As PPL Corp. reported lower overall earnings for the second quarter, its electric utilities company announced plans to construct a major power transmission line costing between $4 billion and $6 billion that would foster more natural-gas-powered generation plants.
The Allentown-based company reported earnings of $229 million, or 34 cents per share, a decrease from $405 million, or 63 cents per share, a year ago, according to a news release. For the first six months of 2014, PPL’s reported earnings were $545 million, or 83 cents per share, compared with $818 million, or $1.28 per share, in the first six months of 2013.
However, PPL’s anticipated spinoff of PPL Energy Supply is included in those earnings. Net special item charges of $128 million, or 19 cents per share, reflect charges of 7 cents per share for an increase in tax valuation allowances related to the spinoff, the company said. The numbers also include 5 cents per share for foreign-currency-related economic hedges and 4 cents per share for adjusted energy-related economic activity.
When factoring out those special items, PPL said that its earnings from ongoing operations for the quarter were $357 million, or 53 cents per share, an increase from $311 million, or 49 cents per share, a year ago. Earnings from ongoing operations for the first half of the year were $880 million, or $1.33 per share, compared with $765 million, or $1.20 per share, for the first half of 2013, according to the release.
William H. Spence, PPL’s chairman, president and chief executive officer, said things were on track with the spinoff, with regulatory filings and transition teams in place. The combination with Riverstone Holdings’ competitive generation business to form the new publicly traded Talen Energy Corp is likely in the first or second quarter next year.
PPL increased its 2014 forecast of earnings from ongoing operations to $2.20 to $2.40 per share, with a midpoint of $2.30 per share, up from the previous forecast of $2.15 to $2.30 per share, with a midpoint of $2.23 per share, according to the release. The increased forecast is primarily driven by the strong earnings performance of the competitive energy supply business through the first half of the year, the company said. The 2014 forecast for reported earnings is $1.70 to $1.90 per share, reflecting special items recorded through the second quarter.
In a separate news release, the electric utilities business said it had submitted a proposal to build the new 500-kilovolt line to PJM Interconnection as required by federal law. As currently proposed, the line would run about 725 miles from western Pennsylvania into New York and New Jersey and also south into Maryland.
The line would enable more natural-gas-burning power plants to be built and connected to the regional power grid managed by PJM, PPL stated. The line is expected to lower the cost of energy, the company said.
If the project, which is still preliminary, is approved and built as proposed, the line would help replace supplies of electricity that would be lost when existing power plants retire, PPL stated. It also would help prevent power shortages during periods of extremely high demand, such as the prolonged severe cold weather this past winter.
The company said it has started regional planning to determine the best route and final details of the proposed line. As always with such projects, the company said, it would have an inclusive public outreach process and would consider public input when making a final route selection.
As a result, it was not clear if any portion of the project would be built in Central Pennsylvania, said PPL spokesman Paul Wirth.
“There is no specific route yet,” he said. “But the results of this line, if built, would benefit those in the midstate counties.”
As to the cost, the company said it is not included in PPL Corp.’s most recent capital expenditure projections. PPL Electric Utilities said it may enter into partnerships to develop and build some or all of the project. Completion would be between 2023 and 2025.