PPL CorpPPL
PPL Corp Fair Value Disclosure
15. Fair Value Measurements
(All Registrants)
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). A market approach (generally, data from market transactions), an income approach (generally, present value techniques and option-pricing models), and/or a cost approach (generally, replacement cost) are used to measure the fair value of an asset or liability, as appropriate. These valuation approaches incorporate inputs such as observable, independent market data and/or unobservable data that management believes are predicated on the assumptions market participants would use to price an asset or liability. These inputs may incorporate, as applicable, certain risks such as nonperformance risk, which includes credit risk. The fair value of a group of financial assets and liabilities is measured on a net basis. See Note 1 for information on the levels in the fair value hierarchy.
Recurring Fair Value Measurements
The assets and liabilities measured at fair value were:
| December 31, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||||||||||||||||||
| PPL | |||||||||||||||||||||||||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 1,071 | $ | 1,071 | $ | — | $ | — | $ | 306 | $ | 306 | $ | — | $ | — | |||||||||||||||||||||||||||||||
| Restricted cash and cash equivalents (a) | 15 | 15 | — | — | 33 | 33 | — | — | |||||||||||||||||||||||||||||||||||||||
| Total Cash, Cash Equivalents and Restricted Cash (b) | 1,086 | 1,086 | — | — | 339 | 339 | — | — | |||||||||||||||||||||||||||||||||||||||
| Special use funds (a): | |||||||||||||||||||||||||||||||||||||||||||||||
| Money market fund | 1 | 1 | — | — | 1 | 1 | — | — | |||||||||||||||||||||||||||||||||||||||
| Commingled debt fund measured at NAV (c) | 5 | — | — | — | 10 | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Commingled equity fund measured at NAV (c) | 5 | — | — | — | 8 | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Total special use funds | 11 | 1 | — | — | 19 | 1 | — | — | |||||||||||||||||||||||||||||||||||||||
| December 31, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||||||||||||||||||
| Price risk management assets (d): | |||||||||||||||||||||||||||||||||||||||||||||||
| Gas contracts | 6 | — | 2 | 4 | 9 | — | 4 | 5 | |||||||||||||||||||||||||||||||||||||||
| Total assets | $ | 1,103 | $ | 1,087 | $ | 2 | $ | 4 | $ | 367 | $ | 340 | $ | 4 | $ | 5 | |||||||||||||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||||||||||||||||||||||||||
| Price risk management liabilities (d): | |||||||||||||||||||||||||||||||||||||||||||||||
| Interest rate derivatives | $ | 5 | $ | — | $ | 5 | $ | — | $ | 3 | $ | — | $ | 3 | $ | — | |||||||||||||||||||||||||||||||
| Gas contracts | 10 | — | 6 | 4 | 13 | — | 10 | 3 | |||||||||||||||||||||||||||||||||||||||
| Total price risk management liabilities | $ | 15 | $ | — | $ | 11 | $ | 4 | $ | 16 | $ | — | $ | 13 | $ | 3 | |||||||||||||||||||||||||||||||
| PPL Electric | |||||||||||||||||||||||||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 30 | $ | 30 | $ | — | $ | — | $ | 24 | $ | 24 | $ | — | $ | — | |||||||||||||||||||||||||||||||
| Total assets | $ | 30 | $ | 30 | $ | — | $ | — | $ | 24 | $ | 24 | $ | — | $ | — | |||||||||||||||||||||||||||||||
| LG&E | |||||||||||||||||||||||||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 162 | $ | 162 | $ | — | $ | — | $ | 8 | $ | 8 | $ | — | $ | — | |||||||||||||||||||||||||||||||
| Restricted cash and cash equivalents (a) | 7 | 7 | — | — | 16 | 16 | — | — | |||||||||||||||||||||||||||||||||||||||
| Total Cash, Cash Equivalents and Restricted Cash (b) | 169 | 169 | — | — | 24 | 24 | — | — | |||||||||||||||||||||||||||||||||||||||
| Total assets | $ | 169 | $ | 169 | $ | — | $ | — | $ | 24 | $ | 24 | $ | — | $ | — | |||||||||||||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||||||||||||||||||||||||||
| Price risk management liabilities (e): | |||||||||||||||||||||||||||||||||||||||||||||||
| Interest rate derivatives | $ | 5 | $ | — | $ | 5 | $ | — | $ | 3 | $ | — | $ | 3 | $ | — | |||||||||||||||||||||||||||||||
| Total price risk management liabilities | $ | 5 | $ | — | $ | 5 | $ | — | $ | 3 | $ | — | $ | 3 | $ | — | |||||||||||||||||||||||||||||||
| KU | |||||||||||||||||||||||||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 10 | $ | 10 | $ | — | $ | — | $ | 13 | $ | 13 | $ | — | $ | — | |||||||||||||||||||||||||||||||
| Restricted cash and cash equivalents (a) | 7 | 7 | — | — | 16 | 16 | — | — | |||||||||||||||||||||||||||||||||||||||
| Total Cash, Cash Equivalents and Restricted Cash (b) | 17 | 17 | — | — | 29 | 29 | — | — | |||||||||||||||||||||||||||||||||||||||
| Total assets | $ | 17 | $ | 17 | $ | — | $ | — | $ | 29 | $ | 29 | $ | — | $ | — | |||||||||||||||||||||||||||||||
(a)Current portion is included in "Other current assets" and noncurrent portion is included in "Other noncurrent assets" on the Balance Sheets.
(b)Total Cash, Cash Equivalents and Restricted Cash provides a reconciliation of these items reported within the Balance Sheets to the sum shown on the Statements of Cash Flows.
(c)In accordance with accounting guidance, certain investments that are measured at fair value using net asset value per share (NAV), or its equivalent, have not been classified in the fair value hierarchy. The fair value amounts presented in the table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the statement of financial position.
(d)Current portion is included in "Other current assets" and "Other current liabilities" and noncurrent portion is included in "Other noncurrent assets" "Other deferred credits and noncurrent liabilities" on the Balance Sheets.
(e)Current portion is included in "Other current liabilities" on the Balance Sheets.
A reconciliation of net assets classified as Level 3 for the year ended December 31 is as follows:
| Gas Contracts | |||||
| 2025 | |||||
| Balance at beginning of period | $ | 2 | |||
| Total unrealized gains (losses) recognized as Regulatory Assets/Regulatory Liabilities | (2) | ||||
| Balance at end of period | $ | — | |||
Special Use Funds (PPL)
The special use funds are investments restricted for paying active union employee medical costs. In 2018, PPL received a favorable private letter ruling from the IRS permitting a transfer of excess funds from the PPL Bargaining Unit Retiree Health Plan VEBA to a new subaccount within the VEBA to be used to pay medical claims of active bargaining unit employees. In 2024, additional excess funds were removed from the PPL Bargaining Unit Retiree Health Plan VEBA and deposited in the existing subaccount within the VEBA to be used to pay medical claims of active bargaining unit employees. The funds are invested primarily in commingled debt and equity funds measured at NAV and are classified as investments in equity securities. Changes in the fair value of the funds are recorded to the Statements of Income.
Price Risk Management Assets/Liabilities
Interest Rate Derivatives (PPL, LG&E and KU)
To manage interest rate risk, PPL, LG&E and KU use interest rate derivatives such as treasury locks, forward-starting swaps, floating-to-fixed swaps and fixed-to-floating swaps. An income approach is used to measure the fair value of these derivatives, utilizing readily observable inputs, such as forward interest rates (e.g., SOFR and government security rates), as well as inputs that may not be observable, such as credit valuation adjustments. In certain cases, market information cannot practicably be obtained to value credit risk and therefore internal models are relied upon. These models use projected probabilities of default and estimated recovery rates based on historical observances. When the credit valuation adjustment is significant to the overall valuation, the contracts are classified as Level 3.
Gas Contracts (PPL)
To manage gas commodity price risk associated with natural gas purchases, RIE utilizes over-the-counter (OTC) gas swaps contracts with pricing inputs obtained from the New York Mercantile Exchange (NYMEX) and the Intercontinental Exchange (ICE), except in cases where the ICE publishes seasonal averages or where there were no transactions within the last seven days. RIE may utilize discounting based on quoted interest rate curves, including consideration of non-performance risk, and may include a liquidity reserve calculated based on bid/ask spread. Substantially all of these price curves are observable in the marketplace throughout at least 95% of the remaining contractual quantity, or they could be constructed from market observable curves with correlation coefficients of 95% or higher. These contracts are classified as Level 2.
RIE also utilizes gas option and purchase and capacity transactions, which are valued based on internally developed models. Industry-standard valuation techniques, such as the Black-Scholes pricing model, are used for valuing such instruments. For valuations that include both observable and unobservable inputs, if the unobservable input is determined to be significant to the overall inputs, the entire valuation is classified as Level 3. This includes derivative instruments valued using indicative price quotations whose contract tenure extends into unobservable periods. In instances where observable data is unavailable, consideration is given to the assumptions that market participants would use in valuing the asset or liability. This includes assumptions about market risks such as liquidity, volatility, and contract duration. Such instruments are classified as Level 3 as the model inputs generally are not observable. RIE considers non-performance risk and liquidity risk in the valuation of derivative instruments classified as Level 2 and Level 3.
The significant unobservable inputs used in the fair value measurement of the gas derivative instruments are implied volatility and gas forward curves. A relative change in commodity price at various locations underlying the open positions can result in significantly different fair value estimates.
Financial Instruments Not Recorded at Fair Value (All Registrants)
The carrying amounts of long-term debt on the Balance Sheets and their estimated fair values are set forth below. Long-term debt is classified as Level 2. The effect of third-party credit enhancements is not included in the fair value measurement.
| December 31, 2025 | December 31, 2024 | ||||||||||||||||||||||
| Carrying Amount (a) | Fair Value | Carrying Amount (a) | Fair Value | ||||||||||||||||||||
| PPL | $ | 18,894 | $ | 18,488 | $ | 16,503 | $ | 15,562 | |||||||||||||||
| PPL Electric | 5,707 | 5,473 | 5,214 | 4,862 | |||||||||||||||||||
| LG&E | 2,865 | 2,784 | 2,471 | 2,295 | |||||||||||||||||||
| KU | 3,510 | 3,304 | 3,066 | 2,750 | |||||||||||||||||||
(a)Amounts are net of debt issuance costs.
The carrying amounts of other current financial instruments (except for long-term debt due within one year) approximate their fair values because of their short-term nature.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 20, 2026 | Showing above |
| 2024 | Feb 13, 2025 | |
| 2023 | Feb 16, 2024 | |
| 2022 | Feb 17, 2023 | |
| 2021 | Feb 18, 2022 | |
| 2020 | Feb 18, 2021 | |
| 2019 | Feb 14, 2020 | |
| 2018 | Feb 14, 2019 | |
| 2017 | Feb 22, 2018 | |
| 2016 | Feb 17, 2017 | |
| 2015 | Feb 19, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.