PPL officials are looking for the sale of its U.K. utility to help fund billions of dollars in clean energy and infrastructure investments in the U.S.

During last week’s fourth-quarter earnings call, PPL CEO Vincent Sorgi said the sale of Western Power Distribution (WPD) — the distribution utility for parts of England and Wales — is progressing and could be announced in the first half of this year. PPL made the decision to sell WPD following a “comprehensive strategic review” last year by the company’s board of directors. (See PPL to Sell UK Operations, Focus on US.)

Sorgi said the goal this year is to focus on “repositioning” PPL as a purely U.S.-focused utility company and “delivering long-term value for our customers and our shareowners.”

“We believe a sale of the U.K. business will simplify our business mix, strengthen our balance sheet and enhance the company’s long-term earnings growth rate,” Sorgi said. “In addition, we believe it will give the company greater financial flexibility to invest in sustainable energy solutions.”

Infrastructure and Renewables

Despite the challenges experienced in 2020 with COVID-19, Sorgi said PPL was able to build on the $27 billion the company has invested in the last decade, completing more than $3 billion in infrastructure improvements over the year. He said of that, nearly 90% was focused on transmission and distribution infrastructure aimed at strengthening grid resilience, incorporating new technology and advancing PPL’s clean energy strategy.

Sorgi highlighted PPL’s securing of regulatory approval for a 100-MW solar power purchase agreement to meet increasing customer demand for clean energy in Kentucky and the expansion of customer participation in the company’s solar share program. LG&E and KU is expanding its solar share facility in the spring, adding two new solar sections to the facility in Simpsonville that will eventually consist of eight 500-kW sections.

PPL’s Safari Energy business added more than 90 MW of solar capacity to its portfolio, Sorgi said, increasing its own capacity to 110 MW. The new capacity is contracted to be a long-term power purchase agreement.

In August, PPL joined a five-year industry initiative designed to accelerate the development of low-carbon energy technology and decarbonization across the economy. PPL partnered with the Electric Power Research Institute (EPRI) and the Gas Technology Institute (GTI) to sponsor the initiative.

“We recognize that going even further faster than the goals that we’ve set to address climate change requires new ideas, technology and systems that can be delivered safely, reliably and affordably,” Sorgi said.

PPL has outlined more than $14 billion in investments from 2021 to 2025, Sorgi said, supporting its continued monetization of the transmission and distribution networks and to “advance a cleaner energy future.” (See PPL Spells out $14B International Tx Upgrade Plan.)

Sorgi said the forecasted spending represents a $1 billion increase of incremental capital expenditures from 2021 to 2024 compared to the spending plan first introduced last year. The increases include $400 million in Kentucky to support the full deployment of advanced metering infrastructure and $300 million in Pennsylvania for additional transmission investments and funding for IT initiatives focused on smart grid technology.

Biden Administration

Sorgi was asked his thoughts on what the Biden administration’s energy policies will mean for PPL. He said the company is closely monitoring developments at the federal level, but it has been too early to determine their specific effects on regulations and the economy.

He said it’s clear climate change will play a key part in the decisions of the administration, so PPL will “remain engaged” in talks about the administration’s goals and ways to successfully advance some of its policies.

One of the biggest issues will be rejoining the Paris Agreement, Sorgi said, which will lead to more aggressive carbon-reduction commitments. He said the targets being discussed would require major advancements in technology.

While the industry has been supportive of the overall goals, Sorgi said, “we don’t quite have agreement on how to get there and the ability of the industry to meet those aggressive targets.”

Earnings

PPL CFO Joseph Bergstein Jr. announced the company’s earnings, saying its profits fell 16% in 2020, as COVID-19 impacted the economy across the board. The company earned $1.47 billion last year, on revenue of $7.6 billion, compared with $1.75 billion on about the same revenue during 2019.

In the fourth quarter, PPL earned $290 million ($0.45/share), down from $364 million ($0.48/share) in 2019. Revenue was flat at $1.9 billion.

Bergstein said that in Pennsylvania, the largest dips in electricity usage remain in retail and service industries, including restaurants, bars and hotels, as the businesses are impacted from closures and limitations from pandemic regulations. He said PPL expects sales to remain down until restrictions are ended or relaxed.