8-K: LG&E and KU Plan \$3.725 Billion Investment in New Generation and Battery Storage to Power Kentucky's Economic Growth

Louisville Gas and Electric (LG&E) and Kentucky Utilities (KU) are seeking regulatory approval for \$3.725 billion in investments to expand generation capacity and battery storage to meet growing energy demands driven by economic development and data center growth in Kentucky.

Summary

• Louisville Gas and Electric (LG&E) and Kentucky Utilities (KU) have filed an application with the Kentucky Public Service Commission (KPSC) for approval of approximately \$3.725 billion in capital expenditures between 2025 and 2031.
• The proposed investments include building two 645MW natural gas combined cycle (NGCC) generation units at KU's E.W. Brown station and LG&E's Mill Creek station.
• A four-hour 400MW (1,600MWh total) battery storage facility (BESS) is planned for LG&E's Cane Run station, and a selective catalytic reduction (SCR) environmental facility for an existing coal generation unit at KU's Ghent station is also proposed.
• The new NGCC units are anticipated to be wholly owned by LG&E, while the BESS unit will be jointly owned by LG&E (32%) and KU (68%).
• The projected in-service dates are 2030 for the E.W. Brown NGCC, 2031 for the Mill Creek NGCC, and 2028 for both the Cane Run BESS and the Ghent SCR.
• The companies expect a ruling from the KPSC during the fourth quarter of 2025.
• LG&E and KU are currently in discussions with businesses that have the potential generation need of up to 8,000 megawatts in the coming years, more than double the utilities current energy demand.
• The companies plan to install 400 megawatts of battery energy storage at the Cane Run Generating Station and a selective catalytic reduction facility to reduce nitrogen oxide (NOx) emissions for Ghent Unit 2 by 2028.

Sentiment

Score: 7

Explanation: The document conveys a positive outlook due to the planned investments, economic growth, and potential benefits for stakeholders. However, uncertainties related to regulatory approval and potential risks temper the overall sentiment.

Positives

• The investments aim to meet the growing energy demands driven by economic development and data center growth in Kentucky.
• The new generation units will use advanced technology, similar to the one currently under construction at the Mill Creek Generating Station.
• Battery storage will allow for better management of power supply and increased reliability.
• The SCR facility will further reduce emissions from the Ghent Generating Station.
• The projects are expected to support job creation and increase tax revenue in the Commonwealth.
• The investments will allow the companies to continue serving customers safely and reliably while maintaining affordability.

Negatives

• The companies cannot predict the outcome of the KPSC proceedings.
• The projects are subject to regulatory approval and may face delays or modifications.
• The actual project costs may vary from the projected capital expenditures.
• The forward-looking statements are subject to risks and uncertainties, and actual results may differ materially.

Risks

• The outcome of the KPSC proceedings is uncertain.
• Regulatory cost recovery may impact the financial viability of the projects.
• Market demand and prices for electricity and natural gas could affect the profitability of the new generation units.
• Political, regulatory, or economic conditions in Kentucky and Virginia could impact the projects.
• Delays in construction, purchase, or installation of assets or operations could affect the in-service dates.

Future Outlook

LG&E and KU expect to have the first NGCC unit (Brown 12) available in 2030 and the second unit (Mill Creek 6) available in 2031. Additionally, given the anticipated economic load growth increases by 2,000 megawatts between now and 2032, the companies plan to install 400 megawatts of battery energy storage at the Cane Run Generating Station and a selective catalytic reduction facility to reduce nitrogen oxide (NOx) emissions for Ghent Unit 2. Both will be available in 2028.

Management Comments

• 'These investments in our system will allow us to continue serving our customers safely and reliably while meeting our regulatory obligation and the growing economic interest in the Commonwealth all while maintaining affordability,' said John R. Crockett III, LG&E and KU President and PPL Chief Development Officer.
• Crockett added, 'We are pleased that our affordable generation and state regulations are encouraging growth that benefits all Kentuckians by bringing more jobs and additional tax revenue to the Commonwealth.'

Industry Context

The announcement reflects a broader trend in the utility industry towards incorporating more natural gas and battery storage into the generation mix to meet growing energy demands and improve grid reliability, while also addressing environmental concerns.

Comparison to Industry Standards

• The planned 645MW NGCC units are comparable in size to other recently constructed or planned natural gas power plants across the US.
• The 400MW battery storage facility is a significant investment in energy storage and aligns with the growing adoption of battery storage technology by utilities to enhance grid resilience and integrate renewable energy sources.
• Companies like NextEra Energy and Duke Energy have also been investing heavily in battery storage projects.
• The SCR installation at Ghent is a common environmental control measure used by coal-fired power plants to reduce NOx emissions, similar to upgrades implemented by other utilities to comply with environmental regulations.

Stakeholder Impact

• Shareholders: Potential for long-term growth and returns through investments in new generation and storage.
• Employees: Potential for job creation and career opportunities related to the new projects.
• Customers: Improved reliability and affordability of electricity service.
• Suppliers: Opportunities to provide equipment and services for the new generation and storage facilities.
• Creditors: Potential for increased lending and investment opportunities.

Next Steps

• The companies await a ruling from the KPSC, expected in the fourth quarter of 2025.
• LG&E and KU will continue discussions with businesses regarding their potential generation needs.

Key Dates