(All Registrants)



This "Item 2. Combined Management's Discussion and Analysis of Financial
Condition and Results of Operations" is separately filed by PPL, PPL Electric,
LKE, LG&E and KU. Information contained herein relating to any individual
Registrant is filed by such Registrant solely on its own behalf, and no
Registrant makes any representation as to information relating to any other
Registrant. The specific Registrant to which disclosures are applicable is
identified in parenthetical headings in italics above the applicable disclosure
or within the applicable disclosure for each Registrant's related activities and
disclosures. Within combined disclosures, amounts are disclosed for individual
Registrants when significant.

The following should be read in conjunction with the Registrants' Condensed
Consolidated Financial Statements and the accompanying Notes and with the
Registrants' 2020 Form 10-K. Capitalized terms and abbreviations are defined in
the glossary. Dollars are in millions, except per share data, unless otherwise
noted.

"Management's Discussion and Analysis of Financial Condition and Results of Operations" includes the following information:

•"Overview" provides a description of each Registrant's business strategy and a discussion of important financial and operational developments.



•"Results of Operations" for all Registrants includes a "Statement of Income
Analysis," which discusses significant changes in principal line items on the
Statements of Income, comparing the three months ended March 31, 2021 with the
same period in 2020. The PPL "Results of Operations" also includes "Segment
Earnings" and "Adjusted Gross Margins," which provide a detailed analysis of
earnings by reportable segment. These discussions include non-GAAP financial
measures, including "Earnings from Ongoing Operations" and "Adjusted Gross
Margins" and provide explanations of the non-GAAP financial measures and a
reconciliation of the non-GAAP financial measures to the most comparable GAAP
measure.

•"Financial Condition - Liquidity and Capital Resources" provides an analysis of the Registrants' liquidity positions and credit profiles. This section also includes a discussion of rating agency actions.

•"Financial Condition - Risk Management" provides an explanation of the Registrants' risk management programs relating to market and credit risk.

•"Application of Critical Accounting Policies" provides an update to PPL's critical accounting policy related to "Income Taxes."



                                    Overview

Introduction

(PPL)

PPL, headquartered in Allentown, Pennsylvania, is a utility holding company.
PPL, through its regulated utility subsidiaries, delivers electricity to
customers in the U.K., Pennsylvania, Kentucky and Virginia; delivers natural gas
to customers in Kentucky; and generates electricity from power plants in
Kentucky. On March 17, 2021, PPL WPD Limited entered into a share purchase
agreement to sell PPL's U.K. utility business, which substantially represents
PPL's U.K. Regulated segment. As a result of this strategic shift in the
operations of the business, PPL will no longer provide segment information for
the U.K. Regulated segment. See "Financial and Operational Developments - "Share
Purchase Agreement to Sell U.K. Utility Business" below for additional
information.

PPL's principal subsidiaries are shown below (* denotes a Registrant).


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                                                                              PPL Corporation*





                            PPL Electric*                                                                                    PPL Capital Funding
              Engages in the regulated transmission and                             LKE*                                 Provides financing for the
                   distribution of electricity in                                                                       operations of PPL and certain
                            Pennsylvania                                                                                        subsidiaries


                                                         LG&E*                                                  KU*
                                          Engages in the regulated generation,                       Engages in the regulated
                                          transmission, distribution and sale                        generation, transmission,
                                              of electricity and regulated                           distribution and sale of
                                          distribution and sale of natural gas                  electricity, primarily in Kentucky
                                                      in Kentucky

                            Pennsylvania                                          Kentucky
                          Regulated Segment                                  Regulated Segment




PPL's reportable segments' results primarily represent the results of LKE and
PPL Electric, except that in 2020 the reportable segments were also allocated
certain corporate level financing and other costs that were not included in the
results of LKE and PPL Electric. In 2021, corporate level financing costs are no
longer being allocated to the reportable segments.

In addition to PPL, the other Registrants included in this filing are as follows.

(PPL Electric)

PPL Electric, headquartered in Allentown, Pennsylvania, is a wholly owned
subsidiary of PPL and a regulated public utility that is an electricity
transmission and distribution service provider in eastern and central
Pennsylvania. PPL Electric is subject to regulation as a public utility by the
PUC, and certain of its transmission activities are subject to the jurisdiction
of the FERC under the Federal Power Act. PPL Electric delivers electricity in
its Pennsylvania service area and provides electricity supply to retail
customers in that area as a PLR under the Customer Choice Act.

(LKE)



LKE, headquartered in Louisville, Kentucky, is a wholly owned subsidiary of PPL
and a holding company that owns regulated utility operations through its
subsidiaries, LG&E and KU, which constitute substantially all of LKE's assets.
LG&E and KU are engaged in the generation, transmission, distribution and sale
of electricity. LG&E also engages in the transmission, distribution and sale of
natural gas in Kentucky. LG&E and KU maintain separate corporate identities and
serve customers in Kentucky under their respective names. KU also serves
customers in Virginia under the Old Dominion Power name.

(LG&E)



LG&E, headquartered in Louisville, Kentucky, is a wholly owned subsidiary of LKE
and a regulated utility engaged in the generation, transmission, distribution
and sale of electricity and distribution and sale of natural gas in Kentucky.
LG&E is subject to regulation as a public utility by the KPSC, and certain of
its transmission activities are subject to the jurisdiction of the FERC under
the Federal Power Act.

(KU)

KU, headquartered in Lexington, Kentucky, is a wholly owned subsidiary of LKE
and a regulated utility engaged in the generation, transmission, distribution
and sale of electricity in Kentucky and Virginia. KU is subject to regulation as
a public utility by the KPSC and the VSCC, and certain of its transmission and
wholesale power activities are subject to the jurisdiction
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of the FERC under the Federal Power Act. KU serves its Kentucky customers under
the KU name and its Virginia customers under the Old Dominion Power name.

Business Strategy

(All Registrants)



PPL's strategy, which is supported by the other Registrants, is to achieve
industry-leading performance in safety, reliability, customer satisfaction and
operational efficiency; to advance a clean energy transition while maintaining
affordability and reliability; to maintain a strong financial foundation and
create long-term value for our shareowners; to foster a diverse and exceptional
workplace; and to build strong communities in areas that we serve.

Central to PPL's strategy is recovering capital project costs efficiently
through various rate-making mechanisms, including periodic base rate case
proceedings using forward test years, annual FERC formula rate mechanisms and
other regulatory agency-approved recovery mechanisms designed to limit
regulatory lag. In Kentucky, the KPSC has adopted a series of regulatory
mechanisms (ECR, DSM, GLT, fuel adjustment clause, and gas supply clause) and
recovery on construction work-in-progress that reduce regulatory lag and provide
timely recovery of and return on, as appropriate, prudently incurred costs. In
Pennsylvania, the FERC transmission formula rate, DSIC mechanism, Smart Meter
Rider and other recovery mechanisms operate to reduce regulatory lag and provide
for timely recovery of and a return on, as appropriate, prudently incurred
costs.

In March 2021, PPL entered into definitive agreements that strategically
reposition the company as a U.S.-based energy company focused on building the
utilities of the future. PPL WPD Limited entered into a share purchase agreement
to sell PPL's U.K. utility business to a subsidiary of National Grid plc. PPL
and its subsidiary, PPL Energy Holdings also entered into a separate share
purchase agreement to acquire The Narragansett Electric Company from a different
subsidiary of National Grid plc, to be financed with a portion of the proceeds
from the sale of the U.K. utility business. On May 3, 2021, an Assignment and
Assumption Agreement was entered into by PPL, PPL Energy Holdings, PPL Rhode
Island Holdings and National Grid U.S. whereby certain interests of PPL Energy
Holdings in the Narragansett SPA were assigned to and assumed by PPL Rhode
Island Holdings. The announced transactions are intended to strengthen PPL's
credit metrics, enhance long-term earnings growth and predictability, and
provide the company with greater financial flexibility to invest in sustainable
energy solutions. See Note 9 to the Financial Statements, and the discussions in
"Financial and Operating Developments" below, for additional information on
these transactions.

Financial and Operational Developments

(PPL)

Share Purchase Agreement to Sell U.K. Utility Business



On March 17, 2021, PPL WPD Limited (WPD Limited) entered into a share purchase
agreement (WPD SPA) to sell PPL's U.K. utility business to National Grid
Holdings One plc (National Grid U.K.), a subsidiary of National Grid plc.
Pursuant to the WPD SPA, National Grid U.K. will acquire 100% of the issued
share capital of PPL WPD Investments Limited (WPD Investments) for £7.8 billion
in cash. WPD Limited will also receive an additional amount of £548,000 for each
day during the period from January 1, 2021 to the closing date if the dividends
usually declared by WPD Investments to WPD Limited are not paid for that period.

The completion of the transaction, which is currently expected to occur by the
end of July 2021, is subject to approval by National Grid plc's shareholders and
receipt of regulatory approvals from the Financial Conduct Authority (the FCA),
the Guernsey Financial Services Commission and, if applicable at the time of
closing, from the U.K. Secretary of State in connection with the National
Security and Investment Bill 2020. On April 22, 2021, National Grid plc's
shareholders approved the transaction pursuant to the listing rules of the FCA.
On May 4, 2021, the Guernsey Financial Services Commission approved the
transaction. The approval of the FCA is the sole remaining approval before the
transaction can be consummated. The consummation of the transaction is not
subject to a financing condition.

In connection with entering into the WPD SPA, the U.K. utility business has met
the accounting criteria to be classified as assets and liabilities held for sale
and discontinued operations beginning with the first quarter of 2021.
Accordingly, PPL's investment in the U.K. utility business has been reported at
its estimated fair value, less costs to sell, resulting in an estimated pre-tax
loss on sale of $1.6 billion as of March 31, 2021.

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See Note 9 to the Financial Statements for additional information on the WPD
SPA.

Share Purchase Agreement to Acquire The Narragansett Electric Company



On March 17, 2021, PPL and its subsidiary, PPL Energy Holdings, entered into a
share purchase agreement (Narragansett SPA) with National Grid USA (National
Grid U.S.), a subsidiary of National Grid plc to acquire 100% of the outstanding
shares of common stock of The Narragansett Electric Company (Narragansett
Electric) for approximately $3.8 billion in cash. On May 3, 2021, an Assignment
and Assumption Agreement was entered into by PPL, PPL Energy Holdings, PPL Rhode
Island Holdings and National Grid U.S. whereby certain interests of PPL Energy
Holdings in the Narragansett SPA were assigned to and assumed by PPL Rhode
Island Holdings. Pursuant to that Assignment and Assumption Agreement, PPL Rhode
Island Holdings became the purchasing entity under the Narragansett SPA. The
acquisition is expected to be funded with proceeds from the sale of the U.K.
utility business. PPL has agreed to guarantee all obligations of PPL Energy
Holdings and PPL Rhode Island Holdings under the Narragansett SPA and the
related Assignment and Assumption Agreement.

The closing of the acquisition, which is currently expected to occur by March
2022, is subject to the prior closing of the sale of WPD Investments to National
Grid U.K. and is also subject to the receipt of certain U.S. regulatory
approvals, as well as other customary conditions to closing. The consummation of
the transaction is not subject to a financing condition.

See Note 9 to the Financial Statements for additional information on the Narragansett SPA.



Regulatory Requirements

(All Registrants)

The Registrants cannot predict the impact that future regulatory requirements may have on their financial condition or results of operations.

(PPL, LKE, LG&E and KU)



The businesses of LKE, LG&E and KU are subject to extensive federal, state and
local environmental laws, rules and regulations, including those pertaining to
CCRs, GHG, and ELGs. See Notes 7, 11 and 16 to the Financial Statements for a
discussion of these significant environmental matters. These and other
environmental requirements led PPL, LKE, LG&E and KU to retire approximately
1,200 MW of coal-fired generating plants in Kentucky since 2010.

Challenge to PPL Electric Transmission Formula Rate Return on Equity (PPL and PPL Electric)



On May 21, 2020, PP&L Industrial Customer Alliance (PPLICA) filed a complaint
with the FERC alleging that PPL Electric's base return on equity (ROE) of 11.18%
used to determine PPL Electric's formula transmission rate is unjust and
unreasonable, and proposing an alternative ROE of 8.0% based on its
interpretation of FERC Opinion No. 569. However, also on May 21, 2020, the FERC
issued Opinion No. 569-A in response to numerous requests for rehearing of
Opinion No. 569, which revised the method for analyzing base ROE. On June 10,
2020, PPLICA filed a Motion to Supplement the May 21, 2020 complaint in which
PPLICA continued to allege that PPL Electric's base ROE is unjust and
unreasonable, but revised its analysis of PPL Electric's base ROE to reflect the
guidance provided in Opinion No. 569-A. The amended complaint proposed an
updated alternative ROE of 8.5% and also requested that the FERC preserve the
original refund effective date as established by the filing of the original
complaint on May 21, 2020. Several parties have filed motions to intervene,
including one party who filed Comments in Support of the original complaint.

On July 10, 2020, PPL Electric filed its Answer and supporting Testimony to the
PPLICA filings arguing that the FERC should deny the original and amended
complaints as they are without merit and fail to demonstrate the existing base
ROE is unjust and unreasonable. In addition, PPL Electric contended any refund
effective date should be set for no earlier than June 10, 2020 and PPLICA's
proposed replacement ROE should be rejected.

On October 15, 2020, the FERC issued an order on the PPLICA complaints which
established hearing and settlement procedures, set a refund effective date of
May 21, 2020 and granted the motions to intervene. On November 16, 2020, PPL
Electric filed a request for rehearing of the portion of the October 15, 2020
Order that set the May 21, 2020 refund effective date. On December 17, 2020, the
FERC issued a Notice of Denial of Rehearing by Operation of Law and Providing
for Further Consideration. On February 16 and April 19, 2021, PPL Electric filed
Petitions for Review with the United States Court of
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Appeals for the District of Columbia Circuit of the portion of the October 15,
2020 Order that set the May 21, 2020 refund effective date.

PPL Electric continues to believe its ROE is just and reasonable and that it has
meritorious defenses against the original and amended complaints. Settlement
negotiations are currently proceeding, but there can be no assurance that they
will result in a final settlement. Although PPL Electric cannot predict the
outcome of this matter, in the first quarter of 2021, PPL Electric recorded a
revenue reserve of $19 million after-tax. Of this amount, $13 million relates to
the period from May 21, 2020 to December 31, 2020. Additional revenue earned
from May 21, 2020 through the ultimate resolution of this matter may be subject
to refund. A change of 50 basis points to the base ROE would impact PPL
Electric's net income by approximately $12 million on an annual basis.

FERC Transmission Rate Filing (PPL, LKE, LG&E and KU)



In 2018, LG&E and KU applied to the FERC requesting elimination of certain
on-going credits to a sub-set of transmission customers relating to the 1998
merger of LG&E's and KU's parent entities and the 2006 withdrawal of LG&E and KU
from the Midcontinent Independent System Operator, Inc. (MISO), a regional
transmission operator and energy market. The application sought termination of
LG&E's and KU's commitment to provide certain Kentucky municipalities mitigation
for certain horizontal market power concerns arising out of the 1998 LG&E and KU
merger and 2006 MISO withdrawal. The amounts at issue are generally waivers or
credits granted to a limited number of Kentucky municipalities for either
certain LG&E and KU or MISO transmission charges incurred for transmission
service received. Due to the development of robust, accessible energy markets
over time, LG&E and KU believe the mitigation commitments are no longer relevant
or appropriate. In March 2019, the FERC granted LG&E's and KU's request to
remove the ongoing credits, conditioned upon the implementation by LG&E and KU
of a transition mechanism for certain existing power supply arrangements,
subject to FERC review and approval. In July 2019, LG&E and KU proposed their
transition mechanism to the FERC and in September 2019, the FERC rejected the
proposed transition mechanism. In September 2020, the FERC issued orders in the
rehearing process that modified various aspects of the September 2019 orders
which had approved future termination of the credits, including adjusting which
customer arrangements are covered by the transition mechanism and respective
future periods or dates for termination of credits. In November 2020, the FERC
denied the parties' rehearing requests. In November 2020 and January 2021, LG&E
and KU and other parties appealed the September 2020 and November 2020 orders at
the D.C. Circuit Court of Appeals. The appellate proceedings are continuing, and
also include certain additional prior pending petitions for review relating to
the matter. On January 15, 2021, LG&E and KU made a filing seeking FERC
acceptance of a new proposal for a transition mechanism. On March 16, 2021, the
FERC accepted the filed transition mechanism agreements effective on March 17,
2021 but subject to refund, and established hearing and settlement procedures.
LG&E and KU are also required to make certain compliance filings consistent with
the March 16, 2021 order. LG&E and KU cannot predict the outcome of the
respective appellate and FERC proceedings. LG&E and KU currently receive
recovery of the waivers and credits provided through other rate mechanisms and
such rate recovery would be anticipated to be adjusted consistent with potential
changes or terminations of the waivers and credits, as such become effective.

Rate Case Proceedings (PPL, LKE, LG&E and KU)



On November 25, 2020, LG&E and KU filed requests with the KPSC for an increase
in annual electricity and gas revenues of approximately $331 million ($131
million and $170 million in electricity revenues at LG&E and KU and $30 million
in gas revenues at LG&E). The revenue increases would be an increase of 11.6%
and 10.4% in electricity revenues at LG&E and KU, and an increase of 8.3% in gas
revenues at LG&E. In recognition of the economic impact of COVID-19, LG&E and KU
requested approval of a one-year billing credit which will credit customers
approximately $53 million ($41 million at LG&E and $12 million at KU). The
billing credit represents the return to customers of certain regulatory
liabilities on LG&E's and KU's Balance Sheets and serves to partially mitigate
the rate increases during the first year in which the new rates are in effect.

LG&E's and KU's applications also included a request for a CPCN to deploy
Advanced Metering Infrastructure across LG&E's and KU's service territories in
Kentucky.
The applications were based on a forecasted test year of July 1, 2021 through
June 30, 2022 and requested an authorized return on equity of 10.0%.

On April 19, 2021, LG&E and KU entered into an agreement with all intervening
parties to the proceedings resolving all matters in their applications, with the
explicit exception of LG&E's and KU's net metering proposals. The agreement
proposes increases in annual revenues of $217 million ($77 million and
$116 million in electricity revenues at LG&E and KU and $24 million in gas
revenues at LG&E) based on an authorized return on equity of 9.55%. The proposal
includes an authorized
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9.35% return on equity for the ECR and GLT mechanisms. The agreement does not
modify the requested one-year billing credit. The agreement proposes that the
KPSC should grant LG&E's and KU's request for a CPCN to deploy Advanced Metering
Infrastructure and proposes the establishment of a Retired Asset Recovery rider
(RAR) to provide recovery of and return on the remaining investment in certain
electric generating units upon their retirement over a ten-year period following
retirement. In respect of the RAR rider, the agreement proposes that LG&E and KU
will continue to use currently approved depreciation rates for Mill Creek units
1 and 2 and Brown Unit 3. The agreement also proposes a four-year "stay-out"
commitment from LG&E and KU to refrain from effective base rate increases before
July 1, 2025, subject to certain exceptions.

A hearing on the agreement, and the underlying proceedings, was completed on
April 28, 2021. Subject to KPSC approval, the rates, decreased by the amount of
the billing credit, are expected to become effective July 1, 2021. An Order on
the net metering issues is expected by the end of September 2021. PPL, LKE, LG&E
and KU cannot predict the outcome of these proceedings.

                             Results of Operations

(PPL)



The "Statement of Income Analysis" discussion below describes significant
changes in principal line items on the Statements of Income, comparing the three
months ended March 31, 2021 with the same period in 2020. The "Segment Earnings"
and "Adjusted Gross Margins" discussions provide a review of results by
reportable segment. These discussions include non-GAAP financial measures,
including "Earnings from Ongoing Operations" and "Adjusted Gross Margins," and
provide explanations of the non-GAAP financial measures and a reconciliation of
those measures to the most comparable GAAP measure.

(PPL Electric, LKE, LG&E and KU)

A "Statement of Income Analysis" is presented separately for PPL Electric, LKE, LG&E and KU. The "Statement of Income Analysis" discussion below describes significant changes in principal line items on the Statements of Income, comparing the three months ended March 31, 2021 with the same period in 2020.

(All Registrants)



The results for interim periods can be disproportionately influenced by numerous
factors and developments and by seasonal variations. As such, the results of
operations for interim periods do not necessarily indicate results or trends for
the year or future periods.

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PPL: Statement of Income Analysis, Segment Earnings and Adjusted Gross Margins

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