PPL and subsidiaries face market risks (interest rate, commodity price, and volumetric), credit risk from counterparty defaults, and regulatory risks from rate cases, legal proceedings, and environmental regulations (e.g., Clean Air Act, Superfund). Potential for significant costs related to environmental remediation, legal settlements, and regulatory penalties. Adverse weather conditions can impact generation, transmission, and distribution operations. Changes in financial markets, commodity prices, and economic conditions (inflation) pose risks.
Financial Upside
PPL and subsidiaries have various rate-making mechanisms to recover capital project costs, including forward test years, formula rates, and other regulatory approvals. Acquisitions (e.g., Narragansett Electric) and new developments (e.g., Mill Creek Unit 5) offer potential revenue growth and asset expansion. Favorable outcomes in rate cases and regulatory proceedings could lead to increased revenue and reduced costs. Interest income from affiliates and other income sources provide additional revenue streams.
