(All Registrants)



This "Item 7. Combined Management's Discussion and Analysis of Financial
Condition and Results of Operations" is separately filed by PPL, PPL Electric,
LKE, LG&E and KU. Information contained herein relating to any individual
Registrant is filed by such Registrant solely on its own behalf, and no
Registrant makes any representation as to information relating to any other
Registrant. The specific Registrant to which disclosures are applicable is
identified in parenthetical headings in italics above the applicable disclosure
or within the applicable disclosure for each Registrant's related activities and
disclosures. Within combined disclosures, amounts are disclosed for individual
Registrants when significant.

The following should be read in conjunction with the Registrants' Consolidated
Financial Statements and the accompanying Notes. Capitalized terms and
abbreviations are defined in the glossary. Dollars are in millions, except per
share data, unless otherwise noted.

"Management's Discussion and Analysis of Financial Condition and Results of Operations" includes the following information:

• "Overview" provides a description of each Registrant's business strategy

and a discussion of important financial and operational developments.





•      "Results of Operations" for all Registrants includes a "Statement of
       Income Analysis," which discusses significant changes in principal line
       items on the Statements of Income, comparing 2019 with 2018. For PPL,

"Results of Operations" also includes "Segment Earnings" and "Adjusted

Gross Margins" which provide a detailed analysis of earnings by reportable

segment. These discussions include non-GAAP financial measures, including

"Earnings from Ongoing Operations" and "Adjusted Gross Margins" and

provide explanations of the non-GAAP financial measures and a

reconciliation of the non-GAAP financial measures to the most comparable


       GAAP measure. The "2020 Outlook" discussion identifies key factors
       expected to impact 2020 earnings.



•      "Financial Condition - Liquidity and Capital Resources" provides an

analysis of the Registrants' liquidity positions and credit profiles. This

section also includes a discussion of forecasted sources and uses of cash

and rating agency actions.

• "Financial Condition - Risk Management" provides an explanation of the


       Registrants' risk management programs relating to market and credit risk.



•      "Application of Critical Accounting Policies" provides an overview of the

accounting policies that are particularly important to the results of

operations and financial condition of the Registrants and that require


       their management to make significant estimates, assumptions and other
       judgments of inherently uncertain matters.



For comparison of the Registrants' results of operations and cash flows for the
years ended December 31, 2018 to December 31, 2017, refer to "Item 7. Combined
Management's Discussion and Analysis of Financial Condition and Results of
Operations" in the 2018 Form 10-K, filed with the SEC on February 14, 2019.

                                    Overview

For a description of the Registrants and their businesses, see "Item 1. Business."



Business Strategy

(All Registrants)

PPL operates seven fully regulated high-performing utilities. These utilities are located in the U.K., Pennsylvania and Kentucky, constructive regulatory jurisdictions with distinct regulatory structures and customer classes. PPL believes this business portfolio positions the company well for continued success and provides earnings and dividend growth potential.



PPL's strategy, and that of the other Registrants, is to deliver best-in-sector
operational performance, invest in a sustainable energy future, maintain a
strong financial foundation, and engage and develop its people. PPL's business
plan is designed to achieve growth by providing efficient, reliable and safe
operations and strong customer service, maintaining constructive regulatory
relationships and achieving timely recovery of costs. These businesses are
expected to achieve strong, long-term


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growth in rate base in the U.S. and RAV in the U.K. Rate base growth is being
driven by planned significant capital expenditures to maintain existing assets
and improve system reliability and, for LKE, LG&E and KU, to comply with federal
and state environmental regulations related to coal-fired electricity generation
facilities.

For the U.S. businesses, central to PPL's strategy is recovering capital project
costs efficiently through various rate-making mechanisms, including periodic
base rate case proceedings using forward test years, annual FERC formula rate
mechanisms and other regulatory agency-approved recovery mechanisms designed to
limit regulatory lag. In Kentucky, the KPSC has adopted a series of regulatory
mechanisms (ECR, DSM, GLT, fuel adjustment clause and gas supply clause) and
recovery on construction work-in-progress that reduce regulatory lag and provide
timely recovery of and return on, as appropriate, prudently incurred costs. In
addition, the KPSC requires a utility to obtain a CPCN prior to constructing a
facility, unless the construction is an ordinary extension of existing
facilities in the usual course of business or does not involve sufficient
capital expenditures to materially affect the utility's financial
condition. Although such KPSC proceedings do not directly address cost recovery
issues, the KPSC, in awarding a CPCN, concludes that the public convenience and
necessity require the construction of the facility on the basis that the
facility is the lowest reasonable cost alternative to address the need. In
Pennsylvania, the FERC transmission formula rate, DSIC mechanism, Smart Meter
Rider and other recovery mechanisms are in place to reduce regulatory lag and
provide for timely recovery of and a return on, as appropriate, prudently
incurred costs.

To manage financing costs and access to credit markets, and to fund capital
expenditures, a key objective of the Registrants is to maintain their investment
grade credit ratings and adequate liquidity positions. In addition, the
Registrants have financial and operational risk management programs that, among
other things, are designed to monitor and manage exposure to earnings and cash
flow volatility, as applicable, related to changes in interest rates, foreign
currency exchange rates and counterparty credit quality. To manage these risks,
PPL generally uses contracts such as forwards, options and swaps. See "Financial
Condition - Risk Management" below for further information.

Earnings generated by PPL's U.K. subsidiaries are subject to foreign currency
translation risk. Because WPD's earnings represent such a significant portion of
PPL's consolidated earnings, PPL enters into foreign currency contracts to
economically hedge the value of the GBP versus the U.S. dollar. These hedges do
not receive hedge accounting treatment under GAAP. See "Financial and
Operational Developments - U.K. Membership in European Union" for additional
discussion of the U.K. earnings hedging activity.

The U.K. subsidiaries also have currency exposure to the U.S. dollar to the extent of their U.S. dollar denominated debt. To manage these risks, PPL generally uses contracts such as forwards, options and cross-currency swaps that contain characteristics of both interest rate and foreign currency exchange contracts.



As discussed above, a key component of this strategy is to maintain constructive
relationships with regulators in all jurisdictions in which the Registrants
operate (U.K., U.S. federal and state). This is supported by a strong culture of
integrity and delivering on commitments to customers, regulators and
shareowners, and a commitment to continue to improve customer service,
reliability and operational efficiency.

Financial and Operational Developments

U.S. Tax Reform (All Registrants)



The IRS issued proposed regulations for certain provisions of the TCJA in 2018,
including interest deductibility and Global Intangible Low-Taxed Income (GILTI).
In 2019, final and new proposed regulations were issued relating to the GILTI
provisions. PPL has determined that neither the final or new proposed
regulations materially change PPL's conclusion that currently no incremental tax
arises under these rules. Proposed regulations relating to the limitation on the
deductibility of interest expense were issued in November 2018 and such
regulations provide detailed rules implementing the broader statutory
provisions. These proposed regulations should not apply to the Registrants until
the year in which the regulations are issued in final form, which is expected to
be in 2020. It is uncertain what form the final regulations will take and,
therefore, the Registrants cannot predict what impact the final regulations will
have on the tax deductibility of interest expense. However, if the proposed
regulations were issued as final in their current form, the Registrants could
have a limitation on a portion of their interest expense deduction for tax
purposes and such limitation could be significant. PPL expressed its views on
these proposed regulations in a comment letter addressed to the IRS on February
26, 2019.
U.K. Membership in European Union (PPL)

Following the June 2016 referendum, on March 29, 2017, the U.K. Government
invoked Article 50 (Article 50) of the Lisbon Treaty, formally beginning the
two-year period provided by Article 50 for the U.K. to negotiate an agreement
specifying the


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terms of its withdrawal from the European Union (EU), popularly referred to as
Brexit. After repeated extensions, on October 28, 2019, the EU agreed to extend
the Article 50 process until January 31, 2020. The U.K. Parliament subsequently
approved an early general election for December 12, 2019, which resulted in a
substantial Conservative Party Parliamentary majority and subsequent U.K. and EU
Parliamentary votes to approve the EU withdrawal agreement negotiated by Prime
Minister Boris Johnson.

The U.K. formally left the EU on January 31, 2020 with agreed upon withdrawal
terms, entering a transition period that is scheduled to end on December 31,
2020. During the transition period, the U.K. will seek to negotiate a free trade
arrangement with the EU and also negotiate new trade terms with countries
outside of the EU. Significant uncertainty continues to surround the outcome of
the transition period. PPL believes that its greatest risk related to the
remaining Brexit uncertainties is an extended period of depressed value of the
GBP or the potential further decline in the value of the GBP compared to the
U.S. dollar. A decline in the value of the GBP compared to the U.S. dollar will
reduce the value of WPD's earnings to PPL.

PPL has executed hedges to mitigate the foreign exchange risk to its U.K.
earnings. As of January 31, 2020, PPL's foreign exchange exposure related to
budgeted earnings is 90% hedged for 2020 at an average rate of $1.48 per GBP and
5% hedged for 2021 at an average rate of $1.33 per GBP.

PPL cannot predict the impact, in either the short-term or long-term, on foreign
exchange rates or PPL's financial condition that may be experienced as a result
of the actions taken by the U.K. government to withdraw from the EU, although
such impacts could be material.

PPL does not expect the financial condition and results of operations of WPD,
itself, to change significantly as a result of Brexit. The regulatory
environment and operation of WPD's businesses are not expected to change.
RIIO-ED1, the current price control, with allowed revenues agreed with Ofgem
runs through March 2023. The impact of a slower economy or recession on WPD
would be mitigated in part because U.K. regulation provides that any reduction
in the volume of electricity delivered will be recovered in allowed revenues in
future periods through the K-factor adjustment. See "Item 1. Business - Segment
Information - U.K. Regulated Segment" for additional information on the current
price control and K-factor adjustment. In addition, an increase in inflation
would have a positive effect on revenues and RAV as annual inflation adjustments
are applied to both revenues and RAV (and real returns are earned on inflated
RAV). This impact, however, would be partially offset by higher operation and
maintenance and interest expense on index-linked debt. With respect to access to
financing, WPD has substantial borrowing capacity under existing credit
facilities and expects to continue to have access to all major financial
markets. With respect to access to and cost of equipment and other materials,
WPD management continues to review U.K. government issued advice on preparations
for Brexit and has taken actions to mitigate potential increasing costs and
disruption to its critical sources of supply. Additionally, less than 1% of
WPD's employees are non-U.K. EU nationals and no change in their domicile is
expected.

Regulatory Requirements

(All Registrants)

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

(PPL, LKE, LG&E and KU)



The businesses of LKE, 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 "Item 1. Business" and Notes 7, 13 and 19 to the
Financial Statements for a discussion of these significant environmental
matters. These and other environmental requirements led PPL, LKE, LG&E and KU to
retire approximately 1,000 MW of coal-fired generating plants in Kentucky since
2015.

TCJA Impact on FERC Rates (All Registrants)



In November 2019, the FERC published Final Rules providing that public utility
transmission providers include mechanisms in their formula rates to deduct
excess ADIT from, or add deficient ADIT to, rate base and adjust their income
tax allowances by amortized excess or deficient ADIT, and to make a related
compliance filing.

In February 2019, PPL Electric filed with the FERC proposed revisions to its
transmission formula rate template pursuant to Section 205 of the Federal Power
Act and Section 35.13 of the FERC Rules and Regulations. Specifically, PPL
Electric proposed to modify its formula rate to permit the return or recovery of
excess or deficient ADIT resulting from the TCJA and


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permit PPL Electric to prospectively account for the income tax expense
associated with the depreciation of the equity component of the AFUDC. In April
2019, the FERC accepted the proposed revisions to the formula rate template,
which were effective June 1, 2019, as well as the proposed adjustments to ADIT,
effective January 1, 2018.

In February 2019, in connection with the requirements of the TCJA and Kentucky
HB 487, LG&E and KU filed a request with the FERC to amend their transmission
formula rates resulting from the laws' reductions to corporate income tax rates.
The FERC approved this request effective June 1, 2019. LG&E and KU are currently
reviewing the Final Rule and will submit a compliance filing addressing excess
ADIT by June 1, 2020. LG&E and KU do not anticipate the impact of the TCJA and
Kentucky HB 487 related to their FERC-jurisdictional rates to be significant.

Pennsylvania Alternative Ratemaking (PPL and PPL Electric)



In June 2018, Governor Tom Wolf signed into law Act 58 of 2018 (codified at 66
Pa. C.S. § 1330) authorizing public utilities to implement alternative rates and
rate mechanisms in base rate proceedings before the PUC. The effective date of
Act 58 was August 27, 2018. Under the new law, a public utility may file an
application to establish alternative rates and rate mechanisms in a base rate
proceeding. These alternative rates and rate mechanisms include, but are not
limited to, decoupling mechanisms, performance-based rates, formula rates,
multi-year rate plans, or a combination of those or other mechanisms.

On April 25, 2019, the PUC issued an Implementation Order adopting its interpretation and implementation of Act 58 and establishing the procedures through which utilities may seek PUC approval of alternative rates and rate mechanisms.

RIIO-2 Framework (PPL)



In 2018, Ofgem issued its consultation document on the RIIO-2 framework,
covering all U.K. gas and electricity transmission and distribution price
controls. The current electricity distribution price control, RIIO-ED1,
continues through March 31, 2023 and will not be impacted by the RIIO-2
consultation process. Later in 2018, Ofgem published its decision following its
RIIO-2 framework consultation after consideration of comments received including
those from WPD and PPL.

In August 2019, Ofgem published an open letter seeking views on its proposed
sector specific approach on the RIIO-ED2 framework. WPD and PPL provided
responses to this open letter. In December 2019, Ofgem published its decision on
the RIIO-ED2 framework, thus confirming the following points in its RIIO-2 and
RIIO-ED2 framework decision documents:

•            RIIO-ED2 will be a five-year price control period, compared to eight
             years in the current RIIO-ED1 price control.


•            CPI or CPIH will be used for inflation measurement in calculating
             both RAV and allowed returns rather than RPI.


•            The baseline allowed return on equity will be set using the same
             methodology in all RIIO-2 sectors. The new methodology

includes; (a)


             an equity indexation, whereby the allowed return on equity is
             updated to reflect changes in the risk-free rate, and (b)
             potentially setting the allowed return 0.5% below the expected
             return.

• Full debt indexation will be retained.




•            The early settlement process (fast tracking) will be removed 

and


             replaced with an alternative mechanism to incentivize

high-quality,


             rigorous and ambitious business plans.


•            The Totex incentive rate will be based on a confidence level for
             setting baseline cost allowances.


•            A new enhanced engagement model will be introduced requiring
             distribution companies to set up a customer engagement group to
             provide Ofgem with a public report of local stakeholders' views on
             the companies' business plans. Ofgem will also establish an
             independent RIIO-2 challenge group comprised of consumer

experts to


             provide Ofgem with a public report on companies' business plans.


•            There will be no change to the existing depreciation policy of using
             economic asset lives as the basis for depreciating RAV as part 

of


             base revenue calculations. WPD is currently transitioning to 

45-year


             asset lives for new additions in RIIO-ED1 based on Ofgem's 

extensive


             review of asset lives in RIIO-ED1.


•            A focus of RIIO-2 will be on whole-system outcomes. Ofgem 

intends


             network companies and system operators working together to 

ensure


             the energy system as a whole is efficient and delivers the 

best


             value to consumers. Ofgem is undertaking further work to 

clarify the


             definition of whole-system and the appropriate roles of the 

network


             companies in supporting this objective. Ofgem is still

undecided on


             how DSO functions are to be treated. Ofgem will include a DSO
             reopener to reassess progress made in the establishment of DSO
             activities.





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Ofgem will now shift focus to the development of the RIIO-ED2 price control
methodology, with the consultation expected to be published by the third quarter
of 2020. WPD and PPL continue to be fully engaged in the RIIO-ED2 process. PPL
cannot predict the outcome of this process or the long-term impact the final
RIIO-ED2 price control will have on its financial condition or results of
operations. Any decision for RIIO-ED2 will not be finalized until November 2022.
The RIIO-ED2 price control will come into effect on April 1, 2023.

FERC Transmission Rate Filing

(PPL, LKE, LG&E and KU)



In 2018, LG&E and KU applied to the FERC requesting elimination of certain
on-going 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 seeks 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. Due to the development of robust, accessible energy markets
over time, LG&E and KU believe the mitigation commitments are no longer relevant
or appropriate. In March 2019, the FERC granted LG&E's and KU's request to
remove the on-going credits, conditioned upon the implementation by LG&E and KU
of a transition mechanism for certain existing power supply arrangements,
subject to FERC review and approval. In July 2019, LG&E and KU proposed their
transition mechanism to the FERC and in September 2019, the FERC rejected the
proposed transition mechanism and issued a separate order providing
clarifications of certain aspects of the March order. In October 2019, LG&E and
KU filed requests for rehearing and clarification on the two September orders.
These rehearing requests are currently pending before FERC. Additionally,
certain petitions for review of FERC's orders have been filed by multiple
parties, including LG&E and KU, at the D.C. Circuit Court of Appeals. LG&E and
KU cannot predict the outcome of the proceedings. LG&E and KU currently receive
recovery of waivers and credits provided through other rate mechanisms.

(PPL and PPL Electric)



In April 2019, PPL Electric filed its annual transmission formula rate update
with the FERC, reflecting a revised revenue requirement, which includes the
impact of the TCJA. The filing established the revenue requirement used to set
rates that took effect in June 2019.

Rate Case Proceedings

(PPL, LKE, LG&E and KU)



In September 2018, LG&E and KU filed requests with the KPSC for an increase in
annual base electricity rates and gas rates and the elimination of the TCJA bill
credit mechanism. In April 2019, the KPSC issued orders eliminating the TCJA
bill credit mechanism and increasing annual base electricity and gas rates
providing for an annual revenue increase of $187 million ($114 million at KU and
$73 million at LG&E), based on a 9.725% return-on-equity. The new base rates and
all elements of the orders became effective May 1, 2019. See Note 7 to the
Financial Statements for additional information.

(KU)



In July 2019, KU filed a request with the VSCC for an increase in annual
Virginia base electricity revenues of approximately $13 million, representing an
increase of 18.2%. In January 2020, KU reached a partial settlement agreement
including an increase in annual Virginia base electricity revenues of $9 million
effective May 1, 2020, representing an increase of 12.9%. A hearing on the
settlement of remaining issues was held in January 2020. A VSCC ruling in the
proceeding is expected in April 2020.

Distribution of TCJA Savings

(PPL and PPL Electric)

In November 2019, the PUC approved PPL Electric's October 2019 petition to distribute the $43 million of TCJA tax savings for the period between January 1, 2018 and June 30, 2018 over the period January 1, 2020 through December 31, 2020.





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                             Results of Operations

(PPL)

The "Statement of Income Analysis" discussion below describes significant
changes in principal line items on PPL's Statements of Income, comparing 2019
with 2018. The "Segment Earnings" and "Adjusted Gross Margins" discussions for
PPL provide a review of results by reportable segment. These discussions include
non-GAAP financial measures, including "Earnings from Ongoing Operations" and
"Adjusted Gross Margins," and provide explanations of the non-GAAP financial
measures and a reconciliation of those measures to the most comparable GAAP
measure. The "2020 Outlook" discussion identifies key factors expected to impact
2020 earnings.

Tables analyzing changes in amounts between periods within "Statement of Income
Analysis," "Segment Earnings" and "Adjusted Gross Margins" are presented on a
constant GBP to U.S. dollar exchange rate basis, where applicable, in order to
isolate the impact of the change in the exchange rate on the item being
explained. Results computed on a constant GBP to U.S. dollar exchange rate basis
are calculated by translating current year results at the prior year
weighted-average GBP to U.S. dollar exchange rate.

(PPL Electric, LKE, LG&E and KU)



A "Statement of Income Analysis" is presented separately for PPL Electric, LKE,
LG&E and KU. The "Statement of Income Analysis" discussion below describes
significant changes in principal line items on the Statements of Income,
comparing 2019 with 2018. The results of operations section for PPL Electric,
LKE, LG&E and KU is presented in a reduced disclosure format in accordance with
General Instructions (I)(2)(a) of Form 10-K.

PPL: Statement of Income Analysis, Segment Earnings and Adjusted Gross Margins

Statement of Income Analysis

Net income for the years ended December 31 includes the following results:


                                                          Change
                                  2019       2018      2019 vs. 2018
Operating Revenues              $ 7,769    $ 7,785    $         (16 )
Operating Expenses
Operation
Fuel                                709        799              (90 )
Energy purchases                    723        745              (22 )
Other operation and maintenance   1,985      1,983                2
Depreciation                      1,199      1,094              105
Taxes, other than income            313        312                1
Total Operating Expenses          4,929      4,933               (4 )
Other Income (Expense) - net        309        396              (87 )
Interest Expense                    994        963               31
Income Taxes                        409        458              (49 )
Net Income                      $ 1,746    $ 1,827    $         (81 )





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Operating Revenues

The increase (decrease) in operating revenues was due to:


                                            2019 vs. 2018

Domestic:


PPL Electric Distribution price (a)        $         42
PPL Electric Distribution volume                     (8 )
PPL Electric PLR                                      8
PPL Electric Transmission Formula Rate (b)           51
PPL Electric TCJA refund (c)                        (12 )
LKE Retail rates (d)                                123
LKE ECR (e)                                          60
LKE Volumes (f)                                     (91 )
LKE Municipal supply (g)                            (56 )
LKE Fuel and other energy prices (h)                (48 )
Other                                                16
Total Domestic                                       85
U.K.:
Price                                                83
Volume                                              (64 )
Foreign currency exchange rates                    (116 )
Other                                                (4 )
Total U.K.                                         (101 )
Total                                      $        (16 )

(a) The increase was primarily due to reconcilable cost recovery mechanisms

approved by the PUC.

(b) The increase was primarily due to $77 million from returns on additional

transmission capital investments partially offset by a $27 million

unfavorable impact of the TCJA, which reduced the new revenue requirement

that went into effect June 1, 2018.

(c) The decrease was due to the estimated income tax savings owed to or already

returned to distribution customers related to the reduced U.S federal

corporate income taxes as a result of the TCJA. See Note 7 to the Financial

Statements for additional information.

(d) The increase was primarily due to higher base rates, inclusive of the

termination of the TCJA bill credit mechanism, effective May 1, 2019.

(e) The increase was primarily due to higher returns on additional environmental

capital investments and higher recoverable depreciation expense as a result

of higher depreciation rates effective May 1, 2019.

(f) The decrease was primarily due to weather.

(g) The decrease was primarily due to the termination of eight supply contracts

with Kentucky municipalities on April 30, 2019.

(h) The decrease was primarily due to lower recoveries of fuel and energy

purchases due to lower commodity costs.

Fuel



Fuel decreased $90 million in 2019 compared with 2018 at LKE, primarily due to a
$42 million decrease in commodity costs, a $33 million decrease in volumes
driven by weather and a $20 million decrease in volumes driven by the
termination of eight supply contracts with Kentucky municipalities on April 30,
2019.

Energy Purchases

Energy purchases decreased $22 million in 2019 compared with 2018, primarily due
to a $27 million decrease at LKE (primarily due to a $14 million decrease in
commodity costs and a $7 million decrease in gas volumes driven by weather in
2019), partially offset by a $5 million increase at PPL Electric (primarily due
to higher PLR volumes of $33 million, partially offset by lower PLR prices of
$25 million).



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Other Operation and Maintenance

The increase (decrease) in other operation and maintenance was due to:


                                                      2019 vs. 2018

Domestic:


PPL Electric project cancellation costs              $        (12 )
Stock compensation expense                                     10
Other operation and maintenance of Safari Energy (a)           20
Other                                                          14

U.K.:


Foreign currency exchange rates                               (23 )
Third-party engineering                                        (4 )
Other                                                          (3 )
Total                                                $          2


(a) The increase is primarily due to 2019 including a full year of other

operation and maintenance expense of Safari Energy, which was acquired on

June 1, 2018.



Depreciation

The increase (decrease) in depreciation was due to:


                                 2019 vs. 2018
Additions to PP&E, net          $         66
Foreign currency exchange rates          (13 )
Depreciation rates (a)                    52
Total                           $        105

(a) Higher depreciation rates were effective May 1, 2019 at LG&E and KU.

Other Income (Expense) - net

The increase (decrease) in other income (expense) - net was due to:


                                                        2019 vs. 2018

Economic foreign currency exchange contracts (Note 17) $ (164 ) Defined benefit plans - non-service credits (Note 11)

             59
Charitable contributions                                           7
Other                                                             11
Total                                                  $         (87 )



Interest Expense

The increase (decrease) in interest expense was due to:


                                  2019 vs. 2018
Long-term debt interest         $         38
Short-term debt interest                   7
Foreign currency exchange rates          (20 )
Other                                      6
Total                           $         31





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Income Taxes

The increase (decrease) in income taxes was due to:


                                                                  2019 vs. 

2018


Change in pre-tax income                                         $        (24 )
Deferred tax impact of Kentucky state tax reform (a)                       (9 )
Kentucky recycling credit, net of federal income tax expense (b)          (18 )
Other                                                                       2
Total                                                            $        (49 )

(a) In 2018, LKE recorded deferred income tax expense, primarily associated with

LKE's non-regulated entities, due to the Kentucky corporate income tax rate

reduction from 6% to 5%, as enacted by HB 487, effective January 1, 2018.

(b) In 2019, LKE recorded a deferred income tax benefit associated with two

projects placed into service that prepare a generation waste material for

reuse and, as a result, qualify for a Kentucky recycling credit. The

applicable credit provides tax benefits for a portion of the equipment costs

for major recycling projects in Kentucky.

See Note 6 to the Financial Statements for additional information on income taxes.

Segment Earnings

PPL's net income by reportable segments were as follows:


                                                    Change
                          2019        2018       2019 vs. 2018

U.K. Regulated $ 977 $ 1,114 $ (137 ) Kentucky Regulated 436 411

                25
Pennsylvania Regulated      458         431                27
Corporate and Other (a)    (125 )      (129 )               4
Net Income              $ 1,746     $ 1,827     $         (81 )



(a) Primarily represents financing and certain other costs incurred at the

corporate level that have not been allocated or assigned to the segments,

which are presented to reconcile segment information to PPL's consolidated


    results.



Earnings from Ongoing Operations



Management utilizes "Earnings from Ongoing Operations" as a non-GAAP financial
measure that should not be considered as an alternative to net income, an
indicator of operating performance determined in accordance with GAAP. PPL
believes that Earnings from Ongoing Operations is useful and meaningful to
investors because it provides management's view of PPL's earnings performance as
another criterion in making investment decisions. In addition, PPL's management
uses Earnings from Ongoing Operations in measuring achievement of certain
corporate performance goals, including targets for certain executive incentive
compensation. Other companies may use different measures to present financial
performance.

Earnings from Ongoing Operations is adjusted for the impact of special items.
Special items are presented in the financial tables on an after-tax basis with
the related income taxes on special items separately disclosed. Income taxes on
special items, when applicable, are calculated based on the statutory tax rate
of the entity where the activity is recorded. Special items may include items
such as:

• Unrealized gains or losses on foreign currency economic hedges (as discussed

below).

• Gains and losses on sales of assets not in the ordinary course of business.




• Impairment charges.


• Significant workforce reduction and other restructuring effects.

• Acquisition and divestiture-related adjustments.

• Other charges or credits that are, in management's view, non-recurring or

otherwise not reflective of the company's ongoing operations.





Unrealized gains or losses on foreign currency economic hedges include the
changes in fair value of foreign currency contracts used to hedge
GBP-denominated anticipated earnings. The changes in fair value of these
contracts are recognized immediately within GAAP earnings. Management believes
that excluding these amounts from Earnings from Ongoing Operations until
settlement of the contracts provides a better matching of the financial impacts
of those contracts with the economic value of


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PPL's underlying hedged earnings. See Note 17 to the Financial Statements and
"Risk Management" below for additional information on foreign currency economic
activity.

PPL's Earnings from Ongoing Operations by reportable segment were as follows:
                                                             Change
                                   2019        2018       2019 vs. 2018
U.K. Regulated                   $ 1,032     $   968     $          64
Kentucky Regulated                   436         418                18
Pennsylvania Regulated               458         436                22
Corporate and Other                 (120 )      (117 )              (3 )

Earnings from Ongoing Operations $ 1,806 $ 1,705 $ 101

See "Reconciliation of Earnings from Ongoing Operations" below for a reconciliation of this non-GAAP financial measure to Net Income.

U.K. Regulated Segment



The U.K. Regulated segment consists of PPL Global, which primarily includes
WPD's regulated electricity distribution operations, the results of hedging the
translation of WPD's earnings from GBP into U.S. dollars, and certain costs,
such as U.S. income taxes, administrative costs, and certain acquisition-related
financing costs. The U.K. Regulated segment represents 56% of PPL's Net Income
for 2019 and 39% of PPL's assets at December 31, 2019.

Net Income and Earnings from Ongoing Operations include the following results:


                                                            Change
                                   2019        2018      2019 vs. 2018
Operating revenues               $ 2,167     $ 2,268    $        (101 )
Other operation and maintenance      510         538              (28 )
Depreciation                         250         247                3
Taxes, other than income             127         134               (7 )
Total operating expenses             887         919              (32 )
Other Income (Expense) - net         294         403             (109 )
Interest Expense                     405         413               (8 )
Income Taxes                         192         225              (33 )
Net Income                           977       1,114             (137 )
Less: Special Items                  (55 )       146             (201 )

Earnings from Ongoing Operations $ 1,032 $ 968 $ 64

The following after-tax gains (losses), which management considers special items, impacted the U.K. Regulated segment's results and are excluded from Earnings from Ongoing Operations:


                                           Income Statement
                                              Line Item            2019     

2018

Foreign currency economic hedges, net of Other Income tax of $13, ($39) (a)

                    (Expense) - net        $     (51 )

$ 148


                                         Other operation and
Other, net of tax of $1, $0 (b)          maintenance                   (4 ) 

-


U.S. tax reform (c)                      Income Taxes                   -   

3


                                         Other operation and
Death benefit, net of tax of $0, $1 (d)  maintenance                    -            (5 )
Total                                                           $     (55 )   $     146

(a) Unrealized gains (losses) on contracts that economically hedge anticipated

GBP-denominated earnings.

(b) Settlement of a contractual dispute.

(c) Adjustments to certain provisional amounts recognized in the December 31,

2017 Statement of Income related to the enactment of the TCJA.

(d) Primarily a payment related to the death of the WPD Chief Executive.





The changes in the components of the U.K. Regulated segment's results between
these periods were due to the factors set forth below, which reflect amounts
classified as U.K. Adjusted Gross Margins, the items that management considers
special and the effects of movements in foreign currency exchange, including the
effects of foreign currency hedge contracts, on separate lines and not in their
respective Statement of Income line items.


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                                      2019 vs. 2018
U.K.

U.K. Adjusted Gross Margins $ 16 Other operation and maintenance

                  3
Depreciation                                   (16 )
Other Income (Expense) - net                    74
Interest expense                               (12 )
Income taxes                                   (15 )
U.S.
Income taxes                                     6
Other                                           (4 )
Foreign currency exchange, after-tax            12
Earnings from Ongoing Operations                64
Special items, after-tax                      (201 )
Net Income                           $        (137 )

• See "Adjusted Gross Margins - Changes in Adjusted Gross Margins" for an

explanation of U.K. Adjusted Gross Margins.

• Higher other income (expense) - net in 2019 compared with 2018 primarily due

to higher pension income.

Kentucky Regulated Segment



The Kentucky Regulated segment consists primarily of LKE's regulated electricity
generation, transmission and distribution operations of LG&E and KU, as well as
LG&E's regulated distribution and sale of natural gas. In addition, certain
acquisition-related financing costs are allocated to the Kentucky Regulated
segment. The Kentucky Regulated segment represents 25% of PPL's Net Income for
2019 and 34% of PPL's assets at December 31, 2019.

Net Income and Earnings from Ongoing Operations include the following results:
                                                             Change
                                   2019        2018       2019 vs. 2018
Operating revenues               $ 3,206     $ 3,214     $          (8 )
Fuel                                 709         799               (90 )
Energy purchases                     174         201               (27 )
Other operation and maintenance      861         848                13
Depreciation                         547         475                72
Taxes, other than income              74          70                 4
Total operating expenses           2,365       2,393               (28 )
Other Income (Expense) - net         (13 )       (16 )               3
Interest Expense                     298         274                24
Income Taxes                          94         120               (26 )
Net Income                           436         411                25
Less: Special Items                    -          (7 )               7

Earnings from Ongoing Operations $ 436 $ 418 $ 18

The following after-tax gains (losses), which management considers special items, impacted the Kentucky Regulated segment's results and are excluded from Earnings from Ongoing Operations:


                              Income Statement Line Item    2019     2018
U.S. tax reform (a)           Income Taxes                 $   -    $  2
Kentucky state tax reform (b) Income Taxes                     -      (9 )
Total                                                      $   -    $ (7 )

(a) Adjustments to certain provisional amounts recognized in the December 31,

2017 Statement of Income related to the enactment of the TCJA.

(b) In 2018, LKE recorded deferred income tax expense, primarily associated with

LKE's non-regulated entities, due to the Kentucky corporate income tax rate

reduction from 6% to 5%, as enacted by HB 487, effective January 1, 2018.






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The changes in the components of the Kentucky Regulated segment's results between these periods were due to the factors set forth below, which reflect amounts classified as Kentucky Adjusted Gross Margins and the items that management considers special on separate lines and not in their respective Statement of Income line item.


                                   2019 vs. 2018
Kentucky Adjusted Gross Margins  $         70
Other operation and maintenance           (19 )
Depreciation                              (26 )
Taxes, other than income                   (5 )
Other Income (Expense) - net                3
Interest Expense                          (24 )
Income Taxes                               19
Earnings from Ongoing Operations           18
Special Items, after-tax                    7
Net Income                       $         25


• See "Adjusted Gross Margins - Changes in Adjusted Gross Margins" for an

explanation of Kentucky Adjusted Gross Margins.

• Higher depreciation expense in 2019 compared with 2018 primarily due to a $15

million increase related to higher depreciation rates effective May 1, 2019

and an $11 million increase related to additional assets placed into service,


    net of retirements.



• Higher interest expense in 2019 compared with 2018 primarily due to increased

borrowings and higher interest rates.

• Lower income taxes in 2019 compared with 2018 primarily due to the recording

of a deferred income tax benefit related to a Kentucky recycling credit.

Pennsylvania Regulated Segment



The Pennsylvania Regulated segment includes the regulated electricity
transmission and distribution operations of PPL Electric. In addition, certain
costs are allocated to the Pennsylvania Regulated segment. The Pennsylvania
Regulated segment represents 26% of PPL's Net Income for 2019 and 26% of PPL's
assets at December 31, 2019.

Net Income and Earnings from Ongoing Operations include the following results:
                                                            Change
                                   2019       2018       2019 vs. 2018
Operating revenues               $ 2,358    $ 2,277     $          81
Energy purchases                     549        544                 5
Other operation and maintenance      566        578               (12 )
Depreciation                         386        352                34
Taxes, other than income             112        109                 3
Total operating expenses           1,613      1,583                30
Other Income (Expense) - net          31         32                (1 )
Interest Expense                     169        159                10
Income Taxes                         149        136                13
Net Income                           458        431                27
Less: Special Items                    -         (5 )               5

Earnings from Ongoing Operations $ 458 $ 436 $ 22

The following after-tax gains (losses), which management considers special items, impacted the Pennsylvania Regulated segment's results and are excluded from Earnings from Ongoing Operations:


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                                              Income Statement
                                                 Line Item             2019          2018
                                            Other operation and
IT transformation, net of tax of $0, $2 (a) maintenance            $        -     $      (5 )
Total                                                              $        -     $      (5 )

(a) In June 2018, PPL EU Services' IT department announced an internal

reorganization, which was substantially completed in the third quarter of

2018. As a result, $5 million of after-tax costs, which includes separation

benefits as well as outside services for strategic consulting to establish

the new IT organization, were incurred.





The changes in the components of the Pennsylvania Regulated segment's results
between these periods were due to the factors set forth below, which reflect
amounts classified as Pennsylvania Adjusted Gross Margins and the items that
management considers special on separate lines and not in their respective
Statement of Income line items.
                                      2019 vs. 2018
Pennsylvania Adjusted Gross Margins $         54
Other operation and maintenance                9
Depreciation                                 (19 )
Other Income (Expense) - net                  (1 )
Interest Expense                             (10 )
Income Taxes                                 (11 )
Earnings from Ongoing Operations              22
Special Items, after-tax                       5
Net Income                          $         27


• See "Adjusted Gross Margins - Changes in Adjusted Gross Margins" for an

explanation of Pennsylvania Adjusted Gross Margins.

• Higher depreciation expense in 2019 compared with 2018 primarily due to

additional assets placed into service, related to the ongoing efforts to

ensure the reliability of the delivery system and the replacement of aging

infrastructure, net of retirements.

Reconciliation of Earnings from Ongoing Operations



The following tables contain after-tax gains (losses), in total, which
management considers special items, that are excluded from Earnings from Ongoing
Operations and a reconciliation to PPL's "Net Income" for the years ended
December 31:
                                                                      2019
                                         U.K.            KY              PA          Corporate
                                      Regulated       Regulated       Regulated      and Other      Total
Net Income                           $      977     $       436     $       458     $    (125 )   $  1,746
Less: Special Items (expense)
benefit:
Foreign currency economic hedges,
net of tax of $13                           (51 )             -               -             -          (51 )
Talen litigation costs, net of tax
of $1 (a)                                     -               -               -            (5 )         (5 )
Other, net of tax of $1                      (4 )             -               -             -           (4 )
Total Special Items                         (55 )             -               -            (5 )        (60 )

Earnings from Ongoing Operations $ 1,032 $ 436 $ 458 $ (120 ) $ 1,806







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                                                                            2018
                                                                                           Corporate and
                                      U.K. Regulated     KY Regulated     PA Regulated         Other           Total
Net Income                           $       1,114      $        411     $        431     $      (129 )      $  1,827
Less: Special Items (expense)
benefit:
Foreign currency economic hedges,
net of tax of ($39)                            148                 -                -               -             148
U.S. tax reform (b)                              3                 2                -              (5 )             -
Kentucky state tax reform                        -                (9 )              -               -              (9 )
IT transformation, net of tax of $2              -                 -               (5 )             -              (5 )
Talen litigation costs, net of tax
of $2 (a)                                        -                 -                -              (7 )            (7 )
Death benefit, net of tax of $1                 (5 )               -                -               -              (5 )
Total Special Items                            146                (7 )             (5 )           (12 )           122

Earnings from Ongoing Operations $ 968 $ 418 $

436 $ (117 ) $ 1,705

(a) PPL incurred legal expenses related to litigation with its former affiliate,

Talen Montana. See Note 13 to the Financial Statements for additional

information.

(b) PPL recorded adjustments to certain provisional amounts recognized in the

December 31, 2017 Statement of Income relating to the enactment of the TCJA.

See Note 6 to the Financial Statements for additional information.

Adjusted Gross Margins

Management also utilizes the following non-GAAP financial measures as indicators of performance for its businesses.

• "U.K. Adjusted Gross Margins" is a single financial performance measure of

the electricity distribution operations of the U.K. Regulated segment. In

calculating this measure, direct costs such as connection charges from

National Grid, which owns and manages the electricity transmission network in

England and Wales, and Ofgem license fees (recorded in "Other operation and

maintenance" on the Statements of Income) are deducted from operating

revenues, as they are costs passed through to customers. As a result, this

measure represents the net revenues from the delivery of electricity across

WPD's distribution network in the U.K. and directly related activities.

• "Kentucky Adjusted Gross Margins" is a single financial performance measure

of the electricity generation, transmission and distribution operations of

the Kentucky Regulated segment, as well as the Kentucky Regulated segment's

distribution and sale of natural gas. In calculating this measure, fuel,

energy purchases and certain variable costs of production (recorded in "Other

operation and maintenance" on the Statements of Income) are deducted from

operating revenues. In addition, certain other expenses, recorded in "Other

operation and maintenance", "Depreciation" and "Taxes, other than income" on

the Statements of Income, associated with approved cost recovery mechanisms

are offset against the recovery of those expenses, which are included in

revenues. These mechanisms allow for direct recovery of these expenses and,

in some cases, returns on capital investments and performance incentives. As

a result, this measure represents the net revenues from electricity and gas


    operations.



• "Pennsylvania Adjusted Gross Margins" is a single financial performance

measure of the electricity transmission and distribution operations of the

Pennsylvania Regulated segment. In calculating this measure, utility revenues

and expenses associated with approved recovery mechanisms, including energy

provided as a PLR, are offset with minimal impact on earnings. Costs

associated with these mechanisms are recorded in "Energy purchases," "Other

operation and maintenance," (which are primarily Act 129, Storm Damage and

Universal Service program costs), "Depreciation" (which is primarily related

to the Act 129 Smart Meter program) and "Taxes, other than income," (which is


    primarily gross receipts tax) on the Statements of Income. This measure
    represents the net revenues from the Pennsylvania Regulated segment's
    electricity delivery operations.



These measures are not intended to replace "Operating Income," which is
determined in accordance with GAAP, as an indicator of overall operating
performance. Other companies may use different measures to analyze and report
their results of operations. Management believes these measures provide
additional useful criteria to make investment decisions. These performance
measures are used, in conjunction with other information, by senior management
and PPL's Board of Directors to manage operations and analyze actual results
compared with budget.



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Changes in Adjusted Gross Margins



The following table shows Adjusted Gross Margins by PPL's reportable segments
and by component, as applicable, for the year ended December 31 as well as the
changes between periods. The factors that gave rise to the changes are described
following the table:
                                                                                    Change
                                                       2019          2018        2019 vs. 2018
U.K. Regulated
U.K. Adjusted Gross Margins                         $   1,998     $   2,089     $         (91 )
Impact of changes in foreign currency exchange
rates                                                                                    (107 )
U.K. Adjusted Gross Margins excluding impact of
foreign currency exchange rates                                             

$ 16



Kentucky Regulated
Kentucky Adjusted Gross Margins                     $   2,111     $   2,041

$ 70



Pennsylvania Regulated
Pennsylvania Adjusted Gross Margins
Distribution                                        $     927     $     924     $           3
Transmission                                              600           549                51
Total Pennsylvania Adjusted Gross Margins           $   1,527     $   1,473     $          54




U.K. Adjusted Gross Margins

U.K. Adjusted Gross Margins, excluding the impact of changes in foreign currency
exchange rates, increased in 2019 compared with 2018 primarily due to $83
million from the April 1, 2018 and 2019 price increases, partially offset by $64
million of lower volumes.

Kentucky Adjusted Gross Margins



Kentucky Adjusted Gross Margins increased in 2019 compared with 2018 primarily
due to higher retail rates approved by the KPSC of $123 million, inclusive of
the termination of the TCJA bill credit mechanism, and higher returns on
additional environmental capital investments of $21 million. These increases
were partially offset by $37 million of decreased sales volumes primarily due to
weather and a $32 million decrease due to the termination of eight supply
contracts with Kentucky municipalities on April 30, 2019.

Pennsylvania Adjusted Gross Margins

Distribution



Distribution Adjusted Gross Margins increased in 2019 compared with 2018
primarily due to returns on additional distribution system improvement capital
investments of $10 million and returns on additional Smart Meter capital
investments of $5 million, partially offset by a $12 million net of gross
receipts tax impact of the estimated income tax savings owed to customers as a
result of the impact of the U.S. federal corporate income tax rate reduction
from 35% to 21% as enacted by the TCJA.

Transmission



Transmission Adjusted Gross Margins increased in 2019 compared with 2018
primarily due to an increase of $77 million from returns on additional
transmission capital investments focused on replacing aging infrastructure and
improving reliability, partially offset by $27 million from the impact of the
reduced U.S. federal corporate income taxes as a result of the TCJA in the first
five months of 2019.

Reconciliation of Adjusted Gross Margins



The following tables contain the components from the Statement of Income that
are included in the non-GAAP financial measures and a reconciliation to PPL's
"Operating Income" for the years ended December 31:


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                                                                          2019
                                                        Kentucky
                                  U.K. Adjusted         Adjusted         Pennsylvania
                                      Gross               Gross         Adjusted Gross                      Operating
                                     Margins             Margins           Margins          Other (a)       Income (b)
Operating Revenues              $         2,129   (c) $     3,206     $          2,358     $       76     $      7,769
Operating Expenses
Fuel                                          -               709                    -              -              709
Energy purchases                              -               174                  549              -              723
Other operation and maintenance             131                92                  125          1,637            1,985
Depreciation                                  -               116                   50          1,033            1,199
Taxes, other than income                      -                 4                  107            202              313
Total Operating Expenses                    131             1,095                  831          2,872            4,929
Total                           $         1,998       $     2,111     $          1,527     $   (2,796 )   $      2,840


                                                                          2018
                                                        Kentucky
                                  U.K. Adjusted         Adjusted         Pennsylvania
                                      Gross               Gross         Adjusted Gross                      Operating
                                     Margins             Margins           Margins          Other (a)       Income (b)
Operating Revenues              $         2,230   (c) $     3,214     $          2,277     $       64     $      7,785
Operating Expenses
Fuel                                          -               799                    -              -              799
Energy purchases                              -               201                  544              -              745
Other operation and maintenance             141                98                  121          1,623            1,983
Depreciation                                  -                70                   35            989            1,094
Taxes, other than income                      -                 5                  104            203              312
Total Operating Expenses                    141             1,173                  804          2,815            4,933
Total                           $         2,089       $     2,041     $          1,473     $   (2,751 )   $      2,852

(a) Represents amounts excluded from Adjusted Gross Margins.

(b) As reported on the Statements of Income.

(c) 2019 and 2018 exclude $38 million of ancillary revenues.





2020 Outlook

(PPL)

Higher net income is projected in 2020 compared with 2019. The following
projections and factors underlying these projections (on an after-tax basis) are
provided for PPL's segments and the Corporate and Other category and the related
Registrants.

(PPL's U.K. Regulated Segment)

Higher net income is projected in 2020 compared with 2019. Excluding 2019 special items, the increase is driven primarily by higher base demand revenues and higher assumed GBP exchange rates, partially offset by lower true-up mechanisms, lower pension income and higher interest expense.

(PPL's Kentucky Regulated Segment and LKE)



Higher net income is projected in 2020 compared with 2019, driven primarily by
higher retail rates, partially offset by higher depreciation expense and higher
income tax expense.

(LG&E)

Higher net income is projected in 2020 compared with 2019, driven primarily by higher retail rates, partially offset by higher depreciation expense.


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(KU)

Net income is projected in 2020 to be comparable with 2019, driven primarily by higher retail rates, offset by higher depreciation expense.

(PPL's Pennsylvania Regulated Segment and PPL Electric)



Higher net income is projected in 2020 compared with 2019, driven primarily by
higher returns on transmission investments and lower operation and maintenance
expense, partially offset by higher depreciation expense.

(PPL's Corporate and Other Category)

Lower costs are projected in 2020 compared with 2019, driven primarily by lower expenses and other factors.

(All Registrants)



Earnings in future periods are subject to various risks and uncertainties. See
"Forward-Looking Information," "Item 1. Business," "Item 1A. Risk Factors," the
rest of this Item 7, and Notes 1, 7 and 13 to the Financial Statements (as
applicable) for a discussion of the risks, uncertainties and factors that may
impact future earnings.

                   PPL Electric: Statement of Income Analysis

Net income for the years ended December 31 includes the following results:


                                                          Change
                                  2019       2018      2019 vs. 2018
Operating Revenues              $ 2,358    $ 2,277    $          81
Operating Expenses
Operation
Energy purchases                    549        544                5
Other operation and maintenance     566        578              (12 )
Depreciation                        386        352               34
Taxes, other than income            112        109                3
Total Operating Expenses          1,613      1,583               30
Other Income (Expense) - net         25         23                2
Interest Income from Affiliate        6          8               (2 )
Interest Expense                    170        159               11
Income Taxes                        149        136               13
Net Income                      $   457    $   430    $          27



Operating Revenues

The increase (decrease) in operating revenues was due to:


                                2019 vs. 2018
Distribution Price (a)        $         42
Distribution volume                     (8 )
PLR                                      8
Transmission Formula Rate (b)           51
TCJA Refund (c)                        (12 )
Total                         $         81


(a) Distribution price variances were primarily due to reconcilable cost recovery

mechanisms approved by the PUC.

(b) Transmission Formula Rate revenues increased primarily due to $77 million

from returns on additional transmission capital investments partially offset

by a $27 million unfavorable impact of the TCJA, which reduced the new

revenue requirement that went into effect June 1, 2018.

(c) Represents the estimated income tax savings owed to or already returned to

distribution customers related to the reduced U.S federal corporate income


    taxes as a result of the TCJA. See Note 7 to the Financial Statements for
    additional information.





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Energy Purchases

Energy purchases increased $5 million in 2019 compared with 2018. This increase
was primarily due to higher PLR volumes of $33 million, partially offset by
lower PLR prices of $25 million and lower transmission enhancement expenses of
$3 million.

Other Operation and Maintenance

The increase (decrease) in other operation and maintenance was due to:


                             2019 vs. 2018
Project cancellations       $        (12 )
Storm costs                           (4 )
Bad debts                             (3 )
Contractor-related expenses            3
Vegetation management                  2
Support costs                          1
Other                                  1
Total                       $        (12 )



Depreciation

Depreciation increased by $34 million in 2019 compared with 2018. This increase
was primarily due to additional assets placed into service, related to the
ongoing efforts to ensure the reliability of the delivery system and the
replacement of aging infrastructure as well as the roll-out of the Act 129 Smart
Meter program, net of retirements.

Interest Expense



Interest expense increased $11 million in 2019 compared with 2018, primarily due
to the June 2018 issuance of $400 million of 4.15% First Mortgage Bonds due 2048
and the September 2019 issuance of $400 million of 3.00% First Mortgage Bonds
due 2049.

Income Taxes

Income taxes increased $13 million in 2019 compared with 2018. The increase was primarily due to a change in pre-tax income. See Note 6 to the Financial Statements for additional information on income taxes.


                       LKE: Statement of Income Analysis

Net income for the years ended December 31 includes the following results:


                                                            Change
                                  2019        2018       2019 vs. 2018
Operating Revenues              $ 3,206     $ 3,214     $          (8 )
Operating Expenses
Operation
Fuel                                709         799               (90 )
Energy purchases                    174         201               (27 )
Other operation and maintenance     861         848                13
Depreciation                        547         475                72
Taxes, other than income             74          70                 4
Total Operating Expenses          2,365       2,393               (28 )
Other Income (Expense) - net        (13 )       (16 )               3
Interest Expense                    226         206                20
Interest Expense with Affiliate      31          25                 6
Income Taxes                        103         129               (26 )
Net Income                      $   468     $   445     $          23





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Operating Revenues

The increase (decrease) in operating revenues was due to:


                                  2019 vs. 2018
Volumes (a)                      $        (91 )
Municipal supply (b)                      (56 )
Fuel and other energy prices (c)          (48 )
Retail rates (d)                          123
ECR (e)                                    60
Other                                       4
Total                            $         (8 )


(a) The decrease was primarily due to weather.

(b) The decrease was primarily due to the termination of eight supply contracts

with Kentucky municipalities on April 30, 2019.

(c) The decrease was primarily due to lower recoveries of fuel and energy

purchases due to lower commodity costs.

(d) The increase was primarily due to higher base rates, inclusive of the

termination of the TCJA bill credit mechanism, effective May 1, 2019.

(e) The increase was primarily due to higher returns on additional environmental

capital investments and higher recoverable depreciation expense as a result

of higher depreciation rates effective May 1, 2019.

Fuel



Fuel decreased $90 million in 2019 compared with 2018, primarily due to a $42
million decrease in commodity costs, a $33 million decrease in volumes driven by
weather and a $20 million decrease in volumes driven by the termination of eight
supply contracts with Kentucky municipalities on April 30, 2019.

Energy Purchases



Energy purchases decreased $27 million in 2019 compared with 2018, primarily due
to a $14 million decrease in commodity costs and a $7 million decrease in gas
volumes driven by weather in 2019.

Depreciation



Depreciation increased $72 million in 2019 compared with 2018, primarily due to
a $52 million increase related to higher depreciation rates effective May 1,
2019 and a $15 million increase related to additional assets placed into
service, net of retirements.

Income Taxes

The increase (decrease) in income taxes was due to:


                                                                  2019 vs. 

2018

Kentucky recycling credit, net of federal income tax expense (a) $ (18 ) Kentucky state tax reform (b)


(9 )
Other                                                                       1
Total                                                            $        (26 )

(a) In 2019, LKE recorded a deferred income tax benefit associated with two

projects placed into service that prepare a generation waste material for

reuse and, as a result, qualify for a Kentucky recycling credit. The

applicable credit provides tax benefits for a portion of the equipment costs

for major recycling projects in Kentucky.

(b) In 2018, LKE recorded deferred income tax expense, primarily associated with

LKE's non-regulated entities, due to the Kentucky corporate income tax rate

reduction from 6% to 5%, as enacted by HB 487, effective January 1, 2018.

See Note 6 to the Financial Statements for additional information on income taxes.





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                       LG&E: Statement of Income Analysis

Net income for the years ended December 31 includes the following results:


                                                             Change
                                   2019        2018       2019 vs. 2018
Operating Revenues
Retail and wholesale             $ 1,473     $ 1,467     $           6
Electric revenue from affiliate       27          29                (2 )
Total Operating Revenues           1,500       1,496                 4
Operating Expenses
Operation
Fuel                                 289         308               (19 )
Energy purchases                     154         183               (29 )
Energy purchases from affiliates       7          13                (6 )
Other operation and maintenance      387         376                11
Depreciation                         231         195                36
Taxes, other than income              39          36                 3
Total Operating Expenses           1,107       1,111                (4 )
Other Income (Expense) - net         (11 )       (12 )               1
Interest Expense                      87          76                11
Income Taxes                          63          64                (1 )
Net Income                       $   232     $   233     $          (1 )



Operating Revenues

The increase (decrease) in operating revenues was due to:


                                   2019 vs. 2018
Retail rates (a)                 $         46
ECR (b)                                    26
Volumes (c)                               (53 )
Fuel and other energy prices (d)          (20 )
Other                                       5
Total                            $          4


(a) The increase was due to higher base rates, inclusive of the termination of

the TCJA bill credit mechanism, effective May 1, 2019.

(b) The increase was primarily due to higher returns on additional environmental

capital investments and higher recoverable depreciation expense as a result

of higher depreciation rates effective May 1, 2019.

(c) The decrease was primarily due to weather.

(d) The decrease was primarily due to lower recoveries of fuel and energy

purchases due to lower commodity costs.

Fuel



Fuel decreased $19 million in 2019 compared with 2018, primarily due to a $10
million decrease in commodity costs and a $10 million decrease in volumes driven
by weather.

Energy Purchases

Energy purchases decreased $29 million in 2019 compared with 2018, primarily due
to a $14 million decrease in commodity costs and a $7 million decrease in gas
volumes driven by weather in 2019.

Depreciation



Depreciation increased $36 million in 2019 compared with 2018, primarily due to
a $26 million increase related to higher depreciation rates effective May 1,
2019 and a $9 million increase related to additional assets placed into service,
net of retirements.



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                        KU: Statement of Income Analysis

Net income for the years ended December 31 includes the following results:


                                                             Change
                                   2019        2018       2019 vs. 2018
Operating Revenues
Retail and wholesale             $ 1,733     $ 1,747     $         (14 )
Electric revenue from affiliate        7          13                (6 )
Total Operating Revenues           1,740       1,760               (20 )
Operating Expenses
Operation
Fuel                                 420         491               (71 )
Energy purchases                      20          18                 2
Energy purchases from affiliates      27          29                (2 )
Other operation and maintenance      438         441                (3 )
Depreciation                         315         279                36
Taxes, other than income              35          34                 1
Total Operating Expenses           1,255       1,292               (37 )
Other Income (Expense) - net          (4 )        (6 )               2
Interest Expense                     109         100                 9
Income Taxes                          79          76                 3
Net Income                       $   293     $   286     $           7



Operating Revenue

The increase (decrease) in operating revenue was due to:


                                  2019 vs. 2018
Municipal supply (a)             $        (56 )
Volumes (b)                               (43 )
Fuel and other energy prices (c)          (30 )
Retail rates (d)                           77
ECR (e)                                    34
Other                                      (2 )
Total                            $        (20 )

(a) The decrease was primarily due to the termination of eight supply contracts

with Kentucky municipalities on April 30, 2019.

(b) The decrease was primarily due to weather.

(c) The decrease was primarily due to lower recoveries of fuel due to lower

commodity costs.

(d) The increase was due to higher base rates, inclusive of the termination of

the TCJA bill credit mechanism, effective May 1, 2019.

(e) The increase was primarily due to higher returns on additional environmental

capital investments and higher recoverable depreciation expense as a result

of higher depreciation rates effective May 1, 2019.

Fuel



Fuel decreased $71 million in 2019 compared with 2018, primarily due to a $32
million decrease in commodity costs, a $23 million decrease in volumes driven by
weather and a $20 million decrease in volumes driven by the termination of eight
supply contracts with Kentucky municipalities on April 30, 2019.

Depreciation



Depreciation increased $36 million in 2019 compared with 2018, primarily due to
a $26 million increase related to higher depreciation rates effective May 1,
2019 and a $6 million increase related to additional assets placed into service,
net of retirements.



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                              Financial Condition

The remainder of this Item 7 in this Form 10-K is presented on a combined basis, providing information, as applicable, for all Registrants.

Liquidity and Capital Resources

(All Registrants)



The Registrants' cash flows from operations and access to cost effective bank
and capital markets are subject to risks and uncertainties. See "Item 1A. Risk
Factors" for a discussion of risks and uncertainties that could affect the
Registrants' cash flows.

The Registrants had the following at:


                                                   PPL
                                    PPL (a)      Electric     LKE     LG&E     KU
December 31, 2019
Cash and cash equivalents          $     815    $     262    $ 27    $  15    $ 12
Short-term debt                        1,151            -     388      238     150
Long-term debt due within one year     1,172            -     975        -  

500


Notes payable with affiliates                           -     150        -       -

December 31, 2018
Cash and cash equivalents          $     621    $     267    $ 24    $  10    $ 14
Short-term debt                        1,430            -     514      279     235
Long-term debt due within one year       530            -     530      434  

96


Notes payable with affiliates                           -     113        -  

-

(a) At December 31, 2019, $155 million of cash and cash equivalents were

denominated in GBP. If these amounts would be remitted as dividends, PPL

would not anticipate an incremental U.S. tax cost. See Note 6 to the

Financial Statements for additional information on undistributed earnings of


    WPD.



(All Registrants)

Net cash provided by (used in) operating, investing and financing activities for the years ended December 31 and the changes between periods were as follows:


                                    PPL
                        PPL       Electric       LKE        LG&E       KU

2019

Operating activities $ 2,427 $ 913 $ 938 $ 492 $ 553 Investing activities (3,080 ) (1,117 ) (1,094 ) (482 ) (610 ) Financing activities 836 199 159 (5 ) 55

2018


Operating activities $ 2,821     $    978     $    915     $ 443     $ 581
Investing activities  (3,361 )     (1,193 )     (1,116 )    (554 )    (561 )
Financing activities     690          433          195       106       (21 )

2019 vs. 2018 Change
Operating activities $  (394 )   $    (65 )   $     23     $  49     $ (28 )
Investing activities     281           76           22        72       (49 )
Financing activities     146         (234 )        (36 )    (111 )      76



Operating Activities

The components of the change in cash provided by (used in) operating activities were as follows:




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                                             PPL
                                 PPL       Electric      LKE      LG&E      KU
2019 vs. 2018
Change - Cash Provided (Used):
Net income                     $  (81 )   $     27     $  23     $ (1 )   $   7
Non-cash components               241          (17 )      64       33        34
Working capital                  (451 )        (90 )    (181 )    (48 )    (126 )
Defined benefit plan funding       11            7        97       55        51
Other operating activities       (114 )          8        20       10         6
Total                          $ (394 )   $    (65 )   $  23     $ 49     $ (28 )



(PPL)

PPL cash provided by operating activities in 2019 decreased $394 million compared with 2018. • Net income decreased $81 million between periods and included an increase

in net non-cash charges of $241 million. The increase in net non-cash


       charges was primarily due to an increase in depreciation expense
       (primarily due to additional assets placed into service, related to the
       ongoing efforts to ensure reliability of the delivery system and the
       replacement of aging infrastructure, net of retirements and higher

depreciation rates) and unrealized losses on hedging activities partially

offset by an increase in the U.K. net periodic defined benefit credits

(primarily due to lower levels of unrecognized losses being amortized) and


       a decrease in deferred income taxes (primarily due to book versus tax
       plant timing differences).



•      The $451 million decrease in cash from changes in working capital was

primarily due to a decrease in accounts payable (primarily due to timing


       of payments), an increase in net regulatory assets and liabilities
       (primarily due to the impact of the TCJA and timing of recovery rate
       mechanisms), an increase in other current liabilities (primarily due to

timing of payments and operating lease liability), an increase in unbilled


       revenue (primarily due to weather, higher retail rates effective May 1,
       2019 and a change in pricing method in the model), an increase in fuel,
       materials and supplies (primarily due to inventory management) and an
       increase in other (primarily due to a decrease in taxes payable and a
       decrease in counter-party collateral partially offset by an increase in
       customer deposits).


• The $114 million decrease in cash provided by other operating activities

was primarily due to the $65 million transfer of excess benefit funds, in

2018, related to the favorable private letter ruling received by PPL from

the IRS permitting a transfer of excess funds from the PPL Bargaining Unit

Retiree Health Plan VEBA to a new sub-account within the VEBA, to be used

to pay for medical claims of active bargaining unit employees, decrease in

non-current regulatory liabilities (due to timing of rate recovery

mechanisms) and an increase in other assets (primarily due to settlement

of interest rate swaps and purchase of solar panels).

(PPL Electric)

PPL Electric's cash provided by operating activities in 2019 decreased $65 million compared with 2018. • Net income increased $27 million between the periods and included a

decrease in non-cash components of $17 million. The decrease in non-cash

components was primarily due to a $35 million decrease in deferred income

tax expense (due to book versus tax plant timing differences and Federal

net operating losses, partially offset by a book to tax timing difference

related to the TCJA regulatory liability) and a $15 million decrease in

Other (primarily due to an increase in AFUDC and a decrease in canceled

projects), partially offset by a $34 million increase in depreciation

expense (primarily due to additional assets placed into service, net of

retirements, related to the ongoing efforts to ensure the reliability of

the delivery system and the replacement of aging infrastructure as well as


       the roll-out of the Act 129 Smart Meter program).



•      The $90 million decrease in cash from changes in working capital was

primarily due to an increase in net regulatory assets and liabilities (due

to timing of rate recovery mechanisms), an increase in unbilled revenue

(primarily due to a change in pricing method in the model), an increase in


       other net current assets and current liabilities (primarily due to an
       increase in 2019 material and supplies) and an increase in accounts
       receivable (primarily due to timing of receipts).


• The $8 million increase in cash provided by other operating activities was

primarily due to a decrease in non-current regulatory assets (due to

timing of rate recovery mechanisms, amortization of storm costs incurred


       in the prior year and $22 million of storm costs incurred in 2018),
       partially offset by a decrease in non-current liabilities (primarily due
       to a $41 million TCJA liability in 2018).




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(LKE)

LKE had a $23 million increase in cash provided by operating activities in 2019
compared with 2018.
•      Net income increased $23 million between the periods and included an

increase in non-cash components of $64 million. The increase in non-cash

components was primarily driven by an increase in depreciation expense

(primarily due to higher depreciation rates and additional assets placed


       into service, net of retirements).


• The decrease in cash from changes in working capital was primarily driven

by an increase in net regulatory assets and liabilities (primarily due to

the impact of the TCJA and timing of rate recovery mechanisms), a decrease

in accounts payable (primarily due to timing of payments) and an increase

in unbilled revenues (primarily due to weather).

• Defined benefit plan funding was $97 million lower in 2019.

• The increase in cash provided by other operating activities was driven

primarily by a decrease in other assets (primarily due to non-current


       regulatory asset increases as a result of significant storm activity in
       2018).



(LG&E)

LG&E had a $49 million increase in cash provided by operating activities in 2019
compared with 2018.
•      Net income decreased $1 million between the periods and included an

increase in non-cash components of $33 million. The increase in non-cash

components was primarily driven by an increase in depreciation expense

(primarily due to higher depreciation rates and additional assets placed


       into service, net of retirements).


• The decrease in cash from changes in working capital was primarily driven

by an increase in net regulatory assets and liabilities (primarily due to

the impact of the TCJA and timing of rate recovery mechanisms), a decrease

in accounts payable (primarily due to timing of payments) and an increase

in accounts receivable and unbilled revenues (primarily due to weather).

• Defined benefit plan funding was $55 million lower in 2019.

• The increase in cash provided by other operating activities was driven

primarily by a decrease in other assets (primarily due to non-current


       regulatory asset increases as a result of significant storm activity in
       2018).



(KU)

KU had a $28 million decrease in cash provided by operating activities in 2019
compared with 2018.
•      Net income increased $7 million between the periods and included an

increase in non-cash components of $34 million. The increase in non-cash

components was primarily driven by an increase in depreciation expense

(primarily due to higher depreciation rates and additional assets placed


       into service, net of retirements).


• The decrease in cash from changes in working capital was primarily driven

by an increase in net regulatory assets and liabilities (primarily due to

the impact of the TCJA and timing of rate recovery mechanisms), a decrease

in accounts payable (primarily due to timing of payments) and an increase

in unbilled revenues (primarily due to weather).

• Defined benefit plan funding was $51 million lower in 2019.





Investing Activities

(All Registrants)

The components of the change in cash provided by (used in) investing activities were as follows:




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                                              PPL
                                   PPL      Electric     LKE      LG&E      KU
2019 vs. 2018
Change - Cash Provided (Used):
Expenditures for PP&E             $ 155    $    78      $ 23     $  72    $ (48 )
Purchase of investments              10          -         -         -      

-

Proceeds from sale of investments 63 - - -


  -
Other investing activities           53         (2 )      (1 )       -       (1 )
Total                             $ 281    $    76      $ 22     $  72    $ (49 )



For PPL, in 2019 compared with 2018, the decrease in expenditures was due to
lower project expenditures at WPD, PPL Electric, LKE and LG&E, partially offset
by higher project expenditures at KU. The decrease in expenditures at WPD was
primarily due to a decrease in expenditures to enhance system reliability and a
decrease in foreign currency exchange rates. The decrease in expenditures for
PPL Electric was primarily due to timing differences on capital spending
projects related to ongoing efforts to improve reliability and replace aging
infrastructure. The decrease in expenditures at LKE was primarily due to
decreased spending for environmental water projects at LG&E and KU's Trimble
County plant, LG&E's Mill Creek plant and KU's Ghent plant, partially offset by
spending on various other projects at KU that are not individually significant.

See "Forecasted Uses of Cash" for detail regarding projected capital expenditures for the years 2020 through 2024.

Financing Activities

(All Registrants)



The components of the change in cash provided by (used in) financing activities
were as follows:
                                                       PPL
                                           PPL      Electric       LKE       LG&E       KU
2019 vs. 2018
Change - Cash Provided (Used):
Debt issuance/retirement, net            $ 383     $    (105 )   $ 414     $   99     $ 315
Debt issuance/retirement, affiliate                        -      (250 )        -         -
Stock issuances/redemptions, net           469             -         -          -         -
Dividends                                  (59 )         (96 )       -        (26 )      17
Capital contributions/distributions, net                 (29 )      57        (58 )      23
Changes in net short-term debt            (641 )           -      (396 )     (121 )    (275 )
Note payable with affiliate                                -       149          -         -
Other financing activities                  (6 )          (4 )     (10 )       (5 )      (4 )
Total                                    $ 146     $    (234 )   $ (36 )   $ (111 )   $  76



(PPL)

For PPL, in 2019 compared with 2018, cash provided by financing activities
increased primarily as a result of an increase in cash required to fund capital
and general corporate expenditures to offset a decrease in cash from operations
of $394 million.

(PPL Electric)

For PPL Electric, in 2019 compared with 2018, cash provided by financing activities decreased primarily as a result of a decrease in cash required to fund capital and general expenditures.

(LKE, LG&E and KU)



For LKE and LG&E, in 2019 compared with 2018, cash provided by financing
activities decreased primarily as a result of a decrease in cash required to
fund capital and general expenditures. For KU, in 2019 compared with 2018, cash
provided by financing activities increased primarily as a result of an increase
in cash required to fund capital and general expenditures.



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(All Registrants)

See "Long-term Debt and Equity Securities" below for additional information on
current year activity. See "Forecasted Sources of Cash" for a discussion of the
Registrants' plans to issue debt and equity securities, as well as a discussion
of credit facility capacity available to the Registrants. Also see "Forecasted
Uses of Cash" for a discussion of PPL's plans to pay dividends on common
securities in the future, as well as the Registrants' maturities of long-term
debt.

Long-term Debt and Equity Securities

Long-term debt and equity securities activity for 2019 included:


                                Debt                   Net Stock
                   Issuances (a)      Retirements      Issuances
Cash Flow Impact:
PPL               $         1,465    $         300    $     1,167
PPL Electric                  393              100
LKE                           705              200
LG&E                          399              200
KU                            306                -


(a) Issuances are net of pricing discounts, where applicable, and exclude the

impact of debt issuance costs. Includes debt issuances with affiliates.

See Note 8 to the Financial Statements for additional long-term debt information.



(PPL)

Equity Securities Activities

Equity Forward Contracts

In May 2018, PPL completed a registered underwritten public offering of 55 million shares of its common stock. In conjunction with that offering, the underwriters exercised an option to purchase 8.25 million additional shares of PPL common stock solely to cover over-allotments.



In connection with the registered public offering, PPL entered into forward sale
agreements with two counterparties covering the total 63.25 million shares of
PPL common stock. Under the forward sale agreements, PPL was obligated to settle
these forward sale agreements no later than November 2019. The forward sale
agreements were classified as equity transactions.

In September 2018, PPL settled a portion of the initial forward sale agreements
by issuing 20 million shares of PPL common stock, resulting in net cash proceeds
of $520 million. In November 2019, PPL settled the remaining 43.25 million
shares of PPL common stock, resulting in net cash proceeds of $1.1 billion. The
net proceeds received will be used for general corporate purposes. See Note 5
for information on the forward sale agreements impact on the calculation of
diluted EPS.

See Note 8 to the Financial Statements for additional information.

ATM Program



In February 2018, PPL entered into an equity distribution agreement, pursuant to
which PPL may sell, from time to time, up to an aggregate of $1.0 billion of its
common stock through an at-the-market offering program, including a forward
sales component. The compensation paid to the selling agents by PPL may be up to
2% of the gross offering proceeds of the shares. There were no issuances under
the ATM program for the twelve months ended December 31, 2019. PPL issued 42
million shares of common stock and received proceeds of $119 million for the
year ended December 31, 2018.

Forecasted Sources of Cash

(All Registrants)

The Registrants expect to continue to have adequate liquidity available from operating cash flows, cash and cash equivalents, credit facilities and commercial paper issuances. Additionally, subject to market conditions, the Registrants and their


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subsidiaries may access the capital markets, and PPL Electric, LG&E and KU anticipate receiving equity contributions from their parent or member in 2020.

Credit Facilities



The Registrants maintain credit facilities to enhance liquidity, provide credit
support and provide a backstop to commercial paper programs. Amounts borrowed
under these credit facilities are reflected in "Short-term debt" on the Balance
Sheets. At December 31, 2019, the total committed borrowing capacity under
credit facilities and the borrowings under these facilities were:

External
                                                                            Letters of
                                                                              Credit
                                                                               and
                                                                            Commercial
                                            Committed                         Paper           Unused
                                             Capacity        Borrowed         Issued         Capacity
PPL Capital Funding Credit Facilities     $      1,550     $        -     $        465     $    1,085
PPL Electric Credit Facility                       650              -                1            649

LG&E Credit Facilities                             500              -              238            262
KU Credit Facilities                               400              -              150            250
Total LKE Consolidated                             900              -              388            512

Total U.S. Credit Facilities (a) (b) $ 3,100 $ - $

854 $ 2,246

Total U.K. Credit Facilities (b) (c) £ 1,055 £ 243 £ - £ 812

(a) The syndicated credit facilities, KU's letter of credit facility and PPL

Capital Funding's bilateral facility, each contain a financial covenant

requiring debt to total capitalization not to exceed 70% for PPL Capital

Funding, PPL Electric, LKE, LG&E and KU, as calculated in accordance with the

facility, and other customary covenants.

The commitments under the domestic credit facilities are provided by a diverse bank group, with no one bank and its affiliates providing an aggregate commitment of more than the following percentages of the total committed capacity: PPL - 8%, PPL Electric - 6%, LKE - 6%, LG&E - 6% and KU - 6%. (b) Each company pays customary fees under its respective syndicated credit

facility. Borrowings generally bear interest at LIBOR-based rates plus an

applicable margin.

(c) The facilities contain financial covenants to maintain an interest coverage

ratio of not less than 3.0 times consolidated earnings before income taxes,

depreciation and amortization and total net debt not in excess of 85% of its

RAV, calculated in accordance with the credit facility.





The amounts borrowed at December 31, 2019, include a USD-denominated borrowing
of $200 million and GBP-denominated borrowings of £88 million, which equated to
$113 million. At December 31, 2019, the USD equivalent of unused capacity under
the U.K. committed credit facilities was approximately $1.0 billion.

The commitments under the U.K.'s credit facilities are provided by a diverse bank group with no one bank providing more than 13% of the total committed capacity.



In addition to the financial covenants noted in the table above, the credit
agreements governing the above credit facilities contain various other
covenants. Failure to comply with the covenants after applicable grace periods
could result in acceleration of repayment of borrowings and/or termination of
the agreements. The Registrants monitor compliance with the covenants on a
regular basis. At December 31, 2019, the Registrants were in compliance with
these covenants. At this time, the Registrants believe that these covenants and
other borrowing conditions will not limit access to these funding sources.

See Note 8 to the Financial Statements for further discussion of the Registrants' credit facilities.

Intercompany (LKE, LG&E and KU)


                     Committed                   Non-affiliate Used      

Unused


                      Capacity      Borrowed          Capacity          Capacity
LKE Credit Facility $       375    $     150    $                 -    $     225
LG&E Money Pool (a)         500            -                    238          262
KU Money Pool (a)           500            -                    150          350





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(a) LG&E and KU participate in an intercompany agreement whereby LKE, LG&E and/or

KU make available funds up to $500 million at an interest rate based on a

market index of commercial paper issues. However, the FERC has authorized a

maximum aggregate short-term debt limit for each utility at $500 million from


    all covered sources.



See Note 14 to the Financial Statements for further discussion of intercompany credit facilities.

Commercial Paper (All Registrants)



PPL, PPL Electric, LG&E and KU maintain commercial paper programs to provide an
additional financing source to fund short-term liquidity needs, as necessary.
Commercial paper issuances, included in "Short-term debt" on the Balance Sheets,
are supported by the respective Registrant's credit facilities. The following
commercial paper programs were in place at:
                                December 31, 2019
                                   Commercial
                                      Paper         Unused
                     Capacity       Issuances      Capacity

PPL Capital Funding $    1,500    $        450    $    1,050
PPL Electric               650               -           650

LG&E                       350             238           112
KU                         350             150           200
Total LKE                  700             388           312
Total PPL           $    2,850    $        838    $    2,012

Long-term Debt and Equity Securities

(PPL)

PPL and its subsidiaries are authorized to issue, at the discretion of management and subject to market conditions, up to $7 billion of long-term debt and equity securities, the proceeds of which would be used to fund capital expenditures and for general corporate purposes.

(PPL Electric)

PPL Electric is authorized to issue, at the discretion of management and subject
to market conditions and regulatory approvals, up to $700 million of long-term
debt securities, the proceeds of which would be used to fund capital
expenditures and for general corporate purposes.

(LKE, LG&E and KU)



LKE is authorized to issue, at the discretion of management, up to $800 million
of long-term debt with a PPL affiliate, the proceeds of which would be used to
repay $475 million of Senior Unsecured Notes maturing in November 2020 and for
general corporate purposes.

LG&E is authorized to issue, at the discretion of management and subject to market conditions and regulatory approvals, up to $400 million of long-term debt securities, the proceeds of which would be used to repay short-term debt incurred to fund capital expenditures and for general corporate purposes.



KU is authorized to issue, at the discretion of management and subject to market
conditions and regulatory approvals, up to $800 million of long-term debt
securities, the proceeds of which would be used to repay $500 million of First
Mortgage Bonds maturing in November 2020, repay short-term debt incurred to fund
capital expenditures and for general corporate purposes.

Contributions from Parent/Member (PPL Electric, LKE, LG&E and KU)



From time to time, LKE's member or the parents of PPL Electric, LG&E and KU make
capital contributions to subsidiaries. The proceeds from these contributions are
used to fund capital expenditures and for other general corporate purposes and,
in the case of LKE, to make contributions to its subsidiaries.



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Forecasted Uses of Cash

(All Registrants)

In addition to expenditures required for normal operating activities, such as
purchased power, payroll, fuel and taxes, the Registrants currently expect to
incur future cash outflows for capital expenditures, various contractual
obligations, payment of dividends on its common stock, distributions by LKE to
its member, and possibly the purchase or redemption of a portion of debt
securities.

Capital Expenditures

The table below shows the Registrants' current capital expenditure projections for the years 2020 through 2024. Expenditures for the domestic regulated utilities are expected to be recovered through rates, pending regulatory approval.


                                                                 Projected
                                Total      2020 (b)       2021       2022       2023       2024
PPL
Construction expenditures (a)
Generating facilities         $    763    $      148    $   222    $   106    $   121    $   166
Distribution facilities          9,299         1,961      1,860      1,767      1,800      1,911
Transmission facilities          2,724           903        632        470        357        362
Environmental                      549           139        209        113         84          4
Other                              932           221        207        161        171        172
Total Capital Expenditures    $ 14,267    $    3,372    $ 3,130    $ 2,617    $ 2,533    $ 2,615

PPL Electric (a)
Distribution facilities       $  1,810    $      419    $   406    $   397    $   294    $   294
Transmission facilities          1,960           713        399        350        245        253
Total Capital Expenditures    $  3,770    $    1,132    $   805    $   747    $   539    $   547

LKE
Generating facilities         $    763    $      148    $   222    $   106    $   121    $   166
Distribution facilities          1,661           417        392        296        284        272
Transmission facilities            764           190        233        120        112        109
Environmental                      549           139        209        113         84          4
Other                              407           113         98         58         69         69
Total Capital Expenditures    $  4,144    $    1,007    $ 1,154    $   693    $   670    $   620

LG&E
Generating facilities         $    322    $       48    $   100    $    58    $    54    $    62
Distribution facilities          1,013           273        254        166        164        156
Transmission facilities            132            44         39         15         15         19
Environmental                      214            58         90         38         28          -
Other                              207            60         47         31         34         35
Total Capital Expenditures    $  1,888    $      483    $   530    $   308    $   295    $   272

KU
Generating facilities         $    441    $      100    $   122    $    48    $    67    $   104
Distribution facilities            648           144        138        130        120        116
Transmission facilities            632           146        194        105         97         90
Environmental                      335            81        119         75         56          4
Other                              203            52         52         28         36         35
Total Capital Expenditures    $  2,259    $      523    $   625    $   386    $   376    $   349

(a) Construction expenditures include capitalized interest and AFUDC, which are

expected to total approximately $93 million for PPL and $77 million for PPL


    Electric over the five-year period.




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(b) The 2020 total excludes amounts included in accounts payable as of December


    31, 2019.



Capital expenditure plans are revised periodically to reflect changes in operational, market and regulatory conditions. For the years presented, this table includes PPL Electric's asset optimization program to replace aging transmission and distribution assets.

Contractual Obligations

The Registrants have assumed various financial obligations and commitments in the ordinary course of conducting business. At December 31, 2019, estimated contractual cash obligations were as follows:


                                    Total         2020         2021-2022       2023-2024       After 2024
PPL
Long-term Debt (a)               $  22,002     $   1,169     $     2,848     $     3,186     $     14,799
Interest on Long-term Debt (b)      15,131           926           1,657           1,435           11,113
Operating Leases (c)                   122            26              42              27               27
Purchase Obligations (d)             2,759         1,137             842             325              455
Pension Benefit Plan Funding
Obligations (e)                        681           272             226             183                -
Total Contractual Cash
Obligations                      $  40,695     $   3,530     $     5,615     $     5,156     $     26,394

PPL Electric
Long-term Debt (a)               $   4,039     $       -     $       874     $        90     $      3,075
Interest on Long-term Debt (b)       3,441           166             317             281            2,677
Unconditional Power Purchase
Obligations                             30            22               8               -                -
Total Contractual Cash
Obligations                      $   7,510     $     188     $     1,199     $       371     $      5,752

LKE
Long-term Debt (a)               $   6,041     $     975     $       674     $        13     $      4,379
Interest on Long-term Debt (b)       3,598           237             378             363            2,620
Operating Leases (c)                    61            18              22              13                8
Coal and Natural Gas Purchase
Obligations (f)                      1,482           572             661             235               14
Unconditional Power Purchase
Obligations (g)                        554            31              62              62              399
Construction Obligations (h)           221           184              34               3                -
Pension Benefit Plan Obligations
(e)                                     22            22               -               -                -
Other Obligations                      304           159              78              25               42
Total Contractual Cash
Obligations                      $  12,283     $   2,198     $     1,909     $       714     $      7,462

LG&E
Long-term Debt (a)               $   2,024     $       -     $       292     $         -     $      1,732
Interest on Long-term Debt (b)       1,573            80             146             143            1,204
Operating Leases (c)                    24             7               9               5                3
Coal and Natural Gas Purchase
Obligations (f)                        837           289             383             155               10
Unconditional Power Purchase
Obligations (g)                        382            21              42              43              276
Construction Obligations (h)            77            64              12               1                -
Pension Benefit Plan Obligations
(e)                                      4             4               -               -                -
Other Obligations                       99            50              20              15               14
Total Contractual Cash
Obligations                      $   5,020     $     515     $       904     $       362     $      3,239





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                                    Total         2020         2021-2022       2023-2024       After 2024
KU
Long-term Debt (a)               $   2,642     $     500     $       132     $        13     $      1,997
Interest on Long-term Debt (b)       1,809           104             173             172            1,360
Operating Leases (c)                    36            11              13               8                4
Coal and Natural Gas Purchase
Obligations (f)                        645           283             278              80                4
Unconditional Power Purchase
Obligations (g)                        172            10              20              19              123
Construction Obligations (h)           108            97              10               1                -
Pension Benefit Plan Obligations
(e)                                      1             1               -               -                -
Other Obligations                      146            70              39               9               28
Total Contractual Cash
Obligations                      $   5,559     $   1,076     $       665     $       302     $      3,516

(a) Reflects principal maturities based on stated maturity or earlier put dates.

See Note 8 to the Financial Statements for a discussion of variable-rate

remarketable bonds issued on behalf of LG&E and KU. The Registrants do not

have any significant finance lease obligations.

(b) Assumes interest payments through stated maturity or earlier put dates. For

PPL, LKE, LG&E and KU the payments herein are subject to change, as payments

for debt that is or becomes variable-rate debt have been estimated and for

PPL, payments denominated in British pounds sterling have been translated to

U.S. dollars at a current foreign currency exchange rate.

(c) See Note 9 to the Financial Statements for additional information.

(d) The amounts include agreements to purchase goods or services that are

enforceable and legally binding and specify all significant terms, including:

fixed or minimum quantities to be purchased; fixed, minimum or variable price

provisions; and the approximate timing of the transaction. Primarily

includes, as applicable, the purchase obligations of electricity, coal,

natural gas and limestone, as well as certain construction expenditures,

which are also included in the Capital Expenditures table presented above.

(e) The amounts for PPL include WPD's contractual deficit pension funding

requirements arising from actuarial valuations performed in March 2016. The

U.K. electricity regulator currently allows a recovery of a substantial

portion of the contributions relating to the plan deficit. The amounts also

include contributions made or committed to be made in 2020 for PPL's and

LKE's U.S. pension plans (for PPL Electric, LG&E and KU includes their share

of these amounts). Based on the current funded status of these plans, except

for WPD's plans, no cash contributions are required. See Note 11 to the

Financial Statements for a discussion of expected contributions.

(f) Represents contracts to purchase coal, natural gas and natural gas

transportation. See Note 13 to the Financial Statements for additional

information.

(g) Represents future minimum payments under OVEC power purchase agreements

through June 2040. See Note 13 to the Financial Statements for additional

information.

(h) Represents construction commitments, which are also reflected in the Capital

Expenditures table presented above.





Dividends/Distributions

(PPL)

PPL views dividends as an integral component of shareowner return and expects to
continue to pay dividends in amounts intended to maintain a capitalization
structure that supports investment grade credit ratings. In November 2019, PPL
declared its quarterly common stock dividend, payable January 2, 2020, at 41.25
cents per share (equivalent to $1.65 per annum). On February 14, 2020, PPL
announced an increase of its quarterly common stock dividend to 41.5 cents per
share (equivalent to $1.66 per annum). Future dividends, declared at the
discretion of the Board of Directors, will depend upon future earnings, cash
flows, financial and legal requirements and other factors.

Subject to certain exceptions, PPL may not declare or pay any cash dividend or
distribution on its capital stock during any period in which PPL Capital Funding
defers interest payments on its 2007 Series A Junior Subordinated Notes due 2067
or 2013 Series B Junior Subordinated Notes due 2073. At December 31, 2019, no
interest payments were deferred.

(PPL Electric, LKE, LG&E and KU)



From time to time, as determined by their respective Board of Directors, the
Registrants pay dividends or distributions, as applicable, to their respective
shareholders or members. Certain of the credit facilities of PPL Electric, LKE,
LG&E and KU include minimum debt covenant ratios that could effectively restrict
the payment of dividends or distributions.

(All Registrants)

See Note 8 to the Financial Statements for these and other restrictions related to distributions on capital interests for the Registrants and their subsidiaries.





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Purchase or Redemption of Debt Securities



The Registrants will continue to evaluate outstanding debt securities and may
decide to purchase or redeem these securities in open market or privately
negotiated transactions, in exchange transactions or otherwise, depending upon
prevailing market conditions, available cash and other factors, and may be
commenced or suspended at any time. The amounts involved may be material.

Rating Agency Actions

Moody's and S&P periodically review the credit ratings of the debt of the Registrants and their subsidiaries. Based on their respective independent reviews, the rating agencies may make certain ratings revisions or ratings affirmations.



A credit rating reflects an assessment by the rating agency of the
creditworthiness associated with an issuer and particular securities that it
issues. The credit ratings of the Registrants and their subsidiaries are based
on information provided by the Registrants and other sources. The ratings of
Moody's and S&P are not a recommendation to buy, sell or hold any securities of
the Registrants or their subsidiaries. Such ratings may be subject to revisions
or withdrawal by the agencies at any time and should be evaluated independently
of each other and any other rating that may be assigned to the securities.

The credit ratings of the Registrants and their subsidiaries affect their
liquidity, access to capital markets and cost of borrowing under their credit
facilities. A downgrade in the Registrants' or their subsidiaries' credit
ratings could result in higher borrowing costs and reduced access to capital
markets. The Registrants and their subsidiaries have no credit rating triggers
that would result in the reduction of access to capital markets or the
acceleration of maturity dates of outstanding debt.

The following table sets forth the Registrants' and their subsidiaries' credit
ratings for outstanding debt securities or commercial paper programs as of
December 31, 2019.
                        Senior Unsecured     Senior Secured     Commercial Paper
       Issuer           Moody's      S&P     Moody's     S&P     Moody's      S&P
PPL
PPL Capital Funding       Baa2       BBB+                          P-2        A-2
WPD plc                   Baa3       BBB+
WPD (East Midlands)       Baa1        A-
WPD (West Midlands)       Baa1        A-
WPD (South Wales)         Baa1        A-
WPD (South West)          Baa1        A-

PPL and PPL Electric
PPL Electric                                   A1         A        P-2        A-2

PPL and LKE
LKE                       Baa1       BBB+
LG&E                                           A1         A        P-2        A-2
KU                                             A1         A        P-2        A-2


The rating agencies have taken the following actions related to the Registrants and their subsidiaries.



(PPL)

In September 2019, Moody's and S&P assigned ratings of Baa1 and A- to WPD (East Midlands) £250 million of 1.75% Senior Notes due 2031.

(PPL and PPL Electric)

In September 2019, Moody's and S&P assigned ratings of A1 and A to PPL Electric's $400 million 3.00% First Mortgage Bonds due 2049.


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(PPL, LKE and LG&E)

In March 2019, Moody's and S&P assigned ratings of A1 and A to LG&E's $400 million 4.25% First Mortgage Bonds due 2049. The bonds were issued April 1, 2019.



In March 2019, Moody's and S&P assigned ratings of A1 and A to the County of
Jefferson, Kentucky's $128 million 1.85% Pollution Control Revenue Bonds, 2001
Series A, due 2033, previously issued on behalf of LG&E. The bonds were
remarketed April 1, 2019.

In May 2019, Moody's assigned a rating of A1, and in June 2019, S&P assigned a
rating of A to the County of Jefferson, Kentucky's $31 million 1.65% Series A
Environmental Facilities Revenue Refunding Bonds, due 2033, previously issued on
behalf of LG&E. The bonds were remarketed June 1, 2019.

In May 2019, Moody's assigned a rating of A1, and in June 2019, S&P assigned a
rating of A to the County of Jefferson, Kentucky's $35 million 1.65% Series B
Environmental Facilities Revenue Refunding Bonds, due 2033, previously issued on
behalf of LG&E. The bonds were remarketed June 1, 2019.

In September 2019, Moody's and S&P assigned ratings of A1 and A to the County of
Jefferson, Kentucky's $40 million 1.75% Pollution Control Revenue Bonds, 2005
Series A, due 2035, previously issued on behalf of LG&E. The bonds were
remarketed September 17, 2019.

(PPL, LKE and KU)



In March 2019, Moody's assigned a rating of A1 and S&P assigned a rating of A to
KU's $300 million 4.375% First Mortgage Bonds due 2045. The bonds were issued
April 1, 2019.

In August 2019, Moody's assigned a rating of A1, and in September 2019, S&P
assigned a rating of A to the County of Carroll, Kentucky's $96 million 1.55%
Pollution Control Revenue Refunding Bonds, 2016 Series A (Kentucky Utilities
Company Project), due 2042, previously issued on behalf of KU. The bonds were
remarketed September 3, 2019.

In August 2019, Moody's assigned a rating of A1, and in September 2019, S&P lowered its rating to A to the following bonds: • County of Carroll, Kentucky's $50 million 1.75% Environmental Facilities

Revenue Bonds, 2004 Series A due 2034;

• County of Carroll, Kentucky's $54 million 1.20% Environmental Facilities

Revenue Refunding Bonds, 2006 Series B due 2034;

• County of Carroll, Kentucky's $78 million 1.20% Environmental Facilities

Revenue Bonds, 2006 Series B due 2032;

• County of Mercer, Kentucky's $13 million 1.30% Solid Waste Disposal

Facility Revenue Bonds, 2000 Series A due 2023.




The bonds, previously issued on behalf of KU, were remarketed September 3, 2019.
S&P and Moody's lowered their ratings as a result of KU's termination of the
letters of credit that previously provided credit enhancement for these bonds.
See Note 8 to the Financial Statements for additional information.

Ratings Triggers

(PPL)



As discussed in Note 8 to the Financial Statements, certain of WPD's senior
unsecured notes may be put by the holders to the issuer for redemption if the
long-term credit ratings assigned to the notes are withdrawn by any of the
rating agencies (Moody's or S&P) or reduced to a non-investment grade rating of
Ba1 or BB+ or lower in connection with a restructuring event. A restructuring
event includes the loss of, or a material adverse change to, the distribution
licenses under which WPD (East Midlands), WPD (South West), WPD (South Wales)
and WPD (West Midlands) operate and would be a trigger event for each company.
These notes totaled £5.4 billion (approximately $6.9 billion) nominal value at
December 31, 2019.

(PPL, LKE, LG&E and KU)

Various derivative and non-derivative contracts, including contracts for the
sale and purchase of electricity and fuel, commodity transportation and storage,
interest rate and foreign currency instruments (for PPL), contain provisions
that require the posting of additional collateral, or permit the counterparty to
terminate the contract, if PPL's, LKE's, LG&E's or KU's or their subsidiaries'
credit rating, as applicable, were to fall below investment grade. See Note 17
to the Financial Statements for a


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discussion of "Credit Risk-Related Contingent Features," including a discussion
of the potential additional collateral requirements for PPL, LKE and LG&E for
derivative contracts in a net liability position at December 31, 2019.

Guarantees for Subsidiaries (PPL)



PPL guarantees certain consolidated affiliate financing arrangements. Some of
the guarantees contain financial and other covenants that, if not met, would
limit or restrict the consolidated affiliates' access to funds under these
financing arrangements, accelerate maturity of such arrangements or limit the
consolidated affiliates' ability to enter into certain transactions. At this
time, PPL believes that these covenants will not limit access to relevant
funding sources. See Note 13 to the Financial Statements for additional
information about guarantees.

Off-Balance Sheet Arrangements (All Registrants)

The Registrants have entered into certain agreements that may contingently require payment to a guaranteed or indemnified party. See Note 13 to the Financial Statements for a discussion of these agreements.



Risk Management

Market Risk

(All Registrants)

See Notes 1, 16 and 17 to the Financial Statements for information about the
Registrants' risk management objectives, valuation techniques and accounting
designations.

The forward-looking information presented below provides estimates of what may
occur in the future, assuming certain adverse market conditions and model
assumptions. Actual future results may differ materially from those presented.
These are not precise indicators of expected future losses, but are rather only
indicators of possible losses under normal market conditions at a given
confidence level.

Interest Rate Risk



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

The following interest rate hedges were outstanding at December 31:


                                                       2019                                                      2018
                                                              Effect of a                                                     Effect of a
                                            Fair Value,       10% Adverse     Maturities                    Fair Value,       10% Adverse
                            Exposure        Net - Asset         Movement       Ranging      Exposure        Net - Asset         Movement
                             Hedged       (Liability) (a)     in Rates (b)     Through       Hedged       (Liability) (a)     in Rates (b)
PPL
Cash flow hedges
Cross-currency swaps (c)   $     702     $         156       $        (71 )         2028   $     702     $         137       $        (76 )
Economic hedges
Interest rate swaps (d)          147               (22 )               (1 )         2033         147               (20 )               (1 )
LKE
Economic hedges
Interest rate swaps (d)          147               (22 )               (1 )         2033         147               (20 )               (1 )
LG&E
Economic hedges
Interest rate swaps (d)          147               (22 )               (1 )         2033         147               (20 )               (1 )




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(a) Includes accrued interest, if applicable.

(b) Effects of adverse movements decrease assets or increase liabilities, as

applicable, which could result in an asset becoming a liability.

Sensitivities represent a 10% adverse movement in interest rates, except for

cross-currency swaps which also includes a 10% adverse movement in foreign

currency exchange rates.

(c) Changes in the fair value of these instruments are recorded in equity and

reclassified into earnings in the same period during which the item being

hedged affects earnings.

(d) Realized changes in the fair value of such economic hedges are recoverable

through regulated rates and any subsequent changes in the fair value of these

derivatives are included in regulatory assets or regulatory liabilities.





The Registrants are exposed to a potential increase in interest expense and to
changes in the fair value of their debt portfolios. The estimated impact of a
10% adverse movement in interest rates on interest expense at December 31, 2019
and 2018 was insignificant for PPL, PPL Electric, LKE, LG&E and KU. The
estimated impact of a 10% adverse movement in interest rates on the fair value
of debt at December 31 is shown below.
                     10% Adverse Movement in Rates
                             2019                    2018
PPL          $           655                        $ 652
PPL Electric             197                          188
LKE                      198                          172
LG&E                      84                           62
KU                       104                           92



Foreign Currency Risk (PPL)

PPL is exposed to foreign currency risk primarily through investments in and
earnings of U.K. affiliates. Under its risk management program, PPL may enter
into financial instruments to hedge certain foreign currency exposures,
including translation risk of expected earnings, firm commitments, recognized
assets or liabilities, anticipated transactions and net investments.

The following foreign currency hedges were outstanding at December 31:


                                                    2019                                                             2018
                                                        Effect of a 10%                                                         Effect of a 10%
                                     Fair Value,        Adverse Movement      Maturities                    Fair Value,        Adverse Movement
                      Exposure       Net - Asset       in Foreign Currency     Ranging       Exposure       Net - Asset       in Foreign Currency
                       Hedged        (Liability)       Exchange Rates (a)      Through        Hedged        (Liability)       Exchange Rates (a)
Economic hedges (b)  £     859     $         137     $             (89 )            2020   £    1,540     $         201     $             (181 )


(a) Effects of adverse movements decrease assets or increase liabilities, as

applicable, which could result in an asset becoming a liability.

(b) To economically hedge the translation of expected earnings denominated in


    GBP.



(All Registrants)

Commodity Price Risk

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

PPL Electric is required to purchase electricity to fulfill its obligation as

a PLR. Potential commodity price risk is insignificant and mitigated through


    its PUC-approved cost recovery mechanism and full-requirement supply
    agreements to serve its PLR customers which transfer the risk to energy
    suppliers.

• LG&E's and KU's rates include certain mechanisms for fuel, fuel-related

expenses and energy purchases. In addition, LG&E's rates include a mechanism

for natural gas supply expenses. These mechanisms generally provide for

timely recovery of market price fluctuations associated with these expenses.





Volumetric Risk

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


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• WPD is exposed to volumetric risk which is significantly mitigated as a

result of the method of regulation in the U.K. Under the RIIO-ED1 price

control regulations, recovery of such exposure occurs on a two year lag. See

Note 1 to the Financial Statements for additional information on revenue

recognition under RIIO-ED1.

PPL Electric, LG&E and KU are exposed to volumetric risk on retail sales,


    mainly due to weather and other economic conditions for which there is
    limited mitigation between rate cases.


Defined Benefit Plans - Equity Securities Price Risk

See "Application of Critical Accounting Policies - Defined Benefits" for additional information regarding the effect of equity securities price risk on plan assets.



Credit Risk

(All Registrants)

Credit risk is the risk that the Registrants would incur a loss as a result of
nonperformance by counterparties of their contractual obligations. The
Registrants maintain credit policies and procedures with respect to counterparty
credit (including requirements that counterparties maintain specified credit
ratings) and require other assurances in the form of credit support or
collateral in certain circumstances in order to limit counterparty credit risk.
However, the Registrants, as applicable, have concentrations of suppliers and
customers among electric utilities, financial institutions and energy marketing
and trading companies. These concentrations may impact the Registrants' overall
exposure to credit risk, positively or negatively, as counterparties may be
similarly affected by changes in economic, regulatory or other conditions.

(PPL and PPL Electric)



In January 2017, the PUC issued a Final Order approving PPL Electric's PLR
procurement plan for the period June 2017 through May 2021, which includes a
total of eight semi-annual solicitations for electricity supply in April and
October. To date, PPL Electric has conducted six of its planned eight
competitive solicitations.

Under the standard Supply Master Agreement (the Agreement) for the competitive
solicitation process, PPL Electric requires all suppliers to post collateral if
their credit exposure exceeds an established credit limit. In the event a
supplier defaults on its obligation, PPL Electric would be required to seek
replacement power in the market. All incremental costs incurred by PPL Electric
would be recoverable from customers in future rates. At December 31, 2019, most
of the successful bidders under all of the solicitations had an investment grade
credit rating from S&P and were not required to post collateral under the
Agreement. A small portion of bidders were required to post an insignificant
amount of collateral under the Agreement. There is no instance under the
Agreement in which PPL Electric is required to post collateral to its suppliers.

See Note 17 to the Financial Statements for additional information on credit risk.

Foreign Currency Translation (PPL)



The value of the British pound sterling fluctuates in relation to the U.S.
dollar. In 2019, changes in this exchange rate resulted in a foreign currency
translation gain of $106 million, which reflected a $181 million increase to
PP&E, $34 million increase to goodwill and $12 million decrease to other net
liabilities partially offset by a $121 million increase to long-term debt. In
2018, changes in this exchange rate resulted in a foreign currency translation
loss of $453 million, which reflected a $754 million decrease to PP&E and $150
million decrease to goodwill partially offset by a $445 million decrease to
long-term debt and a decrease of $6 million to other net liabilities. In 2017,
changes in this exchange rate resulted in a foreign currency translation gain of
$537 million, which reflected a $935 million increase to PP&E and $198 million
increase to goodwill partially offset by a $549 million increase to long-term
debt and an increase of $47 million to other net liabilities.

(All Registrants)

Related Party Transactions



The Registrants are not aware of any material ownership interests or operating
responsibility by senior management in outside partnerships, including leasing
transactions with variable interest entities, or other entities doing business
with the Registrants. See Note 14 to the Financial Statements for additional
information on related party transactions for PPL Electric, LKE, LG&E and KU.


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Acquisitions, Development and Divestitures



The Registrants from time to time evaluate opportunities for potential
acquisitions, divestitures and development projects. Development projects are
reexamined based on market conditions and other factors to determine whether to
proceed with, modify or terminate the projects. Any resulting transactions may
impact future financial results.

Capacity Needs (PPL, LKE, LG&E and KU)



As a result of environmental requirements and energy efficiency measures, KU
retired two older coal-fired electricity generating units at the E.W. Brown
plant in February 2019 with a combined summer rating capacity of 272 MW. Despite
the retirement of these units, LG&E and KU maintain sufficient generating
capacity to serve their anticipated load.

Environmental Matters

(All Registrants)



Extensive federal, state and local environmental laws and regulations are
applicable to PPL's, PPL Electric's, LKE's, LG&E's and KU's air emissions, water
discharges and the management of hazardous and solid waste, as well as other
aspects of the Registrants' businesses. The costs of compliance or alleged
non-compliance cannot be predicted with certainty but could be significant. In
addition, costs may increase significantly if the requirements or scope of
environmental laws or regulations, or similar rules, are expanded or changed.
Costs may take the form of increased capital expenditures or operating and
maintenance expenses, monetary fines, penalties or other restrictions. Many of
these environmental law considerations are also applicable to the operations of
key suppliers, or customers, such as coal producers and industrial power users,
and may impact the costs for their products or their demand for the Registrants'
services. Increased capital and operating costs are subject to rate recovery.
PPL, PPL Electric, LKE, LG&E and KU can provide no assurances as to the ultimate
outcome of future environmental or rate proceedings before regulatory
authorities.

See "Legal Matters" in Note 13 to the Financial Statements for a discussion of
the more significant environmental claims. See "Financial Condition - Liquidity
and Capital Resources - Forecasted Uses of Cash - Capital Expenditures" in "Item
7. Combined Management's Discussion and Analysis of Financial Condition and
Results of Operations" for information on projected environmental capital
expenditures for 2020 through 2024. See Note 19 to the Financial Statements for
information related to the impacts of CCRs on AROs.

Sustainability



Increasing attention has been focused on a broad range of corporate activities
under the heading of "sustainability", which has resulted in a significant
increase in the number of requests from interested parties for information on
sustainability topics. These parties range from investor groups focused on
environmental, social, governance and other matters to non-investors concerned
with a variety of public policy matters. Often the scope of the information
sought is very broad and not necessarily relevant to an issuer's business or
industry. As a result, a number of private groups have proposed to standardize
the subject matter constituting sustainability, either generally or by industry.
Those efforts remain ongoing. In addition, certain of these private groups have
advocated that the SEC promulgate regulations requiring specific sustainability
reporting under the Securities Exchange Act of 1934, as amended (the "'34 Act"),
or that issuers voluntarily include certain sustainability disclosure in their
'34 Act reports. To date, no new reporting requirements have been adopted or
proposed by the SEC.

As has been PPL's practice, to the extent sustainability issues have or may have
a material impact on the Registrants' financial condition or results of
operation, PPL discloses such matters in accordance with applicable securities
law and SEC regulations. With respect to other sustainability topics that PPL
deems relevant to investors but that are not required to be reported under
applicable securities law and SEC regulation, PPL will continue each spring to
publish its annual sustainability report including tracking reductions related
to the company's goal to reduce carbon emissions and post that report on its
corporate website at www.pplweb.com and on www.pplsustainability.com. Neither
the information in such annual sustainability report nor the information at such
websites is incorporated in this Form 10-K by reference, and it should not be
considered a part of this Form 10-K. In preparing its sustainability report, PPL
is guided by the framework established by the Global Reporting Initiative, which
identifies environmental, social, governance and other subject matter
categories. PPL also participates in efforts by the Edison Electric Institute to
provide the appropriate subset of sustainability information that can be applied
consistently across the electric utility industry. Additionally, PPL publicly
discloses its corporate political contributions and responds to the CDP climate
survey.


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Cybersecurity

See "Cybersecurity Management" in "Item 1. Business" and "Item 1A. Risk factors" for a discussion of cybersecurity risks affecting the Registrants and the related strategies for managing these risks.

Competition



See "Competition" under each of PPL's reportable segments in "Item 1. Business -
General - Segment Information" and "Item 1A. Risk Factors" for a discussion of
competitive factors affecting the Registrants.

                            New Accounting Guidance

See Notes 1 and 21 to the Financial Statements for a discussion of new accounting guidance adopted and pending adoption.


                  Application of Critical Accounting Policies

Financial condition and results of operations are impacted by the methods,
assumptions and estimates used in the application of critical accounting
policies. The following accounting policies are particularly important to an
understanding of the reported financial condition or results of operations and
require management to make estimates or other judgments of matters that are
inherently uncertain. Changes in the estimates or other judgments included
within these accounting policies could result in a significant change to the
information presented in the Financial Statements (these accounting policies are
also discussed in Note 1 to the Financial Statements). Senior management has
reviewed with PPL's Audit Committee these critical accounting policies, the
following disclosures regarding their application, and the estimates and
assumptions regarding them.

Defined Benefits

(All Registrants)

Certain of the Registrants and/or their subsidiaries sponsor or participate in
certain qualified funded and non-qualified unfunded defined benefit pension
plans and both funded and unfunded other postretirement benefit plans. See Notes
1, 7 and 11 to the Financial Statements for additional information about the
plans and the accounting for defined benefits.

A summary of plan sponsors by Registrant and whether a Registrant or its
subsidiaries sponsor (S) or participate in and receives allocations (P) from
those plans is shown in the table below.
Plan Sponsor   PPL   PPL Electric   LKE   LG&E   KU
PPL Services    S         P
WPD (a)         S
LKE (b)                              S     P     P
LG&E (b)                                   S


(a) Does not sponsor or participate in other postretirement benefits plans.

(b) The pension plans sponsored by LKE and LG&E were merged effective January 1,

2020 into the LG&E and KU Pension Plan. The merged plan is sponsored by LKE.

LG&E and KU participate in this plan.





Management makes certain assumptions regarding the valuation of benefit
obligations and the performance of plan assets. As such, annual net periodic
defined benefit costs are recorded in current earnings or regulatory assets and
liabilities based on estimated results. Any differences between actual and
estimated results are recorded in AOCI or, in the case of PPL Electric, LG&E and
KU, regulatory assets and liabilities for amounts that are expected to be
recovered through regulated customer rates. These amounts in AOCI or regulatory
assets and liabilities are amortized to income over future periods. The
significant assumptions are:

• Discount Rate - In selecting the discount rates for U.S. defined benefit

plans, the plan sponsors start with a cash flow analysis of the expected

benefit payment stream for their plans. The plan-specific cash flows are

matched against the coupons and expected maturity values of Aa-rated

non-callable (or callable with make-whole provisions) bonds that could be

purchased for a hypothetical settlement portfolio. The plan sponsors then use

the single discount rate derived from matching the discounted benefit payment


    stream to the market value of the selected bond portfolio.




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In selecting the discount rate for its U.K. pension plans, WPD starts with a
cash flow analysis of the expected benefit payment stream for its plans. These
plan-specific cash flows are matched against a spot-rate yield curve to
determine the assumed discount rate. The spot-rate yield curve uses an iBoxx
British pounds sterling denominated corporate bond index as its base. From this
base, those bonds with the lowest and highest yields are eliminated to develop
an appropriate subset of bonds. WPD uses the single weighted-average discount
rate derived from the spot rates to discount the benefit obligation. In
addition, the spot rates that match the cash flows associated with the service
cost and interest cost are used to discount those components of net periodic
defined benefit cost.

• Expected Return on Plan Assets - The expected long-term rates of return for

pension and other postretirement benefits are based on management's

projections using a best-estimate of expected returns, volatilities and

correlations for each asset class. Each plan's specific current and expected


    asset allocations are also considered in developing a reasonable return
    assumption.


• Rate of Compensation Increase - Management projects employees' annual pay

increases, which are used to project employees' pension benefits at

retirement. In selecting a rate of compensation increase, plan sponsors

consider past experience, the potential impact of movements in inflation

rates and expectations of ongoing compensation practices.





See Note 11 to the Financial Statements for details of the assumptions selected
for pension and other postretirement benefits. A variance in the assumptions
could significantly impact accrued defined benefit liabilities or assets,
reported annual net periodic defined benefit costs and AOCI or regulatory assets
and liabilities.

The following tables reflect changes in certain assumptions based on the
Registrants' primary defined benefit plans. The inverse of this change would
have the opposite impact on accrued defined benefit liabilities or assets,
reported annual net periodic defined benefit costs and AOCI or regulatory assets
and liabilities. The sensitivities below reflect an evaluation of the change
based solely on a change in that assumption.
                                Increase (Decrease)
Actuarial assumption
Discount Rate                           (0.25 %)
Expected Return on Plan Assets          (0.25 %)
Rate of Compensation Increase            0.25  %



                                         Increase            Increase          (Increase)          Increase            Increase
                                        (Decrease)          (Decrease)          Decrease          (Decrease)          (Decrease)
                                      Defined Benefit    Defined Benefit          AOCI          Net Regulatory      Defined Benefit
Actuarial assumption                       Asset           Liabilities         (pre-tax)            Assets               Costs
PPL
Discount rates                       $       (371 )      $          134     $          413     $            92     $            47
Expected return on plan assets                n/a                   n/a                n/a                 n/a                  31
Rate of compensation increase                 (56 )                  15                 62                   9                  13

PPL Electric
Discount rates                                                       57                  -                  57                   3
Expected return on plan assets                                      n/a                  -                 n/a                   4
Rate of compensation increase                                         6                  -                   6                   1

LKE
Discount rates                                 (9 )                  51                 26                  34                   6
Expected return on plan assets                n/a                   n/a                n/a                 n/a                   4
Rate of compensation increase                 n/a                     6                  3                   3                   2





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                                          Increase
                                         (Decrease)         Increase (Decrease)       (Increase) Decrease       Increase (Decrease)       Increase (Decrease)
                                      Defined Benefit         Defined Benefit                AOCI                 Net Regulatory            Defined Benefit
Actuarial assumption                       Asset                Liabilities                (pre-tax)                  Assets                     Costs
LG&E
Discount rates                                    (16 )                 2                       n/a                        18                         2
Expected return on plan assets                    n/a                 n/a                       n/a                       n/a                         1
Rate of compensation increase                      (1 )                 -                       n/a                         1                         -

KU
Discount rates                                    (14 )                 2                       n/a                        16                         2
Expected return on plan assets                    n/a                 n/a                       n/a                       n/a                         1
Rate of compensation increase                      (2 )                 -                       n/a                         2                         -



Income Taxes (All Registrants)



Significant management judgment is required in developing the Registrants'
provision for income taxes, primarily due to the uncertainty related to tax
positions taken or expected to be taken in tax returns, valuation allowances on
deferred tax assets, as well as whether the undistributed earnings of WPD are
considered indefinitely reinvested.

Additionally, significant management judgment is required to determine the
amount of benefit recognized related to an uncertain tax position. On a
quarterly basis, uncertain tax positions are reassessed by considering
information known as of the reporting date. Based on management's assessment of
new information, a tax benefit may subsequently be recognized for a previously
unrecognized tax position, a previously recognized tax position may be
derecognized, or the benefit of a previously recognized tax position may be
remeasured. The amounts ultimately paid upon resolution of issues raised by
taxing authorities may differ materially from the amounts accrued and may
materially impact the financial statements in the future.

The need for valuation allowances to reduce deferred tax assets also requires
significant management judgment. Valuation allowances are initially recorded and
reevaluated each reporting period by assessing the likelihood of the ultimate
realization of a deferred tax asset. Management considers a number of factors in
assessing the realization of a deferred tax asset, including the reversal of
temporary differences, future taxable income and ongoing prudent and feasible
tax planning strategies. Any tax planning strategy utilized in this assessment
must meet the recognition and measurement criteria utilized to account for an
uncertain tax position. Management also considers the uncertainty posed by
political risk and the effect of this uncertainty on the various factors that
management takes into account in evaluating the need for valuation allowances.
The amount of deferred tax assets ultimately realized may differ materially from
the estimates utilized in the computation of valuation allowances and may
materially impact the financial statements in the future.

See Note 6 to the Financial Statements for income tax disclosures, including the
impact of the TCJA and management's conclusion that the undistributed earnings
of WPD are considered indefinitely reinvested. Based on this conclusion, PPL
Global does not record deferred U.S. federal income taxes on WPD's undistributed
earnings.

Regulatory Assets and Liabilities

(All Registrants)

PPL Electric, LG&E and KU are subject to cost-based rate regulation. As a
result, the effects of regulatory actions are required to be reflected in the
financial statements. Assets and liabilities are recorded that result from the
regulated ratemaking process that may not be recorded under GAAP for
non-regulated entities. Regulatory assets generally represent incurred costs
that have been deferred because such costs are probable of future recovery in
regulated customer rates. Regulatory liabilities are recognized for amounts
expected to be returned through future regulated customer rates. In certain
cases, regulatory liabilities are recorded based on an understanding or
agreement with the regulator that rates have been set to recover costs that are
expected to be incurred in the future, and the regulated entity is accountable
for any amounts charged pursuant to such rates and not yet expended for the
intended purpose.

Management continually assesses whether the regulatory assets are probable of
future recovery by considering factors such as changes in the applicable
regulatory and political environments, the ability to recover costs through
regulated rates, recent rate orders to the Registrants and other regulated
entities, and the status of any pending or potential deregulation legislation.
Based


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on this continual assessment, management believes the existing regulatory assets
are probable of recovery. This assessment reflects the current political and
regulatory climate at the state and federal levels and is subject to change in
the future. If future recovery of costs ceases to be probable, the regulatory
asset would be written-off. Additionally, the regulatory agencies can provide
flexibility in the manner and timing of recovery of regulatory assets.

See Note 7 to the Financial Statements for regulatory assets and regulatory liabilities recorded at December 31, 2019 and 2018, as well as additional information on those regulatory assets and liabilities. All regulatory assets are either currently being recovered under specific rate orders, represent amounts that are expected to be recovered in future rates or benefit future periods based upon established regulatory practices.

(PPL)



WPD's operations are regulated by Ofgem. Ofgem has adopted a price control
regulatory framework focused on outputs and performance in contrast to
traditional U.S. utility ratemaking that operates under a cost recovery model.
Because the regulatory model is incentive-based, WPD is not subject to
accounting for the effects of certain types of regulation as prescribed by GAAP
for entities subject to cost-based rate regulation and does not record
regulatory assets and liabilities. See "General - Regulation" in Note 1 to the
Financial Statements for additional information.

Price Risk Management (PPL)

See "Financial Condition - Risk Management" above.

Goodwill Impairment (PPL, LKE, LG&E and KU)

Goodwill is tested for impairment at the reporting unit level. PPL has determined its reporting units to be primarily at the same level as its reportable segments. LKE, LG&E and KU are individually single operating and reportable segments. A goodwill impairment test is performed annually or more frequently if events or changes in circumstances indicate that the carrying amount of the reporting unit may be greater than the reporting unit's fair value. Additionally, goodwill is tested for impairment after a portion of goodwill has been allocated to a business to be disposed of.



PPL, LKE, LG&E and KU may elect either to initially make a qualitative
evaluation about the likelihood of an impairment of goodwill or to bypass the
qualitative evaluation and test goodwill for impairment using a two-step
quantitative test. See "Long-Lived and Intangible Assets - Asset Impairment
(Excluding Investments)" in Note 1 to the Financial Statements for further
discussion of qualitative and quantitative goodwill impairment tests. See Note
18 to the Financial Statements for information on goodwill balances at
December 31, 2019.

PPL elected to perform the two-step quantitative impairment test of goodwill for
the U.K. Regulated segment reporting unit in the fourth quarter of 2019.
Management used both discounted cash flows and market multiples including
implied RAV premiums, which required significant assumptions, to estimate the
fair value of the reporting units. Significant assumptions used in the
discounted cash flows include discount and growth rates, outcomes of future rate
filings, and projected operating and capital cash flows. Projected operating and
capital cash flows is based on the Registrants' internal business plan, which
assumes the occurrence of certain future events. Significant assumptions used in
the market multiples include utility sector market performance and comparable
transactions.

Application of an appropriate weighting to both the discounted cash flow and
market multiple valuations for the most recent impairment test performed as of
October 1, 2019 did not require the second-step assessment and did not result in
any impairment.

A high degree of judgment is required to develop estimates related to fair value
conclusions. A decrease in the forecasted cash flows of 10%, an increase in the
discount rate of 0.25%, or a 10% decrease in the market multiples would not have
resulted in an impairment of goodwill for this reporting unit.

PPL (for its Kentucky Regulated segment), and individually, LKE, LG&E and KU
elected to perform the qualitative step zero evaluation of goodwill, as of
October 1, 2019. Based on these evaluations, management concluded it was not
more likely than not that the fair value of these reporting units was less than
their carrying values. As such, the two-step quantitative impairment test was
not performed.



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Asset Retirement Obligations (PPL, LKE, LG&E and KU)



ARO liabilities are required to be recognized for legal obligations associated
with the retirement of long-lived assets. Initial obligations are measured at
estimated fair value. An ARO must be recognized when incurred if the fair value
of the ARO can be reasonably estimated. An equivalent amount is recorded as an
increase in the value of the capitalized asset and amortized to expense over the
asset's useful life.

In determining AROs, management must make significant judgments and estimates to
calculate fair value. Fair value is developed using an expected present value
technique based on assumptions of market participants that consider estimated
retirement costs in current period dollars, inflated to the anticipated
retirement date and discounted back to the date the ARO was incurred. Changes in
assumptions and estimates included within the calculations of the fair value of
AROs could result in significantly different results than those identified and
recorded in the financial statements. Estimated ARO costs and settlement dates,
which affect the carrying value of the ARO and the related capitalized asset,
are reviewed periodically to ensure that any material changes are incorporated
into the ARO estimate. Any change to the capitalized asset is generally
amortized over the remaining life of the associated long-lived asset.

See "Long-Lived and Intangible Assets - Asset Retirement Obligations" in Note 1,
Note 7 and Note 19 to the Financial Statements for additional information on
AROs.

At December 31, 2019, the total recorded balances and information on the most significant recorded AROs were as follows.


                                        Most Significant AROs
       Total
        ARO         Amount
      Recorded     Recorded    % of Total                 Description
PPL  $     282    $     181            64    Ponds, landfills and natural gas mains
LKE        215          181            84    Ponds, landfills and natural gas mains
LG&E        73           56            77    Ponds, landfills and natural gas mains
KU         142          125            88             Ponds and landfills



The most significant assumptions surrounding AROs are the forecasted retirement
costs (including settlement dates and the timing of cash flows), discount and
inflation rates. At December 31, 2019, a 10% increase to retirement cost would
increase these ARO liabilities by $33 million. A 0.25% decrease in the discount
rate would increase these ARO liabilities by $4 million and a 0.25% increase in
the inflation rate would increase these ARO liabilities by $2 million. There
would be no significant change to the annual depreciation expense of the ARO
asset or the annual accretion expense of the ARO liability as a result of these
changes in assumptions.

Revenue Recognition - Unbilled Revenues (LKE, LG&E and KU)



Revenues related to the sale of energy are recorded when service is rendered or
when energy is delivered to customers. Because customers are billed on cycles
which vary based on the timing of actual meter reads taken throughout the month,
estimates are recorded for unbilled revenues at the end of each reporting
period. For LG&E and KU, such unbilled revenue amounts reflect estimates of
deliveries to customers since the date of the last reading of their meters. The
unbilled revenue estimates reflect consideration of factors including daily load
models, estimated usage for each customer class, the effect of current and
different rate schedules, the meter read schedule, the billing schedule, actual
weather data, and, where applicable, the impact of weather normalization or
other regulatory provisions of rate structures. See "Unbilled revenues" on the
Registrants' Balance Sheets for balances at December 31, 2019 and 2018.

                      Other Information (All Registrants)

PPL's Audit Committee has approved the independent auditor to provide audit and audit-related services, tax services and other services permitted by Sarbanes-Oxley and SEC rules. The audit and audit-related services include services in connection with statutory and regulatory filings, reviews of offering documents and registration statements, and internal control reviews.


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      ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

PPL Corporation, PPL Electric Utilities Corporation, LG&E and KU Energy LLC, Louisville Gas and Electric Company and Kentucky Utilities Company

Reference is made to "Risk Management" for the Registrants in "Item 7. Combined Management's Discussion and Analysis of Financial Condition and Results of Operations."





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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareowners and the Board of Directors of PPL Corporation

Opinion on the Financial Statements



We have audited the accompanying consolidated balance sheets of PPL Corporation
and subsidiaries (the "Company") as of December 31, 2019 and 2018, the related
consolidated statements of income, comprehensive income, equity, and cash flows,
for each of the three years in the period ended December 31, 2019, and the
related notes (collectively referred to as the "financial statements"). In our
opinion, the financial statements present fairly, in all material respects, the
financial position of the Company as of December 31, 2019 and 2018, and the
results of its operations and its cash flows for each of the three years in the
period ended December 31, 2019, in conformity with accounting principles
generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States) (PCAOB), the Company's internal
control over financial reporting as of December 31, 2019, based on criteria
established in Internal Control - Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission and our report
dated February 14, 2020, expressed an unqualified opinion on the Company's
internal control over financial reporting.

Basis for Opinion



These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on the Company's financial
statements based on our audits. We are a public accounting firm registered with
the PCAOB and are required to be independent with respect to the Company in
accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those
standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing
procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial statements. Our
audits also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of
the financial statements. We believe that our audits provide a reasonable basis
for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the
current-period audit of the financial statements that were communicated or
required to be communicated to the audit committee and that (1) relate to
accounts or disclosures that are material to the financial statements and (2)
involved our especially challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on
the financial statements, taken as a whole, and we are not, by communicating the
critical audit matters below, providing separate opinions on the critical audit
matters or on the accounts or disclosures to which they relate.
Regulatory Assets and Liabilities - Impact of Rate Regulation on Various Account
Balances and Disclosures - Refer to Notes 1 and 7 to the Financial Statements
Critical Audit Matter Description
As discussed in Note 1 to the financial statements, PPL Corporation owns and
operates three cost-based rate-regulated utilities in the United States (U.S.)
for which rates are set by the Federal Energy Regulatory Commission (FERC), the
Kentucky Public Service Commission (KPSC), the Virginia State Corporation
Commission (VSCC) and the Pennsylvania Public Utility Commission (PUC) to enable
the regulated utilities to recover the costs of providing electric or gas
service, as applicable, and to provide a reasonable return to shareholders. Base
rates are generally established based on a future test period. As a result, the
financial statements are subject to the accounting for certain types of
regulation as prescribed by accounting principles generally accepted in the
United States of America and reflect the effects of regulatory actions.
Regulatory assets are recognized for the effect of transactions or events where
future recovery of underlying costs is probable in regulated customer rates. The
effect of such accounting is to defer certain or qualifying costs that would
otherwise currently be charged to expense. Regulatory liabilities are recognized
for amounts expected to be returned through future regulated customer rates.


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The accounting for regulatory assets and regulatory liabilities is based on
specific ratemaking decisions or precedent for each transaction or event as
prescribed by the FERC, KPSC, VSCC and PUC. The accounting for the economics of
rate regulation also impacts other financial statement line items, including
regulated utility plant, operating revenues, depreciation, and income taxes and
impacts multiple note disclosures. As of December 31, 2019, PPL Corporation had
a recorded regulatory assets balance of $1,559 million and regulatory
liabilities balance of $2,687 million.

PPL Corporation's U.S. regulated utilities' rates are subject to cost-based
rate-setting processes and annual earnings oversight. Rates are established
based on an analysis of the costs incurred and the regulated utility's capital
structure, and must be approved by one or more federal or state regulatory
commissions, including the FERC, KPSC, VSCC and PUC. Regulatory decisions can
have an impact on the recovery of costs, the rate earned on invested capital,
and the timing and amount of assets to be recovered by rates. The FERC, KPSC,
VSCC and PUC regulation of rates is premised on the full recovery of prudently
incurred costs and an adequate return on capital investments. Decisions to be
made by the FERC, KPSC, VSCC and PUC in the future will impact the accounting
for regulated operations, including decisions about the amount of allowable
costs and return on invested capital included in rates and any refunds that may
be required. While PPL Corporation's U.S. utilities have indicated that they
expect to recover costs from customers through regulated rates, there is a risk
that the FERC, KPSC, VSCC or PUC will not approve full recovery of such costs or
approve recovery on a timely basis in future regulatory decisions.

We identified the impact of rate regulation as a critical audit matter due to
the significant judgments made by management in continually assessing whether
the regulatory assets are probable of future recovery by considering factors,
such as changes in the applicable regulatory and political environments, the
ability to recover costs through regulated rates, recent rate orders and the
status of any pending legislation. Auditing these judgments required specialized
knowledge of accounting for rate regulation and the rate-setting process due to
its inherent complexities.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the uncertainty of future decisions by the FERC,
KPSC, VSCC and PUC included the following, among others:

• We tested the effectiveness of management's internal controls over

evaluating the likelihood of recovery in future rates of costs deferred as

regulatory assets. We tested the effectiveness of management's controls

over the recognition of amounts as regulated utility plant, regulatory

assets or liabilities, operating revenues, depreciation, income taxes, and

note disclosures and the monitoring and evaluation of regulatory

developments that may affect the likelihood of recovering costs in future


       rates or of a future reduction in rates.


• We obtained and read relevant regulatory orders issued by the FERC, KPSC,

VSCC and PUC for PPL Corporation's U.S. regulated utilities to assess the


       likelihood of recovery in future rates or of a future reduction in rates.



•      We inquired of management about regulated utility plant that may be

abandoned. We inspected minutes of the board of directors, regulatory

orders and other filings with the commission to identify any evidence that


       may contradict management's assertion regarding probability of an
       abandonment.



•      We evaluated PPL Corporation's disclosures related to the impacts of
       rate-regulation, including the balances recorded and regulatory
       developments, in the financial statements.


Goodwill - U.K. Regulated Reporting Unit - Refer to Notes 1 and 18 to the Financial Statements

Critical Audit Matter Description

PPL Corporation's balance sheet includes $3.2 billion of goodwill as of December
31, 2019, of which $2.5 billion was allocated to the U.K. Regulated reporting
unit. The fair value of the U.K. Regulated reporting unit exceeded its carrying
value as of the measurement date and, therefore, no impairment was recognized.
PPL Corporation elected to perform the two-step quantitative impairment test of
goodwill for the U.K. Regulated reporting unit in the fourth quarter of 2019.
Management used both discounted cash flows and market multiples, which required
significant assumptions, to estimate the fair value of the reporting units.
Significant assumptions used in the discounted cash flows included discount and
growth rates, and projected operating and capital cash flows. Projected
operating and capital cash flows are based on PPL Corporation's internal
business plan, which assumes the occurrence of certain events in the future.
Significant assumptions used in the market multiples include utility sector
market performance and comparable transactions.


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We identified goodwill for the U.K. Regulated reporting unit as a critical audit
matter because of the significant judgments made by management to estimate the
fair value of the U.K. Regulated reporting unit, specifically due to changes in
the economy in the U.K. This required a high degree of auditor judgment and an
increased extent of effort, including the need to involve our fair value
specialists, when performing audit procedures to evaluate the reasonableness of
management's estimates and assumptions related to the regulatory asset value
premiums (RAV premiums), discount and growth rates, and projected operating and
capital cash flows.

How the Critical Audit Matter Was Addressed in the Audit



Our audit procedures related to the RAV premiums, discount and growth rates, and
projected operating and capital cash flows used by management to estimate the
fair value of the U.K. Regulated reporting unit included the following, among
others:

•      We tested the effectiveness of management's internal controls over their

goodwill impairment evaluation, including those over the determination of

the fair value of the U.K. Regulated reporting unit, such as controls

related to management's RAV premiums estimate, and selection of discount


       and growth rates and projected operating and capital cash flows.


• We evaluated the reasonableness of management's projected operating and

capital cash flows by comparing the forecasts to:

• Historical operating and capital cash flows.

• Internal communications to management and the board of directors.





•            Forecasted information included in PPL Corporation's press releases
             as well as in analyst and industry reports for PPL

Corporation.





•      We evaluated the impact of changes in management's forecasts from the
       October 1, 2019 annual measurement date to December 31, 2019.



•      With the assistance of our fair value specialists, we evaluated the

reasonableness of the (1) valuation methodology, (2) RAV premiums and (3)


       discount and growth rates by:



•            Testing the source information underlying the determination of the
             RAV premiums, and discount and growth rates and the

mathematical


             accuracy of the calculation.



•            Developing a range of independent estimates and comparing those to
             the RAV premiums, and discount and growth rates selected by
             management.



Income Taxes - Valuation Allowances - Estimates of future taxable income and
management's determination of whether it is more likely than not that deferred
tax assets will be realized - Refer to Note 1 and 6 to the Financial Statements

Critical Audit Matter Description



Deferred income taxes reflect the net future tax effects of temporary
differences between the carrying amounts of assets and liabilities for
accounting purposes and their basis for income tax purposes and the tax effects
of net operating losses and tax credit carryforwards. Net deferred tax assets
have been recognized based on management's estimates of future taxable income
for the U.S. and the U.K. PPL Corporation files tax returns in multiple
jurisdictions with complex tax laws and regulations. Valuation allowances have
been established for the amount that, more likely than not, will not be
realized. PPL Corporation has $834 million of valuation allowances recorded on
$1,479 million of deferred tax assets related to federal, state and foreign loss
and credit carryforwards as of December 31, 2019.

Management considers a number of factors in assessing the realization of a
deferred tax asset associated with net operating losses and tax credit
carryforwards, including the reversal of temporary differences, future taxable
income and ongoing prudent and feasible tax-planning strategies. Management also
considers the uncertainty posed by political risk and the effect of this
uncertainty on the various factors that management takes into account in
evaluating the need for valuation allowances. The amount of deferred tax assets
ultimately realized may differ materially from the estimates utilized in the
computation of valuation allowances and may materially impact the financial
statements in the future.


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We identified management's estimation of the valuation allowances associated
with loss and credit carryforwards as a critical audit matter because the need
for valuation allowances to reduce deferred tax assets requires significant
management judgment. This required a high degree of auditor judgment and an
increased extent of effort, including the need to involve our income tax
specialists, when performing audit procedures to evaluate the reasonableness of
management's estimates of future taxable income and the determination of whether
it is more likely than not that the deferred tax assets will be realized.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to estimated future taxable income and the determination of whether it is more likely than not that the deferred tax assets will be realized included the following, among others:

• We tested the effectiveness of management's internal controls over the

valuation allowance for income taxes, including management's internal

controls over the estimates of future taxable income and the determination

of whether it is more likely than not that the deferred tax assets will be


       realized.


• We evaluated the reasonableness of the methods, assumptions, and judgments


       used by management to determine whether a valuation allowance was
       necessary.


• With the assistance of our income tax specialists, we evaluated whether

the sources of management's estimated taxable income were of the

appropriate character and sufficient to utilize the deferred tax assets


       under the relevant tax laws.


• We evaluated management's ability to accurately estimate taxable income by

comparing actual results to management's historical estimates and

evaluating whether there have been any changes that would affect


       management's ability to continue accurately estimating taxable income.



•      We tested the reasonableness of management's estimates of future taxable

income by comparing the estimates to:




• Internal budgets.


• Historical taxable income, as adjusted for nonrecurring items.

• Internal communications to management and the board of directors.





•            Forecasted information included in PPL Corporation's press releases
             as well as in analyst and industry reports for PPL

Corporation.



/s/ Deloitte & Touche LLP

Parsippany, New Jersey
February 14, 2020

We have served as the Company's auditor since 2015.


















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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareowners and the Board of Directors of PPL Corporation
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of PPL Corporation
and subsidiaries (the "Company") as of December 31, 2019, based on criteria
established in Internal Control - Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our
opinion, the Company maintained, in all material respects, effective internal
control over financial reporting as of December 31, 2019, based on criteria
established in Internal Control - Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States) (PCAOB), the consolidated financial
statements as of and for the year ended December 31, 2019, of the Company and
our report dated February 14, 2020, expressed an unqualified opinion on those
financial statements.
Basis for Opinion
The Company's management is responsible for maintaining effective internal
control over financial reporting and for its assessment of the effectiveness of
internal control over financial reporting, included in the accompanying
Management's Report on Internal Control over Financial Reporting at Item 9A. Our
responsibility is to express an opinion on the Company's internal control over
financial reporting based on our audit. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those
standards require that we plan and perform the audit to obtain reasonable
assurance about whether effective internal control over financial reporting was
maintained in all material respects. Our audit included obtaining an
understanding of internal control over financial reporting, assessing the risk
that a material weakness exists, testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk, and performing
such other procedures as we considered necessary in the circumstances. We
believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company's internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company's internal control over
financial reporting includes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company's
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.

/s/ Deloitte & Touche LLP

Parsippany, New Jersey
February 14, 2020







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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareowner and the Board of Directors of PPL Electric Utilities
Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of PPL Electric
Utilities Corporation and subsidiaries (the "Company") as of December 31, 2019
and 2018, the related consolidated statements of income, equity, and cash flows,
for each of the three years in the period ended December 31, 2019, and the
related notes (collectively referred to as the "financial statements"). In our
opinion, the financial statements present fairly, in all material respects, the
financial position of the Company as of December 31, 2019 and 2018, and the
results of its operations and its cash flows for each of the three years in the
period ended December 31, 2019, in conformity with accounting principles
generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on the Company's financial
statements based on our audits. We are a public accounting firm registered with
the Public Company Accounting Oversight Board (United States) (PCAOB) and are
required to be independent with respect to the Company in accordance with the
U.S. federal securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those
standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. As part of our audits, we are required to obtain an
understanding of internal control over financial reporting but not for the
purpose of expressing an opinion on the effectiveness of the Company's internal
control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material
misstatement of the financial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in
the financial statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as well as
evaluating the overall presentation of the financial statements. We believe that
our audits provide a reasonable basis for our opinion.

/s/ Deloitte & Touche LLP

Parsippany, New Jersey
February 14, 2020

We have served as the Company's auditor since 2015.







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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Sole Member and the Board of Directors of LG&E and KU Energy LLC



Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of LG&E and KU
Energy LLC and Subsidiaries (the "Company") as of December 31, 2019 and 2018,
the related consolidated statements of income, comprehensive income, equity, and
cash flows, for each of the three years in the period ended December 31, 2019,
and the related notes and the schedule listed in the Index at Item 15
(collectively referred to as the "financial statements"). In our opinion, the
financial statements present fairly, in all material respects, the financial
position of the Company as of December 31, 2019 and 2018, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 2019, in conformity with accounting principles generally accepted
in the United States of America.

Basis for Opinion
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on the Company's financial
statements based on our audits. We are a public accounting firm registered with
the Public Company Accounting Oversight Board (United States) (PCAOB) and are
required to be independent with respect to the Company in accordance with the
U.S. federal securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those
standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. As part of our audits, we are required to obtain an
understanding of internal control over financial reporting but not for the
purpose of expressing an opinion on the effectiveness of the Company's internal
control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material
misstatement of the financial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in
the financial statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as well as
evaluating the overall presentation of the financial statements. We believe that
our audits provide a reasonable basis for our opinion.

/s/ Deloitte & Touche LLP

Louisville, Kentucky
February 14, 2020

We have served as the Company's auditor since 2015.


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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholder and the Board of Directors of Louisville Gas and Electric Company



Opinion on the Financial Statements
We have audited the accompanying balance sheets of Louisville Gas and Electric
Company (the "Company") as of December 31, 2019 and 2018, the related statements
of income, equity, and cash flows, for each of the three years in the period
ended December 31, 2019, and the related notes (collectively referred to as the
"financial statements"). In our opinion, the financial statements present
fairly, in all material respects, the financial position of the Company as of
December 31, 2019 and 2018, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 2019, in conformity
with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on the Company's financial
statements based on our audits. We are a public accounting firm registered with
the Public Company Accounting Oversight Board (United States) (PCAOB) and are
required to be independent with respect to the Company in accordance with the
U.S. federal securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those
standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. As part of our audits, we are required to obtain an
understanding of internal control over financial reporting but not for the
purpose of expressing an opinion on the effectiveness of the Company's internal
control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material
misstatement of the financial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in
the financial statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as well as
evaluating the overall presentation of the financial statements. We believe that
our audits provide a reasonable basis for our opinion.

/s/ Deloitte & Touche LLP

Louisville, Kentucky
February 14, 2020

We have served as the Company's auditor since 2015.








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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholder and the Board of Directors of Kentucky Utilities Company



Opinion on the Financial Statements
We have audited the accompanying balance sheets of Kentucky Utilities Company
(the "Company") as of December 31, 2019 and 2018, the related statements of
income, equity, and cash flows, for each of the three years in the period ended
December 31, 2019, and the related notes (collectively referred to as the
"financial statements"). In our opinion, the financial statements present
fairly, in all material respects, the financial position of the Company as of
December 31, 2019 and 2018, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 2019, in conformity
with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on the Company's financial
statements based on our audits. We are a public accounting firm registered with
the Public Company Accounting Oversight Board (United States) (PCAOB) and are
required to be independent with respect to the Company in accordance with the
U.S. federal securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those
standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. As part of our audits, we are required to obtain an
understanding of internal control over financial reporting but not for the
purpose of expressing an opinion on the effectiveness of the Company's internal
control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material
misstatement of the financial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in
the financial statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as well as
evaluating the overall presentation of the financial statements. We believe that
our audits provide a reasonable basis for our opinion.

/s/ Deloitte & Touche LLP

Louisville, Kentucky
February 14, 2020

We have served as the Company's auditor since 2015.









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