PPL sees few virus cases, no reason to raise rates for foreseeable future
PPL Corp. said it remains on track to achieve financial results for 2020, despite not knowing the full scope of the economic effect the coronavirus will have on earnings.
But if the first four months of 2020 is any indication, the Allentown energy-holding company’s finances and operations during the COVID-19 pandemic appear to be humming like power on the grid.
“We are confident in our ability to weather the storm as we confront the challenge of COVID-19,” PPL Chairman and CEO William H. Spence said during a webcast Friday with financial analysts about its firstquarter earnings.
The company said there have been a “handful” of confirmed coronavirus cases among its 12,000 workers globally. Officials said workers in operations or out in the field have aggressively practiced social distancing, and about 40% of its employees are working from home.
PPL delivers energy in Pennsylvania, Kentucky and the United Kingdom.
Spence said investments in grid resilience, technology and automation have provided the company with greater flexibility to operate safely and reliably under current circumstances.
The company has been able to obtain supplies to operate and has not experienced significant supply-chain problems to date.
In Pennsylvania, where PPL operates a subsidiary that distributes electricity to 1.4 million customers, COVID-19 is also not expected to lead to a rate hike filing anytime soon, according to company President Vince Sorgi.
“We don’t have a rate case in the business plan through at least 2021,” said Sorgi, who on June 1 will become CEO, replacing the retiring Spence. “I don’t think COVID in and of itself would force us to alter the timing decisions of any rate case.”
PPL Electric last raised customers’ bills Jan. 1, 2016, via a rate hike covering distribution and operations, amounting to about a 5% increase in residential customers’ bills. PPL and other utilities also can tweak certain rates, such as the price of power delivered to customers who haven’t switched to alternative suppliers.
While its Pennsylvania commercial and industrial customers consumed between 15% and 20% less power last month, the company saw between a 6% and 8% bump in residential usage, Sorgi said.
“I wouldn’t say COVID-19 is going to alter our rate structure in Pennsylvania,” said Sorgi, calling April’s load results flat.
PPL said it earned firstquarter net income of $554 million, a 19% jump in earnings, which were $466 million during the same period last year. The company said its per-share earnings rose to 72 cents, compared with 64 cents in the first three months of 2019.
Earnings, adjusted for nonrecurring gains, came to $514 million, or 67 cents per share, the company said, compared to $508 million, or 70 cents per share last year. The company pegged the decrease largely by share dilution and lower sales volume due to weather in the U.S., partially offset by additional returns on the company’s capital investments and other factors.
The company also posted operating revenue of $2.05 billion for the first three months of 2020, down from nearly $2.08 billion in the first three months of 2019.
PPL expects full-year earnings in the range of $2.40 to $2.60 per share, unchanged since the outbreak of the coronavirus, adding in a news release it is too soon to predict the COVID-19 pandemic’s full scope, duration and economic impact.
“We still believe our 2020 forecast can be achieved,” said Spence, who held his last call with analysts, though he will remain with PPL as non-executive chairman.
On average, analysts polled by Thomson Reuters still expect the company to report earnings of $2.46 per share for the year. Analysts’ estimates typically exclude special items. As for PPL’s full-year guidance, Wall Street expected the company to report earnings of $2.47 per share.
PPL shares closed at $26.11 a share, up $1.82 cents from Thursday’s close. Its shares have dropped about 25% since the beginning of the year, while the Standard & Poor’s 500 index had dropped about 10%.
The Fortune 500 company, which employs about 1,300 people in the Lehigh Valley, distributes electricity to about 1.4 million customers in 29 Pennsylvania counties, including Lehigh and Northampton.