at the executability of those PPAs. And if we continue to see issues there, that could actually push us more to recommending more company owned where we have a higher degree of confidence that we can get them built.

[David Arcaro, Analyst at Morgan Stanley]

Okay. Got you. That's helpful color. I didn't appreciate that in the backdrop there. That's all I had. Thanks.

[Vincent Sorgi, President and Chief Executive Officer at PPL]

Welcome.

[Operator]

The next question comes from Shar Pourreza with Guggenheim Partners. Please go ahead.

[Vincent Sorgi, President and Chief Executive Officer at PPL]

Hey, Shar.

[Shar Pourreza, Analyst at Guggenheim Partners]

Hey. Good morning, guys.

[Vincent Sorgi, President and Chief Executive Officer at PPL]

Morning.

[Joseph P. Bergstein, Executive Vice President and Chief Financial Officer at PPL]

Good morning.

[Shar Pourreza, Analyst at Guggenheim Partners]

So Vince, I just want to -- starting with the Kentucky CPCN filing, I mean, obviously, thanks for the incremental color and the preparedness on the timeline. As we look ahead to the prospects for settlement, you mentioned August 15 formal conference. I guess, what could that look like? Is it partial? Maybe the gas, but not the renewables. Just any additional color on how to think about that would be great.

[Vincent Sorgi, President and Chief Executive Officer at PPL]

Well, look, I think you can appreciate, I don't necessarily want to get into negotiating positions at this point on the call, but what I'll say just around the process Itself is we're actively engaged right now with various intervenors. As you mentioned, the settlement conference is scheduled for the 15th. If that goes well and we can get settlement on at least significant issues in the case with enough parties, then we may be able to present a stipulation to the PSE for their consideration.

As you know, the hearings are scheduled to begin on the 22 August. That could become a forum for the PSE to take up the settlement agreement if we're able to reach one. But at this point, I'd say, Shar, it's too early to tell if we'll be able to reach a settlement. But if we don't, of course, we're ready to defend the plan as filed as we've been Indicating all along. So a little early at this point to tell if we can get there. But certainly, we're open to those discussions.

[Shar Pourreza, Analyst at Guggenheim Partners]

So let me just drill down a little bit on the defending side. In any off-chance, there are issues with the CPCN, right? I guess, Vince, do you have avenues either through pollution control or GMV work to offset that space in your capex plan, I guess, in a scenario where there's issues? And then do me a favor, could you just maybe frame what -- how much of that capex you could see being backfilled, right, in that worst case scenario?

[Vincent Sorgi, President and Chief Executive Officer at PPL]

Well, look, I think the key takeaway is I'm not sure I would expect whether we have a settlement or fully litigating our case that that would have a material impact on either our capital plan or our EPS targets, given the different buckets of capex, whether it's building replacement generation or environmental spend or other types of capex that we might deploy in Kentucky and elsewhere across the fleet.

If you look at the testimony and based on everything that's been filed to date, I don't think the outcome, Shar, is going to be an all or nothing on the coal plant retirement. But when you look at the Good Neighbor plan, which was consistent with what we were assuming in the CPCN, that would require SCRs on Ghent 2, Mill Creek 1, Mill Creek 2. also, a new cooling tower at Mill Creek 1. When you look at the MAPS Regs and the ELG Regulations, especially the ELG Regs, that could result in significant Incremental investments if we were required to do so.

So even if it was a full rejection of the retirements, which, again, I don't think that'll be the outcome, as we've talked in the past, that's in the $500 million to $1.5 billion of environmental capex. That doesn't even include the amount of maintenance capital we'd have to spend on those plants going forward. So again, I'm not sure the outcome necessarily impacts the capex and EPS trajectory. It might just be different buckets where we're spending that capital.

[Shar Pourreza, Analyst at Guggenheim Partners]

And then just, lastly, that bucket that you're going to be spending that capital. This is obviously the worst case scenario. So no one's really assuming this. But in the case that it does turn out to be negative, that incremental capital doesn't have a timing lag, right? So you can go ahead and recognize it fairly immediately where we wouldn't see divots in your earnings growth in the near term.

[Vincent Sorgi, President and Chief Executive Officer at PPL]

Some of that capex would have -- we would have to start spending that right away to continue to operate those plants. And that -- to your point, that would be recoverable under the environmental cost recovery, which does not require a base rate case for recovery.

[Shar Pourreza, Analyst at Guggenheim Partners]

Okay. Perfect. Thank you, guys. Have a great weekend. Appreciate it.

[Vincent Sorgi, President and Chief Executive Officer at PPL]

Great. Thanks.

[Operator]

The next question comes from Gregg Orrill with UBS. Please go ahead.

[Vincent Sorgi, President and Chief Executive Officer at PPL]

Hey, Gregg.

[Gregg Orrill, Analyst at UBS Group]

Hey. Thanks. This may be repetitive. I know you said that the testimony from intervenors was kind of in line with expectations. Did you learn anything about their positions that was incremental to the process or the process itself that you're willing to share?

[Vincent Sorgi, President and Chief Executive Officer at PPL]

Not really, Gregg. I would say the testimony was as expected. I think we talked about expected intervenor positions when we rolled out the plan that we filed. So we knew the coal association would be against retiring coal. We knew the environmental intervenors would be pushing more renewables. Again, our plan, we think, balances all of those interests. But more importantly, it complies with SB 4. It complies with our obligations to serve least cost, reliable safe energy. It is increasingly cleaner, which we're hearing a lot from our customers and from our two major cities in Louisville and Lexington.

So we were extremely thoughtful and took a lot of actually intervenor input from the IRP process into coming up with what we proposed. As I talked about, however, we are willing to engage in settlement discussions with the parties, and we'll see if we can reach something here in the next couple of weeks, going into the hearings beginning on the 22nd. So I would say as expected, and we incorporated most, if not all, of that into the original plan that we filed with the Commission.

[Gregg Orrill, Analyst at UBS Group]

All right. Thanks.

[Operator]

[Operator Instructions] The next question comes from Anthony Crowdell with Mizuho. Please go ahead.

[Anthony Crowdell, Analyst at Mizuho Securities]

Good morning, Vince. Good morning, Joe. Just...

[Vincent Sorgi, President and Chief Executive Officer at PPL]

Morning, Anthony.

[Joseph P. Bergstein, Executive Vice President and Chief Financial Officer at PPL]

Morning.

[Anthony Crowdell, Analyst at Mizuho Securities]

I just wanted to follow up on Shar's question, just one, and I'm not sure you could answer it. Do you know if the Commission in Kentucky would prefer the parties reach a settlement or given maybe with the closure of plants or whatever that they're more biased or they prefer a fully litigated track to have maybe a stronger record?

[Vincent Sorgi, President and Chief Executive Officer at PPL]

I don't know that they have a preference one way or the other, Anthony, to be honest with you. They're going to uphold their obligation to ensure whether it's a settlement or our case that it meets the requirements of SB 4 and, again, our obligation to serve in a least cost, reliable way. So they're going to do their duty regardless of what's in front of them, whether it's a settlement or our case. Not sure if they have a preference on which one is in front of them. I mean, they'll take a settlement as evidence in the case. They don't have to approve the settlement, but they will certainly take it as evidence in the case. The authority really lies with them in terms of whether or not to accept that or not.

[Anthony Crowdell, Analyst at Mizuho Securities]

Great. And then just lastly, I believe the company has been successful in reaching settlements in the past in Kentucky. Has -- just my memory is getting a little foggy. I believe the Commission has approved those settlements and not modified them. Is that accurate?

[Vincent Sorgi, President and Chief Executive Officer at PPL]

So you're right. Generally, we have been able to reach settlement with the parties to our cases. The Commission has modified them slightly in the past. Nothing too material. At times, they've accepted them as filed, and other times they've modified them, I would say, slightly.

[Anthony Crowdell, Analyst at Mizuho Securities]

Great. Thanks for taking my questions. Appreciate it.

[Vincent Sorgi, President and Chief Executive Officer at PPL]

Thanks, Anthony. [Phonetic]

[Operator]

This concludes our question-and-answer session. I would like to turn the conference back over to Vince Sorgi for any closing remarks.

[Vincent Sorgi, President and Chief Executive Officer at PPL]

Just want to say thanks for joining us on the call. Feeling good about our progress so far, year to date. Looking forward to the second half of the year. And have a great weekend, everyone, and we'll see you soon at the next conference.

[Operator]

[Operator Closing Remarks]