Joe Bergstein William H. Spence - Chairman, Chief Executive Officer, President and Chairman of Executive Committee Paul A. Farr - Chief Financial Officer and Executive Vice President Victor A. Staffieri - Chairman of LKE, Chief Executive Officer of LKE and President of LKE Craig Hart - Chief Financial Officer and Executive Vice President David G. DeCampli - President of PPL Electric Supply Rick L. Klingensmith - President of PPL Energy Services Group LLC and President of PPL Global Gregory N. Dudkin - Principal Executive Officer, President and Director

Dan Eggers - Crédit Suisse AG, Research Division Kit Konolige - BGC Partners, Inc., Research Division Brian Chin - BofA Merrill Lynch, Research Division Paul Patterson - Glenrock Associates LLC Neel Mitra - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division Greg Gordon - ISI Group Inc., Research Division Michael J. Lapides - Goldman Sachs Group Inc., Research Division Julien Dumoulin-Smith - UBS Investment Bank, Research Division Steven I. Fleishman - Wolfe Research, LLC Anthony C. Crowdell - Jefferies LLC, Research Division Gregg Orrill - Barclays Capital, Research Division Rajeev Lalwani - Morgan Stanley, Research Division

Good morning, and welcome to the PPL Corporation Second Quarter Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Joe Bergstein, Vice President, Investor Relations. Please go ahead.

Thank you. Good morning, everyone, and thank you for joining the PPL conference call on second quarter results and our general business outlook. We are providing slides to this presentation on our website at www.pplweb.com. Any statements made in this presentation about future operating results or other future events are forward-looking statements under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from such forward-looking statements. A discussion of factors that could cause actual results or events to differ is contained in the appendix to this presentation and in the company's SEC filings. At this time, I'd like to turn the call over to Bill Spence, PPL Chairman, President and CEO.

Thank you, Joe, and good morning, everyone, and thanks for joining us on the call today. As is our normal practice, joining me on today's call is Paul Farr, PPL's Executive Vice President and Chief Financial Officer, as well as the presidents of our 4 business segments. Following my overview remarks on earnings and operations, Paul will review the financial results in more detail. Today, we're reporting strong earnings for both the second quarter and through the first 6 months of the year. Our quarter-to-date and year-to-date earnings from ongoing operations were driven by strong performance from our regulated utility businesses in Kentucky, Pennsylvania and United Kingdom. Turning to Slide 4. Second quarter reported earnings per share were $0.63, up from $0.46 in the same quarter of 2012. Earnings from ongoing operations for the quarter were $0.49 per share compared with $0.51 per share in the same period last year. Earnings from ongoing operations on a per-share basis are slightly lower than 1 year ago because of the accelerated share recognition of the 2010 and 2011 equity units. That's a topic we discussed in detail on our last quarterly call. For the first year -- half of the year, our reported earnings were $1.28 per share compared with $1.39 per share in the first 6 months of 2012. Ongoing earnings were $1.20 per share for the first half of the year versus $1.21 per share last year. Our strong performance has enabled us to increase the midpoint of our 2013 ongoing earnings forecast to $2.32 per share from the previous midpoint of $2.27 per share. On Slide 5, we provided updated forecasts for each of our segments. Specifically, we're increasing the earnings forecast from our U.K. Regulated segment to $1.28 per share based on its strong performance year-to-date. We're slightly…

Thanks, Bill, and good morning, everyone. Let's move to Slide 9. PPL's second quarter earnings from ongoing operations increased over last year, driven by improved earnings at all 3 regulated segments. The Supply segment experienced an earnings decline, as expected, primarily due to lower hedged wholesale power prices. Per-share earnings from ongoing operations declined slightly in the second quarter due to more than 80 million additional shares being included in our share count year-over-year, which equated to an impact of $0.04 per share for the period. On the first quarter call, we discussed at length the change to if-converted accounting for the shares to be issued under the convert securities. Let's start the segment review with Kentucky results on Slide 10. Kentucky earned $0.08 per share in the second quarter, a $0.01 increase compared to last year. This increase was driven primarily by higher margins due to new base rates that went into effect January 1 of this year, partially offset by lower volumes driven by more temperate weather this year. Moving to Slide 11. Our U.K. Regulated segment earned $0.35 per share in the second quarter, a $0.04 increase over last year. This increase was due to higher utility revenues primarily driven by the April 1, 2013, price increase and higher volumes due to weather. These positive earnings drivers were partially offset by higher depreciation, higher income taxes and other expense, which was primarily driven by exchange rates, and dilution of $0.03 per share. Turning to Slide 12. Our Pennsylvania Regulated segment earned $0.07 per share in the quarter, a $0.02 increase compared to last year. This increase was the result of higher delivery margins primarily due to new rates that went into effect January 1 this year and increased transmission investment, lower O&M and dilution of $0.01 per share. Moving now to Slide 13. Our Supply segment earned $0.01 per share in the second quarter, a decrease of $0.07 compared to last year. This decrease was primarily the net result of lower Eastern energy margins driven by lower baseload energy prices, partially offset by higher capacity prices and increased baseload unit availability, lower Western energy margins primarily due to lower wholesale energy prices and higher depreciation. These negative drivers were partially offset by lower O&M at Susquehanna and lower outage costs at the Eastern fossil and hydroelectric plants. That completes the more detailed financial overview, and I'll now turn the call back over to Bill for the Q&A period.

Okay, operator, we're ready for the questions.

[Operator Instructions] Our first question comes from Dan Eggers at Crédit Suisse. Dan Eggers - Crédit Suisse AG, Research Division: First question. The -- when I look at the weather-normalized load trends, obviously there were some signs of good and not so good in the second quarter, but the year trends are not as bad as we've seen elsewhere. When you guys kind of dig further into the data and you look at usage trends, are you seeing kind of structural improvements once you kind of parse away weather issues? And where do you see bright spots and concerns right now?

Sure. I would say, Dan, overall it's a slightly better situation than we've seen probably seen over the last few years. So there is some improvement when you parse through all the data. Having said that, I think our long-term view is still that, that growth would be somewhat less than 1% on a longer-term run rate based on some of the energy efficiency programs that are out there and just customer usage as we've seen it through the past cycles over the past 5 years. So I can ask the folks to comment more specifically and maybe provide a little bit more color. But Vic, why don't you talk a little bit about Kentucky and what you're seeing there?

Well, our industrial load continues to grow and reinvestment is being made. So we have -- and as you can tell from the statistics, our industrial load is growing nicely. Where we're seeing some issues is in the commercial side, which really is being affected by the economy. And I do think there are some efficiency gains in our residential customers. But I have to tell you that our housing starts were up materially, year-over-year '11. Total of '11 was about 16%, and year-to-date, we're probably 18% higher than we were last year. So we're starting to see a little bit of momentum now probably driven by our unemployment, which is down. So I think, by and large, we are okay. It's not robust, but I think we're moving smartly ahead and driven by our industrial load, frankly.

Craig?

Yes, so in Pennsylvania, I would say that year-to-year, this year compared to last year, we'll probably be almost flat. And then our long term, we're looking at about 0.5% CAGR. So we don't see too much of a big opportunity for load growth in our area. What we're seeing by rate class is that we're starting to see some growth in the residential market. I believe that's due to starting Construction, kind of like what Vic said. Our small C&I has been relatively flat, and the large C&I is down year-to-year about 1%. Dan Eggers - Crédit Suisse AG, Research Division: Okay, great. And...

Yes. Dan Eggers - Crédit Suisse AG, Research Division: I guess just can we get to maybe, Bill, turn the conversation to Supply. With power prices down again this quarter with RPM results pretty disappointing out in '16 and '17, are you guys rethinking where you expect trough to come out from an earnings perspective on Supply? And kind of where you think that business is going to bottom out given what you know today?

Well, our focus remains as it has been, which is to maintain a slightly positive to flat earnings profile for the Supply business, meaning not -- the target is to not allow to go negative from an EPS perspective. That has not changed. We certainly understand the challenges the competitive generation sector faces and the expectations on declining profitability. Because of the strong growth in the utility businesses, we're obviously able to offset a lot of the declines that we've seen in the supply, and we still believe that the 2014, '15 time period is likely to be the trough, assuming that market conditions don't worsen. The management team, as you know, has had a clear track record, in our view, of insightful analysis of the -- those challenges, and we've taken decisive actions to create and defend shareowner value over the years. We do think there's inherent value in the Supply business, and we're very focused on our shareholders getting the benefit of that value. Dan Eggers - Crédit Suisse AG, Research Division: And I guess one last question just kind of on the U.K. tax rates coming back in. Is there -- with this court decision, is there any more structure where it's going to run at a lower repatriated rate than would have expected? Or is this kind of unique to the period and will catch up?

Are you referencing the windfall profits tax, Dan? Dan Eggers - Crédit Suisse AG, Research Division: Yes.

Yes. No, that's a -- it came through as a special item of credit in the period and has no effect on ongoing repatriated tax expense.

Our next question comes from Kit Konolige at BGC.

Just to follow up a little at the Supply business. I wonder if you could give us some color on what your guys thought of the capacity auction in May. What they saw as drivers there, if there are any structural things that you'd like to see changed, et cetera.

Sure. I'll comment first and then -- and ask Dave DeCampli to provide a little bit more color. Overall, it came out a little lower than we had expected. If you'll recall on our last earnings call, we indicated that we expected it to come in slightly lower than the previous auction. It came in a little lower than that. So fundamentally, pretty much in line with our expectations, again just a little bit lower. As we've kind of parsed through the results from the last auction, Dave probably has some comments he'd like to make on what our insights were there. Dave?

Yes, thanks, Bill. Can I -- I'd say that in the end, when we look back, we'd say the pricing that came out of the auction was rational given flat demand growth and increases in supply from both imports and new generation that were a little bit of a surprise. And going forward, it's just difficult for us to model since we have such limited transparency in this process with issues like the imports without firm transmission and moreover [ph] seeming to continually be changing. So anything -- absent anything else to move capacity prices, we expect they may be somewhere in the same general area the next auction around. We'd like to see some progress in PJM's intent or plans to reform their limits and speculative arbitrage between the BRA and the incremental auctions as well. So we're hoping and supporting in the stakeholder process some of these changes as we go forward.

Okay, Thanks, Dave.

Okay. And one other question on the RIIO process. It sounds like you're expecting that all 4 of your units would get fast-track treatment. Is that a fair read of your comments? Or would you not want to go that far?

No, I think that's correct, Kit. When we look at the performances of those businesses in the U.K., they're clearly the superior performers in that structure. And we think if anyone deserves to be fast tracked, it would be our 4 distribution companies.

Our next question comes from Brian Chin at Merrill Lynch.

A follow-up question on the fast track. For the Draft Determination in November, how final is this determination? Is there any sort of precedent for Ofgem changing its view from draft to final in prior deliberations? And in the event we don't get fast-track status in the draft versions, what processes can we follow to help change that draft view towards a better finalized view?

Sure. I'll ask Rick Klingensmith, President of our Global Business, to respond to that question.

The initial determination that Ofgem will make in the November time frame in identifying the potential companies that could be fast tracked is one that they will then follow through with that process so that if you do not make the list of a potential to be fast tracked in that November consultation, then there is not a chance for you to revise your business plan and then try to influence Ofgem in a, way to get your company on that list to be fast tracked. So they will identify those business plans that they believe are well justified and will continue through their evaluations till the March time frame, where they will then either accept all the companies that they had initially determined could be fast tracked or even narrow that list down a bit when their final determination comes out in March.

Understood, very clear. And then if I could just ask one separate question on Supply. We've seen some of your peers talk about how the ARR and FTR issues, how pricing of that has been dislocated from real-time congestion issues. Are you guys seeing any similar issues this year on ARR and FTR dislocations versus congestion?

Dave, why don't you take that question?

Sure. We've seen that approaching, Brian. And from a kind of a strategy point of view, we've significantly reduced our utilization of FTRs as a hedge because of the lack of any real resolution around the whole underfunding issue that's going on with those. So we backed all that into our plan. And for us, that's all delivering in accordance to plan this year. So it's disappointing, and we certainly hope that PJM would come up with a suitable solution so we can resume in earnest these -- the use of these tools as an effective way to mitigate basis risk.

Our next question comes from Paul Patterson at Glenrock.

Just some quick things. First of all, I'm sorry, I missed in Kentucky what the environmental -- I'm sorry, the economic conditions were that led to the decrease in commercial and residential.

Go ahead, Vic.

This is Vic Staffieri. We have -- it's just the natural economy. We have not seen a comeback in our commercial. An offsetting impact of some efficiency gains in our hospitals and educational institutions. So that's where we're seeing some of the runoff in our commercial. And I'll tell you it's really pure economics, and I think there are some efficiencies going on in the commercial sector. We have gotten, as I said before, progress in our industrial sector. We are getting reinvestment by Toyota, by Ford, by General Electric, and that is helping our employment picture. And it should spill over eventually to our residential and, ultimately, our commercial customers, but it's going to take some time.

Okay. So it sounds like it's pretty good. It just sounds like, for some reason, we are just seeing decreases in that area that are sort of because they get efficiencies. Is that the way to think about it?

I would say there's a lot of efficiency going on. When you look at our largest commercial customers, they are doing a pretty good job in getting more efficient and making the investments that make sense. You can see it in our hospitals, as I say. You see it in some of our educational institutions. And then, of course, you're seeing the economic impact spending, retail spending, on some of the malls and those kind of commercial customers. But Kentucky's economy never really busted and never really boomed. And so we've been steady as you go. Housing starts, as I indicated earlier, are up. They've been up for 2 years now after a real period of low. So I have some reason -- some cautious optimism that we're on the path to recovery, but it's not as robust as -- obviously, as we'd like.

Okay. And then on Slide 21, it looks to me like the projected regulated rate base growth is up a couple -- like 7.9 versus 7.7. Just anything in particular there? Or just sort of what's going on?

Sure. I think Paul has the detail on that.

Yes, Paul, we just -- we updated that slide to reflect RAV pursuant to the RIIO filing that we did on July 1. And so you'll see the numbers in green on the bottom a little bit more robust. So that's really effectively the only change that we made. We're still in the throes of our normal business planning process, and so we'd expect -- and I don't expect there would be any material changes, but modest changes as we get through that. That's probably in Q3 or in the year-end call.

Okay. And then the U.K. has had some headlines not really associated with distribution as -- at least as I read it, but more or less associated with the wholesale market and issues of transparency and issues of cost. And there was a report from Parliament and what-have-you. Is there any concern that, that might in some way sort of spill over into the distribution regulatory setup, if you follow me? I mean, is there -- I mean, I'm sure you guys are familiar with it. Just any thoughts about how -- or just how that may or may not relate to you guys?

We are familiar with it. And thus far, we don't see any risk of a spillover. I think the distribution side is very transparent with the process that the U.K. regulator has there. And thus far, that has not even been raised in any publications or any discussions we've seen thus far. So I don't think it will have an impact at all.

Okay, great. And then just finally, trading. What was the numbers for this year? I mean, what was the contribution this year, this quarter -- 6 months and yes, year-to-date and for the quarter? And just any outlook with [indiscernible] to that?

I don't have the year-to-date figure in front of me, but our plan for this year is about $50 million in total, which is similar to last year's plan.

Our next question comes from Neel Mitra at Tudor, Pickering, Holt. Neel Mitra - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division: With the DSIC mechanism now implemented in Pennsylvania, roughly what percentage of your distribution CapEx now is covered through a tracker you get a contemporaneous recovery with?

Sure. Let me ask Greg Dudkin to comment on that.

Yes, I would say it's probably around 30% to 40%. So it's -- the DSIC is focused on reliability-related investments, so it's in the 30% to 40% range. Neel Mitra - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division: Okay. And then second, on Kentucky. Can you kind of comment on the supply-demand situation post-2015 when the coal plants retire from that? Is the Cane Run CCGT enough to fulfill the load? Or would you envision building new plants or possibly acquiring some of the coal plants that have come up for sale in your service territory?

Go ahead, Vic.

Let me comment on that. We -- you may recall we issued an RFP for a generation supply. That begins in about 2017, 2018. And we're in the process of evaluate -- about 30 bids come in, including from Western Kentucky, Big Rivers, and we're in the process of evaluating those things. It appears to us that we begin to show a deficiency in -- by 2018, so we'll put something in place to meet those requirements. As we say, we're evaluating the RFP, results from the RFP, against self-build option as well. But then now, since it's not complete, we have a little time before we have to do that. We'll probably be in a position to talk about that by the end of the year. Neel Mitra - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division: And so you would foresee new capacity coming online in 2018 as kind of the first year as [indiscernible]?

I'm sorry, could you repeat that? Neel Mitra - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division: Sure. Is 2018 the first year that you would need the additional capacity after Cane Run? Or would you need it prior to that?

About 2018 is when we would begin to show a deficiency off of our -- we have a reserve margin of about 15%, and that's when we begin to show a deficiency in the reserve margin. That's the period of time we're focusing on right now. Neel Mitra - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division: Great. And then one last question on Supply. How are you looking at hedging longer term now that we're seeing some of the Marcellus gas dislocate versus Henry Hub? And obviously, that kind of sets the price of power for your Pennsylvania plants. Are you looking to hedge a little farther out? Or is it just too early to tell?

I would say overall, our hedging program, generally speaking, has not changed. We have been, as you know, very aggressive in hedging the output, which has resulted in significant benefits to shareowners. And as we look at our fundamental analysis, that kind of guides us as to how aggressively we want to hedge or not hedge. Dave, do you want to provide any other comments on our hedging?

Yes. I'd add -- I'll just a supplement, Bill. We have, at this point, no plans to change the percentage targets we have put out in the past for future years, starting with 2015 in this case. So really, no change intended at this point in time.

And I think to some degree, we're -- we have constraints with liquidity in the market. So even if we wanted to hedge 3 to 5 years out, let's say, the liquidity just doesn't exist to allow us to effectively do that.

Our next question comes from Greg Gordon at ISI Group.

Most of my questions have actually been answered, but I wanted to circle back to a comment that you made about being focused on the idea that there is value in your generation fleet and you're trying to make sure that's preserved so that your shareholders benefit from it. You've clearly done that through hedging well, but do you think that your fleet is scaled? And do you think that one of the ways that you might preserve and create value in the long run would be to seek to become a more scaled entity that would benefit more from an ultimate recovery in power markets or the flip side being at least capitalize the benefits of being able to have more sustained reduced costs?

Sure, a fair question. And as I have mentioned on previous calls, in Supply our focus has been and will continue to be on aggressively controlling both our O&M and capital costs. And we'll continue to evaluate other options that could increase value. But that's really nothing new in terms of our approach and how we've thought about strategic options over the years. So I think we continue to explore options for all the businesses that would maximize value.

Our next question comes from Michael Lapides at Goldman Sachs.

A couple of questions, a little bit unrelated. First, there's been some discussion out of D.C. regarding some tax code-related changes, and one of the things that always comes up is the potential impact -- the potential treatment of offshore cash that gets repatriated. Can you just give high-level comments about how much cash you maintain offshore? How much of it you could actually bring back to the U.S. if that tax code were -- if there was a tax code change versus what you need to keep offshore to be able to fund CapEx in the U.K.?

Sure. Paul?

Yes, there's not -- we don't -- given the growth in investment in the U.K., don't maintain significant offshore cash balances. And we've kind of said in the past that if we find ourselves in a situation where we've got cash there in excess of our targeted cap structures and in excess of planned reinvestment, we sweep that cash back to the States, irrespective of tax outcomes. And given the way that we very efficiently tax-structured the acquisitions, there's not any material U.S. incremental tax that comes with those repatriations for the intermediate term. At times, if you look at the P&L and you would see cash balances there, it's because we do benchmark fundraising. So we'll over time eat into our liquidity facilities, do a benchmark transaction and then use that to fund 1 year in our multiyear set of investment options there. So there's not room in the cap structure to lever up, and there's not significant excess cash sitting on the ground.

Got it. A follow-up for you, Paul. If you just look at the balance sheet in your earnings release, the balance of short-term debt at the end of the second quarter is almost, I don't know, roughly 80% to 90% higher than it was at the end of 2012. What's the plan?

Transactions, GBP 400 million transaction later this year in the U.K., and then we've got $250 million to $300 million FMBs at both KU and LG&E. We did a transaction in July as well. When you look at the quarter-end statements, we did an FMB at Electric Utilities as well. So the utilities, much like the comment that I just made about the U.K., where we have liquidity facilities that we use and eat into and then replace that with longer-term debt balances, we cycle through that, especially -- you'll see bigger movements with the big construction programs, then you would see a normal run rate where you've only got kind of maintenance CapEx kind of a cycle. So nothing concerning on that front at all, and you'll see some more capital markets debt transactions as we make our way through the balance of the year.

Got it. And then last item. You all talked in the prepared comments about an increase in the Pocono transmission project. How big of an increase? What's the driver? And kind of what years does that impact?

Sure, let me ask Greg Dudkin to respond to that.

Yes, so the increase went from $200 million to $335 million. The 3 categories were material and labor. Combining those, that was about $45 million of the change. And the scope -- and when I say scope, so when we put together the original estimate, we hadn't finalized on the path. So it's finalizing on a path, increase right away. We changed the construction standards. So the remainder is in that area. This project basically is scheduled over the next few years all the way through to 2017. So the increase is basically throughout those years.

Got it. I was just curious because when I was looking at the CapEx slide, I think it's Page 20, I didn't really see much of a change in the kind of that red bar in Pennsylvania transmission, so I didn't know if you were cutting somewhere else.

Yes, no, there's no cuts. I had made the comments earlier that we hadn't fully updated that to reflect the business planning changes, which the increase in this transmission project would fall into. So you'd see those updates from us later in the year.

Our next question comes from Julien Dumoulin-Smith at UBS.

So first question here. We've kind of talked about it a little bit, but on the Marcellus and gas basis, obviously that's kind of taken an acceleration of late. What are you seeing just with respect to PJM West pricing? Obviously, your cousins to the east were fairly good in the quarter. But for yourselves, how are you seeing this play out given spot prices as low as they are on gas?

Well, I think overall, I wouldn't say there was a significant change from our plan. And of course, we came into the year very highly hedged. But overall, we understand the impact. We're following the basis very closely, and it has been slightly negative thus far which, again, was consistent with our thought coming into the year. Dave, I don't know if you have any further comments.

Yes, we -- well, Julien, we expect that to persist into the future and are enveloping that into our plans for 2014 and beyond. So essentially, we're accepting reality here and just incorporating into our forward-going plan.

And then secondly, could you talk a little bit about the change in U.K. guidance? Just I suppose pushing it back around after kind of a couple of different changes here, if you will?

Sure. Rick, why don't you comment?

Sure. We've experienced a number of small, favorable variance in a number of our income statement line items like interest expense and depreciation and maintenance expense, with probably our largest variance in revenue. And that's really due to favorable price and volume variances, including weather, as Paul had mentioned in his remarks earlier. And so our revised forecast for the year incorporates this higher level of revenue that we'll see for the remainder of the year in both pricing and the past volume variances that we've realized already on a year-to-date basis.

Interesting. And what had pushed it down initially, if you can remind us?

I'm sorry, the question again, Julien?

What had pushed the outlook down, if you will, initially?

Well, the outlook had -- went down was due to the revised share count that we had at the end of the Q1. So, yes, at the beginning of the year, it was higher, but the entire change was just due to the reflection of the share difference at the end of the Q1. There was no operational effects that resulted in that difference in forecast at the end of Q1.

Our next question comes from Steven Fleishman at Wolfe Research.

Follow-up on that last question. The -- should we think that some of the drivers that raised the '13 guidance for the U.K. would benefit the '14 guidance you gave as well for the U.K.? Or are they more specific to this year such as weather?

Go ahead, Rick.

A big part of the positive variance that we're seeing for this year was weather, and that's probably $0.03 a share that's in our numbers on a year-to-date basis. That is more of a onetime item because in the U.K., we may have volume variances within the year, but those get normalized over the long term. And so some of that will get -- be given back in tariffs in the subsequent year. At this stage, it's hard to identify all the changes that'll take place in our tariff calculation. And so we have not changed our forecast or guidance for '14 as it relates to the U.K. Regulated segment.

And Steve, we set the business plan late in 2012. Some of the positive things that we had been seeing, we factored into the numbers that we provided in July. We had the benefit of 6 months of experience at that point in time versus when the plan got finalized. So some of that was based in there as well.

That's right because so you did raise the '14 when you did the update in July, as I recall a little bit. Okay.

Yes.

And my other question, and this is just a clarification, Bill, when you talk about kind of a trough in earnings, '14, '15, are you referring specifically still to just the Supply business or the overall PPL [indiscernible]?

Really, what we -- I was really speaking to the overall PPL consolidated EPS, which, obviously, some of that is driven by the fall-off on the Supply earnings.

Our next question comes from Anthony Crowdell at Jefferies.

Just 2 quick housekeeping issues. On Slide 21, you give there projected regulated rate base growth. Are those average or year-end totals? And the second thing, I know you talked on a percentage basis. But for your incentive revenues for the U.K. businesses, were you assuming in millions of dollars in like '16 and '17?

Okay. So on the slide, those are year-end numbers. And Rick, why don't you comment on the incentives?

Yes. So as we showed on our July 1 presentation, there was an incentive slide that was baked in. And to give a bit more detail, we have estimated $100 million in incentive revenue that we have earned throughout the rest of this regulatory period. But given the regulatory lag and how you recover those revenues, those will then slip into '16 and partially into '17 for our recovery period. But that's our forecast for the incentive revenues for that period.

[Operator Instructions] And our next question comes from Gregg Orrill at Barclays.

Just wanted to ask about coal transportation costs to your PJM fleet. And kind of longer term, what you're seeing in terms of trends there and how you're addressing it?

Sure. On the coal transportation front for our major rail supplier, we had renegotiated a longer-term contract that I think was either -- I think it was late year before last. And that contract goes out still a number of years yet. And so, in terms of our trend, it's really just following the contract terms as we negotiated it. I don't know that I have any more color on where the trends are today. So we're happy with the contract, and it's performing pretty much as we expected it to perform.

Our next question comes from Rajeev Lalwani at Morgan Stanley.

Just a question on the U.K. operations. Can you talk about what it takes to get fast tracked and what impact having good customer service has on that?

Sure. Rick?

The fast-tracking process is one that Ofgem will look at how has companies performed in the current rate period with regards to what you had promised to deliver. And promising to deliver is the investment plan that had been set forth in this current 5-year period, as well your performance against the regulatory metrics, including customer service and reliability, safety and a number of other items. And so, how you have performed is a key factor that goes into the fast-track decision. The other side of that decision is then providing a well-justified business plan, a justified business plan that is backed up by cost-benefit analyses, technical analysis of what you need to spend over the next 8-year period, a review of all your cost bases to ensure that there's levels of efficiency in your cost base, as well as then having your business plan influenced by a significant stakeholder engagement program. And we have an extensive stakeholder program where we've had over 4,200 different stakeholders, a number of working groups that have been spread out across our territory to get input from our customers, to get input from our stakeholders with regards as to what do they deem to be most important in the delivery of the service that we provide them. And then we take that input and include it into the business plan determination and prioritizing our investment that is consistent with our stakeholder views. And so that's an important factor that the regulator will review as well. So it's performance in the current period and a well-justified business plan that we believe then sets us forth to be fast tracked through the process.

Thanks, Rick.

Great. And then just a question on the Supply business. Can you talk about your commitment to infuse equity into Supply just to improve the balance sheet and help pay down some debt, particularly in the light of what we've seen in the markets? And maybe some better opportunities elsewhere within the company as far as regulated investment, et cetera?

Sure. Paul?

Yes, we've got significant capital in terms of equity coming into the company. We had the $1.150 billion convert at the beginning of the third quarter here, we had the equity forward conclude itself and convert over to shares in Q2. There is new equity coming, $978 million, April of next year from the converts issued to finance the U.K. acquisition. We did -- at the beginning of the quarter, we had a maturity in Supply of $300 million that got paid off. We're, again, in the throes of our business planning process. There's not a -- you use the term capital commitment where we are trying to target and expect to achieve investment-grade credit ratings across the enterprise. We've eliminated equity on a going forward -- need on a going forward basis. So with the very robust capital spending plans of all 3 of the utilities segment, the capital is called for and spoken for at this point in time. But we do massage things as we move through time, and we're cognizant of the statement that Bill made earlier about looking at all the options to try to increase share value, and that'll factor into our financing plans as we finalize those as part of normal business planning.

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

Okay, thanks, operator, and thank you all for joining us today and look forward to your questions on our next quarterly earnings call.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.