However, discussions on potential electricity service agreements aren’t far enough along for the joint venture to commit to buying turbines and it is unclear when it would be able to announce any news, according to Sorgi.

“We've made no material financial commitments to date as it relates to the joint venture,” he said.

PPL intends to make sure that the joint venture’s deals don’t change the company’s credit risk profile, Sorgi said.

PPL supports pending legislation in Pennsylvania — H.B. 1272 and S.B. 897 — that would allow regulated utilities like PPL Electric Utilities to build and own generation to address a resource adequacy need, Sorgi said.

The bills would also encourage utilities to enter into agreements with independent power producers to help “derisk” their new generation investments, according to Sorgi. 

“We are primed to act quickly once this proposed legislation becomes law,” he said.

PPL Electric Utilities estimates it will need about 7.5 GW of new generation in the next five to seven years, according to Sorgi.

“Given both federal and state support for new natural gas plants, natural gas pipeline expansion and streamlined siting and permitting, we are optimistic this generation can get built,” he said.

PPL estimates that it costs about $2.2 million to $2.5 million per MW to build a gas-fired combined cycle power plant, according to Sorgi.

The PJM Interconnection’s last two capacity auctions will increase customer bills by about $20 a month, without bringing new generation onto the grid, according to Sorgi.

“That was simply a transfer of wealth from utility customers to IPPs and to their shareholders,” Sorgi said. “What we're seeing in the market today is contracting long-term deals with hyperscalers for nuclear capacity. I would expect that to continue.”

IPPs are reluctant to build new generation because it would cannibalize the value of their existing fleets by lowering capacity prices, according to Sorgi.

“So it's not a surprise to us that the competitive markets are not delivering on this much needed generation,” he said. 

Also, PJM’s interconnection queue has about 10 GW of new generation in Pennsylvania, with about 1.2 GW of dispatchable gas and nuclear generation, with the rest comprised of solar and batteries, according to Sorgi. 

“We see real issues with the solar developers being able to get their projects completed,” he said. “So we're clearly staring at a near-term supply and demand issue that we believe needs to be addressed ASAP.”

PPL expects its utilities in Kentucky, Pennsylvania and Rhode Island will spend $20 billion in infrastructure improvements from 2025 to 2028, resulting in average annual rate base growth of 9.8%, according to Sorgi.

While PPL expects strong customer growth in Kentucky and Pennsylvania, weather-normalized sales at the company’s utilities in the states grew 0.5% in the second quarter and were essentially flat over the previous 12 months, according to the presentation.

In the second quarter, residential sales dipped 0.5% in Pennsylvania. Industrial sales fell 2.4% in Pennsylvania and 2.1% in Kentucky. 

The decline in industrial sales was caused by one steel manufacturer in Pennsylvania and possibly weather in Kentucky, according to Joseph Bergstein, PPL chief financial officer.