8. Defined Benefits

(PPL, LKE and LG&E)

Certain net periodic defined benefit costs are applied to accounts that are further distributed among capital, expense and regulatory assets, including certain costs allocated to applicable subsidiaries for plans sponsored by PPL Services and LKE. Following are the net periodic defined benefit costs (credits) of the plans sponsored by PPL and its subsidiaries, LKE and LG&E for the periods ended June 30:



	Pension Benefits
	Three Months												Six Months
	U.S.						U.K.						U.S.						U.K.
	2017			2016			2017			2016			2017			2016			2017			2016
PPL
Service cost	$	15		$	16		$	18		$	18		$	32		$	33		$	37		$	36
Interest cost	42			44			44			62			84			87			87			124
Expected return on plan assets	(58		)	(58		)	(127		)	(132		)	(115		)	(114		)	(252		)	(265		)
Amortization of:
Prior service cost	3			3			—			—			5			4			—			—
Actuarial loss	14			10			36			36			34			25			71			73
Net periodic defined benefit costs (credits) before special termination benefits	16			15			(29		)	(16		)	40			35			(57		)	(32		)
Special termination benefits (a)	(1		)	—			—			—			1			—			—			—
Net periodic defined benefit costs (credits)	$	15		$	15		$	(29	)	$	(16	)	$	41		$	35		$	(57	)	$	(32	)


(a)	Enhanced pension benefits offered to certain PPL Electric bargaining unit employees under a one-time voluntary retirement window offered as part of the new five year IBEW contract ratified in March 2017.



	Pension Benefits
	Three Months						Six Months
	2017			2016			2017			2016
LKE
Service cost	$	5		$	6		$	12		$	12
Interest cost	18			18			34			35
Expected return on plan assets	(24		)	(24		)	(46		)	(45		)
Amortization of:
Prior service cost	2			3			4			4
Actuarial loss	4			5			15			10
Net periodic defined benefit costs	$	5		$	8		$	19		$	16



	Pension Benefits
	Three Months						Six Months
	2017			2016			2017			2016
LG&E
Service cost	$	1		$	1		$	1		$	1
Interest cost	3			4			$	6		$	7
Expected return on plan assets	(6		)	(5		)	(11		)	(10		)
Amortization of:
Prior service cost	1			1			2			2
Actuarial loss	1			1			4			3
Net periodic defined benefit costs	$	—		$	2		$	2		$	3



	Other Postretirement Benefits
	Three Months						Six Months
	2017			2016			2017			2016
PPL
Service cost	$	2		$	2		$	4		$	4
Interest cost	6			7			12			13
Expected return on plan assets	(5		)	(6		)	(11		)	(11		)
Amortization of prior service cost	(1		)	—			(1		)	—
Net periodic defined benefit costs	$	2		$	3		$	4		$	6

LKE
Service cost	$	1		$	1		$	2		$	2
Interest cost	2			3			4			5
Expected return on plan assets	(2		)	(1		)	(3		)	(3		)
Amortization of prior service cost	—			—			—			1
Net periodic defined benefit costs	$	1		$	3		$	3		$	5

(PPL Electric, LG&E and KU)

In addition to the specific plans it sponsors, LG&E is allocated costs of defined benefit plans sponsored by LKE. PPL Electric and KU do not directly sponsor any defined benefit plans. PPL Electric is allocated costs of defined benefit plans sponsored by PPL Services and KU is allocated costs of defined benefit plans sponsored by LKE. These allocations are based on participation in those plans, which management believes are reasonable. For the periods ended June 30, PPL Services allocated the following net periodic defined benefit costs to PPL Electric, and LKE allocated the following net periodic defined benefit costs to LG&E and KU:



	Three Months				Six Months
	2017		2016		2017		2016
PPL Electric	$	5	$	5	$	13	$	11
LG&E	2		3		5		5
KU	1		3		5		6

Expected Cash Flows - U.K. Pension Plans

(PPL)

For the six months ended June 30, 2017, WPD contributed $485 million to its U.K. pension plans. These accelerated contributions fund all 2017 required contributions and a portion of 2018 required contributions. WPD does not expect to make additional contributions in 2017.