Item 7.01 Regulation FD Disclosure
TCJA Impact on Kentucky Rates – Order on Reconsideration
On September 28, 2018, the Kentucky Public Service Commission ("KPSC") issued an order on reconsideration in the existing proceeding relating to the impact of the Tax Cuts and Jobs Act ("TCJA") on the Kentucky rates of Louisville Gas and Electric Company ("LG&E") and Kentucky Utilities Company ("KU" and, together with LG&E, the "Companies").
In its September 28, 2018 order, the KPSC implemented rates reflecting electricity revenue rate reductions of $101 million at KU and $75 million at LG&E and gas rate reductions of $16 million for LG&E. The amounts in this order represent lower revenue reduction amounts than the KPSC's March 20, 2018 order, which had approved revenue reductions of approximately $108 million, $79 million and $17 million, respectively, and was the subject of the Companies' motion for reconsideration.
The rate revenue reduction amounts were calculated based on the period January 2018 through April 2019, to be billed over the period April 2018 to April 2019, and thereafter until tax-reform related savings are reflected in changes in base rates of the Companies. As previously announced, the Companies filed an application with the KPSC on September 28, 2018 for such base rate changes to be effective May 2019.
The Companies have been implementing interim partial rate reductions since April 2018, as authorized by the KPSC, and recording reserves up to the higher reduction amounts originally approved in the March 20,
2018 order. The Companies do not anticipate the current order to have a material adverse impact on their financial condition or results of operations.
Statements in this report regarding future events and their timing, including the Companies' proposed rate changes, future rates, rate mechanisms or returns on equity, as well as statements as to future costs or expenses, regulation, corporate strategy and performance, are "forward-looking statements" within the meaning of the federal securities laws. Although the Companies believe that the expectations and assumptions reflected in these forward-looking statements are reasonable, these expectations, assumptions and statements are subject to a number of risks and uncertainties, and actual results may differ materially from the results discussed in the statements. The following are among the important factors that could cause actual results to differ materially from the forward-looking statements: subsequent phases of rate proceedings and regulatory cost recovery; market demand and prices for electricity and natural gas; political, regulatory or economic conditions in states and regions where the Companies conduct business; and the progress of actual construction, purchase or installation of assets or operations subject to tracker mechanisms. All forward-looking statements should be considered in light of these important factors and in conjunction with PPL Corporation's, LG&E and KU Energy LLC's and the Companies' Form 10-K and other reports on file with the Securities and Exchange Commission.