賓州電力 (PPL) 2021 Q4 法說會逐字稿

Good morning, and welcome to the PPL Corporation fourth quarter earnings conference call. (Operator Instructions) Please note, this event is being recorded.

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

Thank you. Good morning, everyone, and thank you for joining the PPL Conference Call on Fourth Quarter and Full Year 2021 Financial Results. We provided slides for this presentation in our earnings release issued this morning on the Investors section of our website. Before we get started, I'll draw your attention to Slide 2 and a brief cautionary statement. Our presentation and earnings release, which we'll discuss during today's call, contain forward-looking statements about future operating results or other future events. Actual results may differ materially from these forward-looking statements. Please refer to the appendix of this presentation and PPL's SEC filings for a discussion of factors that could cause actual results to differ from the forward-looking statements.

We will also refer to non-GAAP measures, including earnings from ongoing operations and adjusted gross margins on this call. For reconciliations to the comparable GAAP measures, please refer to the appendix. Participating on our call this morning are Vince Sorgi, PPL President and CEO; Joe Bergstein, Chief Financial Officer; and Greg Dudkin, Chief Operating Officer.

With that, I'll now turn the call over to Vince.

Thank you, Andy, and good morning, everyone. We appreciate you joining us for our 2021 year-end earnings call. Moving to Slide 3 and the agenda for today's call. I'll begin this morning with an overview of 2021 and what was clearly a significant transition year for PPL. I'll highlight key achievements we made throughout the year, including our progress in strategically repositioning PPL for future growth and success. Joe will provide a financial update, including the previously discussed reset of our first quarter dividend we announced this morning and a detailed overview of our 2021 financial results. And as always, we'll leave ample time for your questions.

Turning to Slide 4. I'm incredibly proud of how our team performed and what was truly a remarkable year for PPL. As we began a new century in our company's history, we took bold steps to strategically reposition PPL as a U.S.-focused energy company, committed to sustainable growth and well positioned to lead the clean energy transition while maintaining affordability and reliability for our customers.

We completed the sale of our U.K. utility business in June, achieving exceptional value at almost $11 billion while eliminating risks associated with foreign operations. We then took steps to strengthen PPL's balance sheet by reducing $3.5 billion of our holding company debt which provides us with significant financial flexibility going forward. We advanced our planned acquisition of Narragansett Electric, which will expand and diversify our U.S. presence, add another high-quality regulated utility to our portfolio and create additional opportunities to leverage our proven operating model to drive value for customers and shareowners.

We anticipate receiving a final order from the Rhode Island division of Public Utilities and Carriers with respect to the acquisition by March of 2022. While the strategic repositioning was a key priority in 2021 to set PPL up for long-term success, we also remain focused on achieving our near-term objectives.

In 2021, we continued our track record of earning equity returns that were in line with those allowed by our regulators. We also achieved constructive regulatory outcomes in 2021, with the settlements on the Pennsylvania FERC ROE challenge and the Rate Case in Kentucky, which will provide added stability and predictability to our plan over the next several years.

We also returned over $2 billion to share owners through dividends as well as share repurchases, which included the completion of our targeted $1 billion in share buybacks through December 31. And true to our mission, we delivered energy safely, reliably and affordably for our 2.5 million customers in the United States. And as the pandemic refused to yield, we stayed resilient, acted responsibly to protect our employees and remained focused on continuous improvement. From Kentucky to Pennsylvania, we delivered exceptional service throughout 2021. We maintain transmission and distribution reliability as well as generation availability that was among the best in the industry.

Despite PPL Electric Utilities experiencing significant storms during 2021, it maintained top quartile performance for safety, which measures the average number of outages our customers experience. Meanwhile, our Kentucky operations posted their second best year on record for safety. When severe weather struck either in Pennsylvania or Kentucky, we responded quickly and effectively.

For example, after December tornadoes tore through portions of our service territory in Kentucky, damaging or destroying more than 500 transmission and distribution poles, we restored power to most customers within 48 hours. Similarly, when the remnants of Hurricane Ida swept through our Pennsylvania service territory, knocking out power to tens of thousands of customers, we mobilized quickly and effectively to get the lights back on as soon as possible. Our restoration performance in the wake of Hurricane Ida was recognized with an EEI Emergency Response Award.

This performance is the result of the investments we've made in our grid and our dedicated employees who pride themselves on delivering the superior level of service each day. And that service was once again reflected in our customer satisfaction scores. We were honored to receive 4 new J.D. Power Awards in 2021 for electric utility residential and business customer satisfaction with PPL Electric Utilities and Kentucky Utilities both ranking highest among similarly-sized utilities in their respective regions.

And following an independent survey of customers at 140 of the largest utilities in the U.S., PPL Electric and Kentucky Utilities were recognized by Escalent as 2 of the most trusted utility brands in the nation. Across PPL, we also continue to foster a culture of innovation, investing in advanced technology and data analytics to deliver industry-leading reliability and enterprise-wide cost efficiencies.

This resulted in multiple industry awards in 2021, including the use of dynamic line rating, technology, and the use of data analytics to better target vegetation management. With an eye toward keeping reliability strong and empowering our customers, we also continue to invest in the future. This included executing more than $2 billion in infrastructure improvements to further strengthen grid resilience, modernize our network, incorporate advanced technology and pave the way for increased electrification and renewable energy in our service territories.

Turning to Slide 5. Over the past year, we also delivered on our commitments to deliver a sustainable PPL for our shareowners, employees and the communities we serve. We made significant progress in advancing our clean energy strategy. We adopted a net zero carbon emissions goal, accelerated our interim emissions reduction targets to 70% from 2010 levels by 2035 and 80% by 2040, and we also accelerated our coal plant retirement schedule. Separately, we announced a commitment of over $50 million in new investments to fund research and development in the clean energy space with our planned investments in EIP and EPRI's Low-Carbon Resources Initiative.

We also launched a new partnership to study carbon capture at natural gas combined cycle power plant and reached new agreement to provide an additional 125 megawatts of solar power to major Kentucky customers. In November, we published our latest comprehensive climate assessment report, which highlights the risks associated with climate change and the opportunities in responding to it and evaluate potential future emissions under multiple scenarios.

This included a scenario consistent with limiting global warming to 1.5-degree Celsius. Our climate assessment outlines our clean energy strategy and goal to enable a responsible transition that balances our commitment to the environment, our customers, our employees and our communities. LG and KU also submitted their triennial joint Integrated Resource Plan, which reflected a significant increase in projected renewable additions in the 15-year planning horizon compared to our prior plan.

We expect the trend of a more rapid decarbonization of our generation fleet in Kentucky to continue, with further improvements in cost and technology for renewables as well as other clean energy technology. In addition to our focus on advancing our clean energy transition, we also remain very engaged in the communities we serve and with our employees throughout 2021. We continue to move PPL forward by creating a more diverse and inclusive workplace. We implemented an enterprise-wide diversity, equity inclusion strategy, adopted DEI commitment, increased diversity within our leadership ranks, overall workforce and the Board, and we expanded our support for social justice and equity initiatives in the communities we serve.

In addition, we continued to create new opportunities through business resource groups for employees of all backgrounds and experiences to collaborate, share perspectives and contribute to PPL's success. Our strong commitment to diversity and inclusion received recognition for multiple organizations in 2021, with PPL being named the Best Place to Work for LGBTQ Equality and Disability Inclusion as well as a top company for ESG. In this January, PPL once again was named a Best Place to Work for LGBTQ Equality, marking the sixth straight year PPL has received this recognition.

During our Fall Giving Campaign, PPL employees and retirees collectively raised more money than ever before. More than $7 million in individual pledges and corporate matching contributions that will help lift individuals, families and communities. And in the aftermath of the Kentucky tornadoes, we responded quickly, providing financial support to assist Kentucky families and businesses. In other highlights, we continue to build an exceptional management team that we believe will lead PPL to its best years to come.

We promoted Greg Dudkin to Chief Operating Officer and are leveraging his experience in building one of the most advanced utilities in the nation in PPL Electric Utilities to drive further value for stakeholders across all of PPL's operating companies. We're extremely excited to have Wendy Stark on our team as our new General Counsel.

Wendy's extensive experience in regulatory matters and her deep knowledge of our industry, have made her a great addition to PPL. We named 2 new Utility Presidents in Pennsylvania and Kentucky, with Stephanie Raymond in Pennsylvania, and John Crockett in Kentucky. Stephanie is the first female Utility President in our company's 100-year history. We also named a highly qualified and experienced leadership team in Rhode Island, led by Dave Bonenberger from PPL and numerous talented employees from National Grid to lead our electric and gas operations pending the completion of the acquisition. We also took steps to strengthen our corporate governance during the year.

Our Board of Directors appointed an outstanding leader and experienced Board member as independent Board Chair in Craig Rogerson, reflecting PPL's continued commitment to strong corporate governance and independent oversight by a diverse, engaged Board. And Heather Redman, Co-Founder and Managing Partner of Flying Fish Partners was a welcomed addition to our highly experienced Board of Directors, and brings a wealth of expertise in disruptive technologies and the energy industry.

In summary, across our business, we made tremendous progress in 2021 as we pursued our strategy to deliver sustainable value for all stakeholders and position PPL for future growth and success.

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

Thank you, Vince, and good morning, everyone. Let's turn to Slide 7 for the financial update. Today, we announced fourth quarter reported earnings of $0.18 per share. Special items in the fourth quarter were $0.04 per share, primarily due to integration expenses associated with the planned acquisition of Narragansett Electric and discontinued operations associated with the U.K. utility business.

Adjusting for special items, fourth quarter earnings from ongoing operations were $0.22 per share. Our fourth quarter results bring our total 2021 results to a net loss of $1.93 per share. Special items for 2021 were $2.98 per share, primarily due to discontinued operations associated with the U.K. utility business, a U.K. tax rate change prior to the sale and a loss on the early extinguishment of debt.

Adjusting for special items, 2021 earnings from ongoing operations were $1.05 per share. Before turning to the 2021 earnings walk, I'll highlight a few other financial updates, the most notable being the first quarter dividend we announced this morning.

As we indicated on our third quarter earnings call, we planned to update the dividend following the January 3 payment as we continued to progress on PPL's strategic repositioning. Recall that we had maintained the dividend at the prior rate despite the sale of WPD, providing $350 million of dividends to reward long-term shareowners as we work to close the transactions and deploy the cash proceeds from the WPD sale in a value-accretive manner. Today, we've announced the first quarter 2022 dividend of $0.20 per share, payable April 1.

The updated quarterly dividend aligns with our earnings projections for PPL's current businesses and a targeted payout ratio of 60% to 65%. We plan to provide an updated annualized dividend rate and growth projections to align with earnings growth during an Investor Day following the completion of the Narragansett regulatory review process. We recognize that it would have been optimal to declare the April 1 dividend when we provide our annualized earnings forecast.

However, since we haven't completed the Narragansett regulatory review process, we wanted to be transparent today by providing clarity on the dividend reset following the sale of WPD. We plan to reflect any increase in the dividend due to the inclusion of Narragansett in our forecast when we provide a comprehensive financial update at the Investor Day.

As Vince noted, one of the key financial highlights for 2021 was a reduction in our holding company debt as we allocated a significant amount of the WPD sales proceeds to strengthen PPL's balance sheet. We had a unique opportunity to establish one of the leading credit profiles in the sector, an attribute we see as increasingly important with the growing capital needs to fund the clean energy transition and now amid the backdrop of rising interest rates.

In other financial updates, we amended and extended our credit facilities during the fourth quarter to better align our liquidity needs post the strategic repositioning. In short, we slightly reduced the capacity at PPL Capital Funding to $1.25 billion from $1.45 billion as we no longer need the same level of liquidity without the foreign currency risk associated with the U.K.

We have also included an option to add Narragansett as a co-borrower to the PPL Capital Funding credit facility, pending the closing of the acquisition. And we continue to target 16% to 18% CFO and FFO to debt metrics, including the Narragansett Electric acquisition.

We believe these actions provide a very strong financial foundation and place PPL among the best credit profiles in our industry. Let's move to our full year 2021 earnings results on Slide 8. I would note that while I will compare 2021 earnings to our 2020 results, the periods are not truly comparable given the sale of the U.K. businesses, the reallocation of certain costs, the balance sheet recapitalization along with the outcome of the transmission ROE challenge. Similar to prior quarters, we have adjusted the 2020 Corporate and Other amount to reflect certain costs previously allocated to the U.K. regulated segment, primarily interest expense and other support costs.

These costs totaled about $0.07 per share for the year. Turning to the ongoing segment drivers. Our Pennsylvania Regulated segment earned $0.61 per share, a $0.04 year-over-year decrease. Earnings results in Pennsylvania were primarily driven by a reduction in the transmission formula rate return on equity, lower peak transmission demand and higher operation and maintenance expense. These decreases were partially offset by returns on additional capital investments in transmission.

Turning to our Kentucky segment, we earned $0.61 per share in 2021. A $0.06 increase over comparable results 1 year ago. The increase was primarily due to higher base retail rates effective July 1, lower interest expense primarily due to lower interest costs that were previously allocated to the Kentucky Regulated segment and lower interest rates. Partially offsetting these items were higher operation and maintenance expense related to several factors, including support costs, generation plant costs, T&D costs and higher depreciation due to the additions to PP&E.

Results at Corporate and Other were $0.03 higher compared to the prior year. Factors driving earnings results at Corporate and Other, primarily included lower interest expense primarily due to less outstanding long-term holding company debt, partially offset by interest costs previously allocated to the Kentucky segment. Partially offsetting this increase were several factors that were not individually significant.

Moving to Slide 9. The capital investments made in Pennsylvania and Kentucky during 2021, support a grid modernization, grid resiliency and reliability and improved service for our customers. Of the $2 billion of CapEx that Vince noted, we invested about $1 billion in each of the segments. In Pennsylvania, investments in distribution were made to maintain top quartile industry reliability and performance and investments in more advanced IT systems.

Meanwhile, on the transmission side, investments were primarily related to asset health and reliability with a focus on smart relays, equipment monitoring and automation to support a more advanced grid. Our Kentucky investments were primarily related to replacing aging transmission infrastructure, maintaining and enhancing our electric distribution network, generation outages, environmental compliance and grid modernization. This resulted in total rate base growth of nearly 6% even as rate base related to our coal-fired generation facilities declined.

That concludes my prepared remarks, and I'll turn the call back over to Vince for some closing comments.

Thank you, Joe. As I mentioned at the outset of my remarks, 2021 was very much a transition year for PPL. It was about reimagining PPL and laying a firm foundation for the company's future growth and success, and I believe we achieved just that.

Looking forward, our focus is on completing the acquisition of Narragansett Electric and introducing a new PPL to shareowners, a PPL that is committed to delivering sustainable value for shareowners, backed by one of the strongest balance sheets in the U.S. utility sector, distinguished by its best-in-class customer service, committed to net zero carbon emissions and well positioned to lead the clean energy transition, while maintaining affordable, reliable service for our customers. We look forward to sharing further details on our strategy and the exciting growth prospects for the new PPL at our Investor Day.

With that, operator, let's open the call for Q&A.

(Operator Instructions) And our first question will come from Shar Darreza (sic) [Shar Pourreza] of Guggenheim Partners.

So Vince, perhaps if we can just start on the process in Rhode Island. It seems like there's been some noise around things like cost and mutual assistance versus grid's ownership in the docket. Any kind of color you can provide around your interactions as the decision target date approaches by the end of this month?

Yes, sure. First of all, let me just say that we think we've met the standard for approval in the state, and we are looking forward to the decision coming out from the division. And again, as we stated really from the outset of this process, we believe that PPL is uniquely positioned to serve Rhode Island customers at this point in time. When you look at our long history of providing energy safely, reliably, affordably for our customers, we consistently rank among the very best for customer satisfaction, we've been a clear leader in developing and deploying the kind of smart grid technology that's going to be critical to helping Rhode Island meet their very ambitious decarbonization goals and with the additional commitments that we've made, we believe the transaction is clearly in the public interest in Rhode Island.

So I'll just reiterate that we believe we've met the standard, and we're looking forward to the decision.

Got it. Got it. So I get it. So just there is a high level of confidence that we're going to close. Okay. And then just, Vince, you completed the $1 billion buybacks, right, increased CapEx by $1 billion at EEI. Could we just check back on the remaining amount of unallocated cash here? And how you're thinking about the toggle allocation between buybacks and more CapEx in light of the current DPS guidance?

Yes, Shar. I would say we don't have a detailed update on that. We'll provide a full update at the Investor Day. Really it's important that we get through the regulatory process in Rhode Island -- of course, we've made some commitments as part of the process. To date we want to make sure we factor all of that into the proceeds' discussion, and we'll update that with the full update on the Investor Day call.

Got it. Understood. And then just on a little bit more of a minor thing, maybe just -- can you comment on the Safari sale process? I mean it seems like there was some interest there previously. I guess, what drove the decision to put it on the block and any material amount of cash expected there?

Well, Shar, as you know, we're not going to comment on market rumors. So...

The next question comes from Paul Zimbardo of Bank of America.

I know you commented a little bit on it, Joe, but just on the decision around the dividend and the timing now versus maybe wait until you have clarity in a month or so, just any perspective there? And it sounds like the plan would be more of a kind of a one-time bump, assuming Narragansett closes versus a faster growth rate on the dividend? But just any perspective you can provide there would be helpful.

Yes, sure, Paul. While it's certainly possible that we'll receive the decision as early as next week from the division, we're not certain of that, and we are still in the middle of the regulatory approval process. And as we discussed on the third quarter call, we did want to reduce the uncertainty related to the anticipated reset of the dividend following the U.K. sale. And just without the firm timeline for the Rhode Island transaction, we just felt it was appropriate to keep our normal cadence, which as you know, we would normally announce our first quarter dividend on our call, on our year-end call. And so as we were contemplating whether to move from that normal cadence and potentially hold off with a call, we also realized that if we didn't do it today, we'd actually risk ended up doing it in the U.K., which would not be the preferred approach, of course.

So we wanted to make sure that we could provide an opportunity for questions around what we've said. And that was really the nature of the decision to announce it today versus waiting. And then in terms of the second part of your question, as Joe noted, the Q1 dividend is based on our current operations only, and we would plan to increase that following the closing of the Narragansett transaction. And again, we'll provide that full update once we close the deal and then conduct the Analyst Day or the investor call.

Okay. Great. And then one last question on the strategic corporate initiative costs you incurred in the quarter, particularly at Kentucky as well as just the corporate overall? Just what's the thought process there? And is there anything you're considering specifically with that Kentucky property?

Joe, do you want to go at it?

Yes. No. I think the costs associated with the strategic repositioning were normal in nature related to the Narragansett Electric acquisition, really, the amount that's associated with Kentucky is really immaterial and nothing related to any strategic going on in Kentucky. It's all essentially for the Narragansett acquisition.

The next question comes from Durgesh Chopra of Evercore ISI.

I know there's an update coming post the Narragansett transaction. But just so we have the numbers right. Am I right that with the share buybacks, and I'm focused on the leftover cash, with the share buybacks and the additional CapEx announced at the U.S. utilities, you still have roughly about $1 billion left to allocate? Do I have that number right?

Well, we'll get into the total use of proceeds and any -- and how that's utilized when we get to the Investor Day.

That's fair. And then just one, and you may not be able to answer this also, but I'll just ask. Is the sort of 2022 going to be the base year for any term -- any long-term projections that you give out or long-term earnings growth target that you gave out?

Yes, that's the plan, Durgesh.

The next question comes from Paul Patterson of Glenrock Associates.

Can you hear me?

Yes, Paul, we can hear you.

Yes, we can, Paul.

So just to sort of follow up on this, when -- I guess, how should we think of -- I mean I know you guys are obviously feeling confident about the Narragansett closure, but it doesn't appear that there's any settlement. And it appears that there's some uncertainty just generically speaking, hence, sort of the dividend action that you guys have been describing. How should we think about what the scenario would be if the deal doesn't come about if you don't get approval for it?

Yes, Paul, I don't really want to talk about some hypotheticals. We're really focused. Again, I'll just go back to what I said to Shar, we think we've clearly met the standard for approval in the state with what we bring to the table in terms of our operating experience, the financial strength of our company, of course, commitment that we've made throughout the process there. So we and National Grid are very focused on getting to closing. We spent the last year on transition planning, integration planning, hiring or getting 1,100 people identified and ready to start on day 1. Paul, we are all very focused on getting this deal over the goal line and bringing real value to our line.

Okay. But given the idea that the target date, and again, I mean, are you hearing -- let me ask you this, are you hearing that there's any change in the target date decision because that's almost just a week away, and it would seem to me that with the dividend action, everything that perhaps you could have sort of waited to do the earnings release and everything else, unless you think that there's maybe a potential for that target date isn't -- that it's going to be pushed back or something? How should we think about when we're going to get more clarity of Rhode Island? Is it still the target date kind of thing? Or is there something else we should think about?

Yes. Look, Paul, I think based on the schedule that we have, right, the targeted decision date is the 25th. But we just -- we recognize that there's a lot in this case through the written testimony, the briefs, the oral hearings. We just want to recognize the fact that the 25th is a target. And there's a lot that the hearing officer and the division need to get through. And so there's been no change in the 25th as the target. But we're just trying to be realistic that there's no guarantee that we're going [to make it].

The next question comes from Michael Lapides of Goldman Sachs.

I actually wanted to just ask about Pennsylvania and Kentucky items. First, in Kentucky. Can you remind us as a result of the [IRP] when the material fleet generation changes or transformation would likely play out over that extended timeframe? Like what happens in the next 3 to 5 years, what happens in the year 6 through 15?

Sure. So we have the next round of retirements, you may recall, are in 2024. Based on our reserve margins, we don't anticipate a significant need to replace generation for those retirements. The next group would be in 2028. We would need to replace the 2028 retirements. And so probably see capital start to be spent in the 2026-ish timeframe for that. And then the next round of retirements are this side of 2035. So I think in 2034, '35-ish. And so you'll see the capital in the early 30s to prepare for those retirements.

Got it. And given the move in commodity prices, both natural gas, power and coal. Do you see for the next couple of years, your [copayments] actually running at a higher capacity factor in Kentucky than maybe what you had seen previously? Or is there an opportunity to maybe save O&M and scale back the output levels of that source and either run gas units more or buy more power from the market?

Yes. So it's a good question. So as you know, we're incredibly focused on decarbonizing the overall generation fleet. But you bring up a good point around the cost of natural gas versus the cost of coal. So as we think about it, Michael, we'll continue to look at how we best utilize the fleet to ensure reliability for the lowest cost for customers, but at the same time, decarbonizing. So that could be additional renewables -- renewable PPAs or own renewals. We're always looking at -- does it make sense to shift between natural gas and coal, so those are all things that we continue to iterate as we look at the decarbonization -- the overall decarbonization strategy for the coal.

Got it. And then one last Kentucky question. Can you just remind me, I remember -- I think I remember correctly, smart meter implementation in the company, it's been a while. But did Kentucky have a similar level of that relative to the other [jurisdictions] in Pennsylvania?

Yes. So we've done 2 rounds of smart meter deployment in Pennsylvania. We are doing our initial deployment in Kentucky. We're expecting that to be completed in 2026. And then you hadn't asked, but in Rhode Island, they don't have smart meters, but that would be something we would be deploying very quickly after acquisition in Rhode Island as well.

The next question comes from Steve Fleishman of Wolfe Research.

I've got a few questions, Vince. So I guess, first of all, I thought you had said in the past that you were going to use like a pro forma base for your growth rate, including like a full year of it NEC, not just 2022. Is that correct? Or are you going to use 2022 calendar year?

Yes. Sorry, if I wasn't clear on that with your earlier response. Yes, it would be 2022 's pro forma.

Okay.

Okay. And just you have a new payout -- dividend and you gave a payout ratio, so you can kind of back into what earnings power from the core businesses roughly are expected to be without NEC, is that like a fair representation of 2022 core businesses without NEC?

That's reasonable, yes.

Okay. And then just on NEC, has the -- I know initially, the Attorney General had talked about being opposed. Have they given an official opposition now with the commission? Or where does that stand?

Yes. Steve, I don't think that the Attorney General has modified their original position as we've gone through it.

Okay. And so there's no -- at this point, there's no like settlement talks going on? There's just going to be a decision?

At this point, we're just awaiting the decision from the...

Okay. And then just on another thing you had talked about was potentially -- I think you have potentially trying to kind of resolve future rate case as part of this, too. But if you have to just get a decision, like when would be the next rate case in Rhode Island?

Yes. So we've agreed to not file a rate case for a period of 3 years from the time of closing. And so that I think in Rhode Island at 9, 10 months to get from the time we file till the time we complete, so depending on when it closes, that can give you kind of when the case would...

So that's -- at least is your proposal, that's a condition of your filing?

Yes. So that is a commitment that we made on upfront that is a commitment that has been made.

Okay. And then -- so maybe just to sum up on the dividend. So you have this new dividend level based on the existing businesses. You'll -- when you close NEC, you'll reset some payout additional dividend related just to that business as well. And then beyond that, dividends would grow in line with earnings growth. Is that kind of the way to rebuild this up?

That's exactly correct.

Okay. Last question. Can you give any information on what Safari had in terms of earnings or EBITDA and any debt on Safari, if there's any separate debt in 2021?

Yes.

Yes. So it's included in our Corporate and Other segment, Steve, and -- but we don't break it out from that as part of that, it's really not material to the overall [Retail] Corporation earnings, and it's just not a level of detail that we provide given its materiality.

Is there any debt on it? Or is it just part of PPL Corporate?

Yes, just PPL Corporate.

The next question comes from Ryan Levine of Citi.

I was hoping that you could elaborate on what factors drove where PPL wants to be in terms of dividend payout ratio relative to the range that you highlighted in your slide deck. And any color as to how you're thinking about that for subsequent dividend decision?

Yes, I'll let Joe cover the details, but just high level, right? We wanted to make sure, again, this is a broader strategic repositioning, obviously starting with the sale of the U.K. acquisition of Veeco. The dividend reset was a natural part of that. So making sure that again, we have one of the strongest balance sheets. We want to make sure that the dividend is sized appropriately for the new businesses going forward and make sure that we're set up to be able to grow that dividend in line with earnings going forward. And we think we've positioned ourselves very well to accomplish all of that with where we set it. But Joe, if there's any other details you want to add.

Yes, Ryan, we've said for a while that we would set the dividend at 60% to 65% of earnings. And with the dividend announcement today, we're in that range on the base business as we move forward and include Narragansett in the forecast and provide the update, we would expect to continue to have dividend in the 60% to 65% payout range.

And then you highlighted some of the kind of preview to the Analyst Day of starting with pro forma 2022 EPS and growing it off there. Is it going to be a 5-year growth that you're looking to provide? And any other color you could share around level of detail that we should expect to get updated at the future Analyst Day?

Yes, it will be a comprehensive update, Ryan. We haven't provided a lot of information since the sale of WPD. We recognize that. We've repositioned the company significantly and we're going to -- we'll provide a lot of detail on the new PPL including the growth rate and the duration of the growth rate. So we'll hold all of that for now until we get there, but you should expect a detailed update at that time.

The next question comes from Gregg Orrill of UBS.

Regarding the dividend, assuming Narragansett Electric closes, when would you provide that new level? Would that be in the closing or at the Analyst Day or how would that work?

Yes. So we would provide an update on that at the Investor Day based on the current schedule, which would support a March closing, as we've been saying, we would then target to have the Investor Day within a few weeks of closing. And so that potentially could put the second quarter dividend in play for the (inaudible).

The next question comes from Anthony Crowdell of Mizuho.

Just hopefully 2 quick ones. Just not specific to Narragansett. I know you don't want to talk about the approval process there. But just it's my first transaction in Rhode Island. What's the process if the -- a merger gets declined? Is there a refiling process where it can -- can a company appeal to a higher court?

So there is an appeal process, Anthony. Certainly, we're focused on getting the approval done. It really depends on what would be in the order. So it's really hard to predict what our next steps would be. Could potentially be [cured via] refiling then we also have the option to appeal, but really speculating at this point. We're hopeful that we've met -- again, we think we've met the standard for approval and we're hopeful that, that decision will come out in our favor when it comes out.

Do you know what court the appeal takes place in? Or is it with the same regulator?

I'm not sure about that, Anthony.

Okay. And then if I could just pivot probably off of Michael's question earlier on Kentucky. Just how should we think about the growth -- the growth in Kentucky from this level? Just if you could maybe give some clarity on that?

Yes, we're not providing really growth targets for any parts of the business at this point, but we will provide full updates on all of that on the Investor Day. To Joe's point, we recognize that -- we've been in this kind of point between selling WPD and closing Veeco without providing a lot of financial detail, and we commit to doing that on the Investor Day, but we're not ready to do that yet.

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

Thanks, and I just want to thank everybody for joining us this morning. We certainly look forward to introducing the new PPL to investors. We remain very confident as we talked a little bit today that our strategic repositioning will deliver long-term value for our shareowners. We do see robust capital investment opportunities going forward to deliver clean energy future. That investment will fuel competitive earnings and dividend growth going forward, and we believe we can deliver that clean energy future in a way that's affordable to our customers with no equity needs in the foreseeable future given the strength of our balance sheet.

So again, we're -- we look forward to seeing you all at the Investor Day and providing all the details that I know you're looking forward for the new PPL. Thanks, everybody.

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