Welcome to the PPL Corporation First Quarter Earnings Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note, this call is being recorded. I would now like to turn the conference over to Joe Bergstein. Please go ahead..

Thank you, Amy. Good morning, everyone. Thank you for joining the PPL conference call on first quarter results and our general business outlook. We are providing slides of 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 the 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. We will refer to earnings and ongoing operations or ongoing earnings, a non-GAAP measure, on this call. For reconciliation to the GAAP measure, you should refer to the press release which has been posted on our website and has been filed with the SEC. As a reminder, Talen Energy has filed its Form S-1 Registration Statement with the SEC. And although the registration statement has been declared effective by the SEC, we remain in a quiet period with respect to future prospects of PPL Energy Supply and Talen until the completion of the spin-off as previously announced on June 1. At this time, I'd like to turn the call over to Bill Spence, PPL Chairman, President and CEO. William H. Spence - Chairman, President & Chief Executive Officer: Thank you, Joe. Good morning, everyone. We're pleased that you've joined us today. With me on the call are Vince Sorgi, PPL's Chief Financial Officer; and the presidents of our four business segments. Moving to slide three, our agenda this morning starts with an overview of our 2015 first quarter earnings results, an operational overview and a discussion of our 2015 earnings forecast. After my remarks, Vince will review…

Thank you. Our first question is from Greg Gordon at Evercore ISI.

Good morning, gentlemen. William H. Spence - Chairman, President & Chief Executive Officer: Good morning, Greg.

So, just a few questions on the regulated segments. So, you came in obviously with a big increase in Q1 in the U.K. Regulated segment. So basically you expect the headwinds from the lower revenues to fully offset that in the next three quarters and come in flat for the year or did you come in slightly ahead or behind of your budget, what you expected in Q1? William H. Spence - Chairman, President & Chief Executive Officer: Vince, you want to take that question? Vincent Sorgi - Chief Financial Officer & Senior Vice President: Sure. How're you doing, Greg? Yeah, I would say we came in slightly ahead of budget for the quarter, but based on the forecast going through the rest of the year, we would still expect to maintain our original forecast of around $1.38.

Okay. And then this $0.02 headwind in 2017 associated with the 50 basis point sensitivity to RPI, does that assume that you're unable to offset that with any sort of cost reductions? One would presume if inflation is tracking below trend that your costs might also be somewhat flexible and track below trend? Vincent Sorgi - Chief Financial Officer & Senior Vice President: Yeah, that would be net of all three components that I discussed.

Okay. Great. In Kentucky, what percentage of that $132 million should you get approval of the settlement, would you expect to flow in the revenue in the second half of 2015? William H. Spence - Chairman, President & Chief Executive Officer: I'm sorry, Greg. Could you repeat that question again?

How much of the $132 million annualized rate increase that is codified in the settlement would actually flow into 2015 revenue if it's approved as currently proposed? Vincent Sorgi - Chief Financial Officer & Senior Vice President: Yeah. It would be about half, Greg.

Great. And then the timing, sorry. Vincent Sorgi - Chief Financial Officer & Senior Vice President: Let me just rewind a bit back to the answer on the U.K.

Yeah. Vincent Sorgi - Chief Financial Officer & Senior Vice President: I think that $0.02 that we're talking about on the RPI would not include any potential offsets that we might achieve based on lower inflation that could impact O&M.

Okay. So, in other words, if inflation is tracking below expectations, costs might also track below expectations and mitigate that $0.02 impact? Vincent Sorgi - Chief Financial Officer & Senior Vice President: That is correct.

Great. And then the timing of the decision in Pennsylvania, based on the filing, when would you expect to get a revenue decision? William H. Spence - Chairman, President & Chief Executive Officer: Go ahead. Vincent Sorgi - Chief Financial Officer & Senior Vice President: Yeah, so, the based on the normal flow, it'd be December we'd get the final ruling from the PUC.

Okay. And then last question. You've given us a couple years of visibility on your expectation for U.K. earnings. Given the headwind of the expected bonus revenue decline from $125 million at the midpoint to $90 million to $75 million, when do you expect to get on a playing field in the U.K. where you would expect to have the opportunity to show growth in the earnings power of that business? Is it the 2018 fiscal year 2019, 2020? When do we get to the point where sort all the headwinds have been mitigated and you start to grow again? William H. Spence - Chairman, President & Chief Executive Officer: It would really began in around the 2018 timeframe, Greg.

Okay. So in 2018, you're confident you could overcome that last negative step-down? William H. Spence - Chairman, President & Chief Executive Officer: That's kind of the base year. I think that's – yeah, 2018 is kind of the base year, because that's the last year when we do the step-down or reflect the lower new bonus revenue that we just disclosed today and then it would be a trajectory off of that.

Okay. So 2018 through the end of the current rate period? William H. Spence - Chairman, President & Chief Executive Officer: Yes.

Okay. Thank you, guys. William H. Spence - Chairman, President & Chief Executive Officer: Sure. You're welcome.

The next question comes from Daniel Eggers at Credit Suisse. William H. Spence - Chairman, President & Chief Executive Officer: Good morning, Dan. Vincent Sorgi - Chief Financial Officer & Senior Vice President: Good morning, Dan. Daniel Eggers - Credit Suisse Securities (USA) LLC (Broker): Hey. Good morning. Just a couple questions. One, I guess the U.K. elections are upon us, can you just give any thoughts of what effect that may have on your business or with the RIIO in place, are you guys well protected at this point? William H. Spence - Chairman, President & Chief Executive Officer: Yeah, I think we feel pretty confident that the U.K. election would have no material effect on us. We would expect, as you've probably read as well, probably a coalition government would get established. As you know, we've have already got our license, it's been approved and well in hand. And on the distribution side of the business, we would really not expect any material change. Daniel Eggers - Credit Suisse Securities (USA) LLC (Broker): Okay, just wanted to make sure. And then with the load growth, you're kind of showing negative on a weather normalized basis. Should we read much into that as it being hard to disaggregate weather in the volatile first quarters the last two years or is there something more structural going on as far as the lack of recovery in usage? William H. Spence - Chairman, President & Chief Executive Officer: No, I think you hit on it. I think it's just a difficult thing to model and so I wouldn't read anything through on the first quarter results at all. Daniel Eggers - Credit Suisse Securities (USA) LLC (Broker): If we look at the trailing 12 months versus trailing 12 months, it still has…

The next question comes from Michael Weinstein at UBS.

Hi, good morning. William H. Spence - Chairman, President & Chief Executive Officer: Morning.

I was wondering if you could talk about the tax consequences of the repatriation? William H. Spence - Chairman, President & Chief Executive Officer: Go ahead, Vince. Vincent Sorgi - Chief Financial Officer & Senior Vice President: Sure. No incremental U.S. income tax as a result of the additional cash repatriation.

Okay. And then, a separate question on PJM's capacity auction that's coming up. Wondering if you could kind of highlight what kinds of assets you think might be base versus capacity performance and in your own fleet as well as other assets outside of your fleet, and what you think might be the differential or would cause the differential between the pricing that will count for each category William H. Spence - Chairman, President & Chief Executive Officer: Sure. Let me ask Paul Farr to address that question.

Okay. For our own fleet as we think about the way the rules came out in more final form in December versus the original October white paper, other than a de-rate for the hydro facilities in PJM, I would see the entirety of our fleet qualifying on the PPL Energy Supply side, really as well as the PJM assets on the Riverstone qualifying for CP. Which assets would be likely bid based by a generation owner based upon risk and what asset classes like DR – like limited DR that wouldn't qualify for an annual bid because it's a full-year requirement for CP, but the limited wouldn't. And I think a lot of that it would be tough to group together some of that other DR. So I think a lot of that kind of falls out to base. And then even though we've got really strong EFORds for our fleet, if you've got coal assets that have been very challenged economically and you've not been putting capital into the plan and you have a very hard time forecasting a forced outage rate, so it becomes very difficult to predict penalties. I think you effectively bid those base simply because you're not willing to take the penalty exposure. And then the other assets that are in the system like our hydro assets that would get de-rated or renewables assets that get de-rated all as well kind of fall out. And if they are bid in, they would be at fractional percentages of their base or name-plate capacity.

Right. So you see all of your assets in the CP category?

That's correct.

And do you think there will be a big price differential between CP and base?

I think there will be a reasonably sized price differential between CP and base. By definition, if you're in base, if you've got your plan hedged, you still have the LMP penalty of not running your unit and you have sold forward the power. We have that today in the BRA auctions up to this point in payment. (33:47) But because of the penalty exposure of nonperformance in CP, it's very, I think, rational and economically logical that people are going to have to bid that risk into their required results from CP and you're going to see those risks bid into prices and the CP clearing at higher than base.

Okay. Thank you very much, Paul.

You bet.

Our next question comes from Paul Patterson at Glenrock Associates.

Good morning. William H. Spence - Chairman, President & Chief Executive Officer: Morning, Paul.

Most of my questions have been asked and answered. But just, if you could elaborate a little bit more on how you guys went about hedging the currency for 2017. Just in general, are you guys using options or did the forward actually get up to $1.60? Sorry to be so sort of – I don't have all the data in front of me. William H. Spence - Chairman, President & Chief Executive Officer: No. It did not get up to the $1.60. It did get quite strong there for a while. It's backed off a little bit, but it's still above $1.50 and I think yesterday it was about $1.52. But I'll let Vince describe what tools we're using and how we hedged 2017. Vincent Sorgi - Chief Financial Officer & Senior Vice President: Sure. So, Paul, what we did was for the – as you know, our 2015 hedges are well in the money, because we hedged those north of, in some cases, $1.60. And so, what we were able to do was basically reprice some of our 2015 in the money hedges, lower the strikes a little bit on those. And that enabled us to basically get in the money hedges out in 2017. And so, the impact of doing that is actually about a $0.02 hit to 2015, but it enabled us to preserve about 20% of our hedge levels in 2017 at our budgeted rate of $1.60.

Okay. So, you guys are taking advantage of some in the money hedges this year, and swapping it into 2017, and for what seems to be kind of small cost of $0.02 a share. Does that make, am I getting it right? Vincent Sorgi - Chief Financial Officer & Senior Vice President: Essentially, yes. William H. Spence - Chairman, President & Chief Executive Officer: Yeah, that's a good summary.

Okay, great. That's it, thanks so much. William H. Spence - Chairman, President & Chief Executive Officer: Thank you, Paul.

And our next question comes from Michael Lapides at Goldman Sachs. Michael J. Lapides - Goldman Sachs & Co.: Hey, guys, congrats on a good start of the year. Can you talk – now that you're beginning the first days of RIIO, I mean you've known it's coming for a while. Can you talk about opportunities for O&M or expense management you see over the next couple years in the U.K? William H. Spence - Chairman, President & Chief Executive Officer: Yeah. Let me – Michael, I'll ask Rick Klingensmith to comment on that.

Good morning, Michael. You're right, as we head into RIIO, we're heading into a new regulatory regime that's primarily related with the revenue side of the equation and how the regulator is rewarding us for both costs as well as innovation and on the incentive standpoint. From an operating cost standpoint, though, what you've seen us perform in the last couple years, especially with the Midlands properties, will just continue from an operating standpoint into the future. So, our expectation is not a very significant or material change in the way we operate the business and the way we're performing on the business to deliver the high levels of reliability, the high levels of customer service. We will continue to seek out areas of efficiency and use technology in any other applications that we can going forward and we will expect some level of ongoing efficiencies, but probably not at the same level you saw as we had with the changes that we made with the Midlands properties. And so from a cost standpoint, though, it's almost pretty much business as usual as we move into the RIIO period with the major effect from RIIO affecting how the revenues are paid out. Michael J. Lapides - Goldman Sachs & Co.: Got it. And then in the U.S., how are you thinking about the next cycle of rate cases, meaning you've got a Kentucky settlement, you're into the process in Pennsylvania, what happens now? Do you stay out for a number of years in both places? Do you have a limited amount of time and then you're back in filing in front of regulators? How are you thinking about just kind of the cycle? William H. Spence - Chairman, President & Chief Executive Officer: Well as we continue to deploy capital and look for cost efficiencies, it's an ongoing evaluation of when or if there is a need to go back in. Clearly in Kentucky, we've still got quite a bit of work to do to meet the match rules and conclude some of the plans, but in that case the bulk of that capital is going to be through the tracker mechanisms that we have there. And as I mentioned in my opening remarks, this settlement that we have before the Kentucky Public Service Commission would have us at a 10% ROE for that spending. So, it's really just kind of an ongoing evaluation and, at this time, as Greg just filed his rate case in Pennsylvania, that's going to take some time to play out. So, yet to be determined what that cycle may look like in the future. Michael J. Lapides - Goldman Sachs & Co.: Got it. Thanks, guys, much appreciated. William H. Spence - Chairman, President & Chief Executive Officer: You're welcome. Operator, do we have any other questions in the queue?

There are currently no questions in the queue, if you'd like to make any closing comments. William H. Spence - Chairman, President & Chief Executive Officer: Okay, very good. Thanks for joining us today. We'll look to speak with you on the next quarterly earnings call. Thank you.