KENTUCKY UTILITIES CO

Regulatory Requirements

The Registrants cannot predict the impact that future regulatory requirements may have on their financial condition or results of operations.

Rate Case Proceedings

Rhode Island 2025 (PPL)

On November 26, 2025, RIE filed a request with the RIPUC for an increase in electric and natural gas base distribution rates, and approval of certain regulatory and accounting treatments. In its application, RIE sought to implement a two-year rate plan. As submitted in the initial application, in the first year of the rate plan RIE's proposed base distribution rates for electric and gas service were designed to collect additional annual operating revenue of approximately $181 million ($66 million in electricity revenues and $115 million in gas revenues). In the second year of the rate plan, RIE's proposed base distribution rates for electric and gas combined were designed to collect the proposed base distribution rate increases for electric and gas in the first year of the rate plan and additional operating revenues of approximately $49 million ($17 million in electricity revenues and $32 million in gas revenues). The application was based on a historical test year of September 1, 2024 through August 31, 2025 and requested an authorized ROE of 10.75%. The amounts in the initial submission were evaluated after the Hold Harmless Commitment (as defined below) and potential bill credits were consolidated with the base distribution rate proceeding, as discussed below.

On August 21, 2026, the RIPUC approved oral motions in the proceeding. The RIPUC approved certain aspects of RIE's proposals and modified or rejected others. The RIPUC decisions authorized annual revenue increases of $44 million for electric and $94 million for gas, a return on equity of 9.275%, and a debt-to-equity ratio of 48% debt to 52% equity. The RIPUC did not approve a proposed second rate year.

The RIPUC decisions also addressed certain issues regarding the recovery and accounting treatment of certain expenses, directed RIE to propose new performance metrics for certain investments and directed RIE to file a new tariff for extra-large electric loads by December 31, 2026. The RIPUC also approved or accepted several settlement agreements with intervening parties.

In response to the motions, RIE submitted the required compliance filing on August 27, 2026. The approved rate changes were effective as of September 1, 2026. RIE has not received a final written order from the RIPUC as of the filing date of this Form 10-Q. RIE and all intervening parties have the right to appeal once the final written order is issued. RIE will evaluate the details of the written order and related matters, including potential next steps. PPL cannot predict the ultimate outcome of this matter.

Pennsylvania 2025 (PPL and PPL Electric)

On September 30, 2025, PPL Electric filed a request with the PAPUC for an increase in distribution base rates of approximately $356 million, more than $50 million of which is already included in customer bills through rate recovery mechanisms, and approval of certain regulatory and accounting treatments. The proposed increase in distribution base rates would have increased PPL Electric's total annual revenue by approximately 8.6%. The application was based on a fully projected future test year of July 1, 2026 through June 30, 2027 and requested an authorized ROE of 11.3%.

On March 5, 2026, PPL Electric reached a non‑unanimous settlement in principle (the settlement) in its distribution rate case. On March 13, 2026, PPL Electric submitted a joint petition with the PAPUC reflecting the settlement to resolve all issues in PPL Electric's base rate proceeding.

The settlement proposed an annual electric base distribution revenue increase of approximately $275 million and does not stipulate a return on equity or capital structure. As part of the settlement, PPL Electric will not increase distribution base rates for two years from the effective date of the new rates. Additionally, the settlement:

•provides for DSIC eligible capital investment (and associated depreciation and tax effects) to be rolled into base rates, and for the DSIC to be reset to zero, capped at 5.0% of annual distribution revenues, upon implementation of new base rates.

•sets the expense from reportable storms recovered through base rates for the Storm Damage Expense Rider (SDER) at $32 million annually beginning July 1, 2026. To the extent eligible reportable storm expenses are above or below this level, over or under collections would be addressed through the SDER during the applicable recovery period.

•supports capitalization of Information Technology (IT) upgrades for planned system implementations and infrastructure costs for shared IT platforms. The total projected cost of these projects is expected to be $54 million, inclusive of AFUDC, through June 30, 2027.

•supports adoption of a new tariff schedule governing service to certain large load customers (including data centers). This new rate class would provide $11 million in support for PPL Electric's residential low-income program.

•provides for enhancements to Customer Assistance Program processes and customer notifications, an increase to the Low-Income Usage Reduction Program annual budget beginning January 1, 2027 of $1.5 million (to a total of $13.5 million) with a rollover mechanism for unspent amounts, and a waiver of reconnection fees for low-income customers beginning July 1, 2027.

The settlement also contains agreed positions regarding certain other tariff, rate, regulatory accounting and other issues raised in the proceedings, as well as recommending approval of all remaining matters as requested by PPL Electric's rate request.

On June 11, 2026, the PAPUC entered its order approving the settlement with a minor modification related to net metering eligibility. None of the parties to the settlement objected to the PAPUC's minor modification to the settlement terms and new rates became effective on July 1, 2026. On June 26, 2026, the Customer-Generator Coalition filed a Petition for Reconsideration of the June 11, 2026 PAPUC Order, and PPL Electric filed its Answer on July 6, 2026. The PAPUC entered an Order denying the Customer-Generator Coalition’s Petition on August 27, 2026. One member of the Customer-Generator Coalition, Aspen Power Partners, LLC, filed a Petition for Review with the Pennsylvania Commonwealth Court on September 25, 2026, appealing the PAPUC’s August 27, 2026 Order. Aspen Power Partners’ appeal is limited to a net metering eligibility issue, and PPL Electric does not anticipate that the outcome of the Commonwealth Court appeal will have any effect on the rates approved by the PAPUC.

Kentucky 2025 (PPL, LG&E and KU)

On February 16, 2026, the KPSC issued orders approving portions of LG&E's and KU's October 2025 stipulation and recommendation, with modifications. See "Regulatory Matters – Kentucky Activities – Rate Case Proceedings" in Note 7 in PPL's, LG&E's and KU's 2025 Form 10-K for additional information on the filings made by LG&E and KU with the KPSC in 2025.

The KPSC orders provide for increases in annual electricity and gas revenues of $233 million ($59 million and $128 million in electricity revenues at LG&E and KU and $46 million in gas revenues at LG&E.) The orders included authorized returns on equity of 9.775% for base rate purposes and 9.675% for capital rate adjustment mechanisms.

The KPSC orders approved LG&E's and KU's requests for establishment of certain new rate adjustment mechanisms or tariffs, with modifications:

• a temporary Pilot Generation Recovery Adjustment Clause (PGR) to provide recovery of and return on investment of applicable costs of certain new generation and storage assets being built or anticipated to be built by LG&E and KU as authorized in the 2022 CPCN proceeding;

• the inclusion in the PGR of recovery of and return on investment of certain costs associated with a potential extension of the operating life of LG&E's Mill Creek Unit 2 beyond its original 2027 retirement date; and

• an Extremely High Load Factor Tariff for future applicable customers, such as data centers, which includes requirements such as long-term contracts, minimum revenue payments and collateral security structures that help protect the interests of LG&E, KU and of other ratepayers.

The PGR mechanism is similar to the Generation Cost Recovery Adjustment Clause proposed in the stipulation, but restructured by the KPSC to be a pilot adjustment mechanism with a term until the earlier of ten months following the submission of LG&E's and KU's next base rate proceeding or the effective date of new rates in such proceeding, with the expectation that the mechanism would be reviewed in such proceeding. The pilot mechanism will apply to the planned Mill Creek Unit 5, Brown Battery Energy Storage System, Mercer County Solar and Marion County Solar generation-related projects. The KPSC also included Mill Creek Unit 2's potential stay-open costs in the PGR in lieu of approving the stipulation's request for a stand-alone adjustment mechanism for such costs. Finally, the KPSC excluded from coverage under the PGR costs related to Mill Creek Unit 6 and Brown Unit 12 planned new generation assets due to their anticipated in-service dates falling outside of the estimated pilot mechanism's duration, but without prejudice to LG&E and KU seeking recovery of such costs in future proceedings.

The KPSC orders also approved, approved with modifications, or denied in some cases, other requested accounting and rate matters relating to regulatory assets or liabilities, depreciation rates, and other areas.

The rate changes have a retroactive effective date as of January 1, 2026. LG&E and KU applied refunds to customer accounts for amounts billed in excess of the rates approved by the KPSC.

The KPSC orders did not approve the Sharing Mechanism Adjustment Clause that had been requested in the stipulation and made no modifications to the stay out offer by LG&E and KU to refrain from effective base rate increases prior to August 2028.

On March 11, 2026, LG&E and KU filed a request for rehearing on several issues contained in the orders from the KPSC along with a Notice of their Withdrawal from the stipulation. On March 27, 2026, the KPSC issued orders correcting tariff appendices, denying two intervenor rehearing requests, and reopening the dockets to consider LG&E's and KU's request for rehearing. Following two rounds of additional discovery and the filing of briefs by the parties, on June 20, 2026, the case was submitted for a decision on the record by the KPSC.

On August 14, 2026, the KPSC issued an order relating to LG&E's and KU's requests for rehearing of the KPSC's February 2026 orders granting certain increases in annual electricity and gas revenues and associated accounting and other matters. The KPSC order approved certain elements of the rehearing requests, including matters relating to incorporating regulatory assets and liabilities in rate base calculations and recovery therein, utilizing updated cost estimates in a potential recovery cap in the PGR mechanism, and allowing pre-2026 costs to be included in a regulatory asset relating to LG&E's stay-open costs regarding Mill Creek Unit 2.

The KPSC order denied other elements of the rehearing requests, including seeking reinstatement of certain other aspects of a prior October 2025 stipulation and recommendation of LG&E and KU and certain intervenors in the rate increase proceedings.

LG&E and KU estimate that the KPSC order represents increases of approximately $4 million in annual LG&E electricity and gas revenues and approximately $3 million in annual KU electricity revenues, above the increased amounts contained in the KPSC's February 2026 order. The revised rates are effective for services rendered on and after the date of the order.

Virginia 2026 (PPL and KU)

On April 30, 2026, KU filed a request with the VSCC for an increase in Virginia annual base electricity rates of approximately $19 million. KU's request is based on an authorized 10.95% ROE. On October 1, 2026, the VSCC's staff filed testimony recommending a revenue increase of approximately $12 million based on a 9.80% ROE. Subject to regulatory review and approval, new rates would become effective February 1, 2027. A public hearing is scheduled to commence on November 12, 2026. PPL and KU cannot predict the outcome of this matter.

Potential Legal Merger of LG&E and KU

Pursuant to prior orders of the KPSC, the LG&E and KU rate case application included an assessment of a potential legal merger of LG&E and KU and concluded a legal merger may be appropriate. On December 30, 2025, LG&E and KU filed a joint update in the rate case proceedings stating that they expected to file necessary applications for merger approval in mid-2026 with the KPSC. On March 31, 2026, LG&E and KU filed an application with the KPSC for approval of the merger and associated accounting, financing and rate mechanism matters. On April 17, 2026, LG&E and KU filed an application with the VSCC for approval of the merger and certain associated matters. On May 29, 2026, LG&E and KU filed a related application with the VSCC for approval of financing and affiliate transactions in connection with the proposed merger. On July 2, 2026, LG&E and KU reached a proposed settlement agreement with the majority of the intervenors in the KPSC proceeding and filed a stipulation and recommendation with the KPSC recommending approval of the merger by the KPSC and including certain LG&E and KU commitments regarding merged LG&E and KU rate transition plans and deferred regulatory asset and liability accounting and rate treatment regarding relevant merger costs and savings and depreciation changes. On July 9, 2026, LG&E and KU filed a Section 203 application with the FERC for approval of the merger.

On August 31, 2026, the VSCC issued an order authorizing the financing and affiliate transaction matters relating to the merger. On September 18, 2026, the FERC issued an order authorizing the merger. On September 23, 2026, the FCC consented to the merger transaction. On September 25, 2026, the KPSC issued an order authorizing the merger and related matters, with certain modifications to the proposed settlement agreement and associated accounting, financing and rate matters. On October 22, 2026, the VSCC issued an order authorizing the merger. The merger remains subject to approvals by internal boards and the sole shareholder of both companies, and the entry by LG&E and KU into the operative merger transactional agreements.

The proposed merger structure contemplates LG&E as the successor legal entity which would, by operation of law, retain and assume, respectively, all the assets, properties and rights, and liabilities, duties and obligations of LG&E and KU. The targeted effective date is January 1, 2027.

PPL, LG&E and KU cannot predict the outcome of this matter.

Environmental Considerations for Coal-Fired Generation

The businesses of LG&E and KU are subject to extensive federal, state and local environmental laws, rules and regulations, including those pertaining to CCRs, GHG, and ELGs. See Notes 6, 10 and 15 to the Financial Statements for a discussion ofthese significant environmental matters. These and other environmental requirements led PPL, LG&E and KU to retire approximately 1,500 MW of coal-fired generating plants in Kentucky since 2010. As part of the long-term generation planning process, LG&E and KU evaluate a range of factors including the impact of potential stricter environmental regulations, fuel price scenarios, the cost of replacement generation, continued operations and major maintenance costs and the risk of major equipment failures in determining when to retire generation assets.

As a result of environmental requirements and aging infrastructure, LG&E has sought and obtained approval to retire two older coal-fired units at the Mill Creek Plant. Mill Creek Unit 1, with 300 MW of capacity, was retired in 2024. Mill Creek Unit 2, with 297 MW of capacity, was approved to be retired in 2027, subject to certain conditions. On October 28, 2025, in LG&E and KU's 2025 CPCN proceeding, the KPSC declined to rule on a request to extend the operation of Mill Creek Unit 2. The KPSC indicated that a request for a new retirement approval proceeding may be required should LG&E elect to operate Mill Creek Unit 2 beyond its existing approved retirement date and seek to later retire the unit. See "Kentucky Activities -Rate Case Proceedings" in Note 6 to the Financial Statements for additional information.

FERC Transmission Rate Filing

In 2018, LG&E and KU applied to the FERC requesting elimination of certain on-going waivers and credits to a sub-set of transmission customers relating to the 1998 merger of LG&E's and KU's parent entities and the 2006 withdrawal of LG&E and KU from the Midcontinent Independent System Operator, Inc. (MISO), a regional transmission operator and energy market. The application sought termination of LG&E's and KU's commitment to provide certain Kentucky municipalities mitigation for certain horizontal market power concerns arising out of the 1998 LG&E and KU merger and 2006 MISO withdrawal. The amounts at issue are generally waivers or credits granted to a limited number of Kentucky municipalities for either certain LG&E and KU or MISO transmission charges incurred for transmission service received. In 2019, the FERC granted LG&E's and KU's request to remove the ongoing credits, conditioned upon the implementation by LG&E and KU of a transition mechanism for certain existing power supply arrangements, which was subsequently filed, modified, and approved by the FERC in 2020 and 2021. In 2020, LG&E and KU and other parties filed appeals with the U.S. Court of Appeals - D.C. Circuit (D.C. Circuit Court of Appeals) regarding the FERC's orders on the elimination of the mitigation and required transition mechanism. In August 2022, the D.C. Circuit Court of Appeals issued an order remanding the proceedings back to the FERC. On May 18, 2023, the FERC issued an order on remand reversing its 2019 decision and requiring LG&E and KU to refund credits previously withheld, including under such transition mechanism. LG&E and KU filed a petition for review of the FERC's May 18, 2023 order with the D.C. Circuit Court of Appeals and provided refunds in accordance with the FERC order on December 1, 2023. The FERC issued an order on LG&E's and KU's compliance filing on November 16, 2023, and LG&E and KU filed a petition for review of this November 16, 2023 order on February 14, 2024. The FERC issued the substantive order on rehearing on March 21, 2024, reaffirming its prior decision. On August 8, 2025, the D.C. Circuit Court of Appeals issued a procedural ruling vacating the FERC's prior orders and remanded the matter back to the FERC for further proceedings, which are underway. In May 2026, the FERC issued an order declaring the transition mechanism agreements effective, subject to refund, and set the proceedings for hearing suspended for settlement. LG&E and KU cannot predict the ultimate outcome of the proceedings or any other post decision process but do not expect the annual impact to have a material effect on their operations or financial condition. LG&E and KU currently receive recovery of certain waivers and credits primarily through existing base rate levels.

(PPL)

Joint Venture Agreement with Blackstone Infrastructure

PPL and affiliates of Blackstone Infrastructure Advisors L.L.C. (Blackstone Infrastructure) have formed a joint venture, Invitium Energy, LLC (Invitium), to build, own and operate new electricity generation stations to power data centers in Pennsylvania under long-term energy supply services agreements to address underlying resource adequacy and affordability concerns in Pennsylvania and the territory served by PJM Interconnection, L.L.C. more broadly. PPL owns 51% of Invitium and Blackstone Infrastructure owns 49%. Invitium is actively engaged with hyperscalers, landowners, natural gas pipeline companies and turbine manufacturers, and has secured multiple land parcels and placed deposits on future turbine purchases to enable the build of new generation. Construction of new generation stations is contingent on the execution of commercial agreements with data center developers, including hyperscalers.

Hold Harmless Commitment

As a condition of its approval of the acquisition of RIE in May 2022, the Rhode Island Division of Public Utilities and Carriers (the Division) required PPL to hold harmless Rhode Island customers from the impact of future rate increases resulting from changes in Accumulated Deferred Income Taxes as a result of the acquisition (the Hold Harmless Commitment). See "Regulatory Matters - Rhode Island Activities - Hold Harmless Implementation Agreement" in Note 7 in PPL's 2025 Form 10-K for additional information on the filings and other matters related to the Hold Harmless Commitment that occurred in 2025.

On April 16, 2026, RIE filed a motion with the RIPUC to reopen the previous docket concerning the Hold Harmless Commitment along with an updated tariff advice which reflected a methodology consistent with the previously proposed miscellaneous bill credits and two potential, alternative methods of allocating the bill credits among customers. On April 17, 2026, the RIPUC approved the motion and consolidated the tariff advice docket with the pending base distribution rate proceeding. The RIPUC held hearings on the RIE proposal on July 8, 2026.

On August 21, 2026, the RIPUC addressed RIE's proposal with respect to its Hold Harmless Commitment. The RIPUC denied RIE's hold harmless proposal as submitted but authorized an alternative that increases the amount to be provided to customers to approximately $175 million, of which $163 million will be delivered to customers as bill credits and $12 million through a reduction to the gas cost recovery rate adjustment mechanism balance. The Division confirmed that the alternative proposal would fully satisfy RIE's obligation under the Hold Harmless Commitment, and RIE voluntarily accepted the RIPUC's alternative proposal on August 25, 2026. The RIPUC approved the implementing tariff on September 24, 2026. The bill credits will be issued to RIE electric and gas customers from October 2026 through September 2027. RIE will record a reduction of revenue as the bill credits are issued. The reduction of the gas cost recovery rate adjustment mechanism balance was recorded in the third quarter of 2026.

FY 2027 Gas ISR Plan

On March 27, 2026, the RIPUC approved a capital budget of $161 million. In addition, the RIPUC approved an operation and maintenance expense budget of $17 million for curb-to-curb paving. On March 31, 2026, the RIPUC approved RIE's compliance filing for rates effective April 1, 2026.

FY 2027 Electric ISR Plan

On March 27, 2026, the RIPUC approved a capital budget of $141 million (including $18 million for Advanced Metering Functionality). In addition, the RIPUC approved an operation and maintenance expense budget of $14 million, primarily for vegetation management. On March 31, 2026, the RIPUC approved RIE's compliance filing for rates effective April 1, 2026.