Defined Benefits

9 Months Ended

Sep. 30, 2020

Retirement Benefits [Abstract]

Defined Benefits

10. Defined Benefits

(PPL, LKE and LG&E)

Certain net periodic defined benefit costs are applied to accounts that are further distributed among capital, expense, regulatory assets and regulatory liabilities, 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 September 30:

	Pension Benefits
	Three Months								Nine Months
	U.S.				U.K.				U.S.				U.K.
	2020		2019		2020		2019		2020		2019		2020		2019
PPL
Service cost	$	14	$	13	$	22	$	17	$	42	$	38	$	66	$	51
Interest cost	35		41		36		45		109		123		107		140
Expected return on plan assets	(62)		(62)		(155)		(144)		(185)		(184)		(464)		(442)
Amortization of:
Prior service cost	3		2		1		1		7		6		1		1
Actuarial loss	23		15		52		22		67		42		158		69
Net periodic defined benefit costs (credits) before settlements	13		9		(44)		(59)		40		25		(132)		(181)
Settlements (a)	13		—		—		—		13		1		—		—
Net periodic defined benefit costs (credits)	$	26	$	9	$	(44)	$	(59)	$	53	$	26	$	(132)	$	(181)

(a)Due to the amount of lump sum payment distributions from the LKE qualified pension plan, an estimated settlement charge of $13 million for the three and nine months ended September 30, 2020 was incurred. In accordance with existing regulatory accounting treatment, LG&E and KU have primarily maintained the settlement charge in regulatory assets to be amortized over fifteen years. The portion of the settlement attributed to LKE's unregulated operations has been charged to expense.

	Pension Benefits
	Three Months				Nine Months
	2020		2019		2020		2019
LKE
Service cost	$	6	$	5	$	18	$	16
Interest cost	14		16		43		49
Expected return on plan assets	(25)		(25)		(75)		(76)
Amortization of:
Prior service cost	2		2		6		6
Actuarial loss (a)	11		7		30		17
Net periodic defined benefit costs (credits) before settlements	8		5		22		12
Settlements (b)	13		—		13		—
Net periodic defined benefit costs (credits) (c)	$	21	$	5	$	35	$	12

(a)    As a result of treatment approved by the KPSC, the difference between actuarial loss calculated in accordance with LKE's accounting policy and actuarial loss calculated using a 15-year amortization period was $3 million and $9 million for the three and nine months ended September 30, 2020 and $2 million and $3 million for the three and nine months ended September 30, 2019. This difference is recorded as a regulatory asset.

(b) Due to the amount of lump sum payment distributions from the LKE qualified pension plan, an estimated settlement charge of $13 million for the three and nine months ended September 30, 2020 was incurred. In accordance with existing regulatory accounting treatment, LG&E and KU have primarily maintained the settlement charge in regulatory assets to be amortized over fifteen years. The portion of the settlement attributed to LKE's unregulated operations has been charged to expense.

(c)     Due to the amount of lump sum payment distributions from the LG&E qualified pension plan, a settlement charge of $5 million for the three and nine months ended September 30, 2019 was incurred. In accordance with existing regulatory accounting treatment, LG&E maintained the settlement charge in regulatory assets. The amount is being amortized over fifteen years.

	Pension Benefits
	Three Months		Nine Months
	2019 (a)		2019 (a)
LG&E
Service cost	$	—	$	1
Interest cost	2		8
Expected return on plan assets	(5)		(16)
Amortization of:
Prior service cost	1		4
Actuarial loss (b)	4		7
Net periodic defined benefit costs (c)	$	2	$	4

(a)    The pension plans sponsored by LKE and LG&E were merged effective January 1, 2020 into the LG&E and KU Pension Plan, sponsored by LKE.

(b) As a result of treatment approved by the KPSC, the difference between actuarial loss calculated in accordance with LG&E's accounting policy and actuarial loss calculated using a 15-year amortization period was $1 million and $2 million for the three and nine months ended September 30, 2019. This difference is recorded as a regulatory asset.

(c) Due to the amount of lump sum payment distributions from the LG&E qualified pension plan, a settlement charge of $5 million for the three and nine months ended September 30, 2019 was incurred. In accordance with existing regulatory accounting treatment, LG&E maintained the settlement charge in regulatory assets. The amount is being amortized over fifteen years.

	Other Postretirement Benefits
	Three Months				Nine Months
	2020		2019		2020		2019
PPL
Service cost	$	2	$	2	$	5	$	4
Interest cost	4		5		14		16
Expected return on plan assets	(5)		(5)		(16)		(14)
Amortization of:
Prior service cost	—		—		1		—
Actuarial loss	—		1		—		1
Net periodic defined benefit costs	$	1	$	3	$	4	$	7
LKE
Service cost	$	1	$	1	$	3	$	3
Interest cost	2		2		6		6
Expected return on plan assets	(2)		(2)		(7)		(6)
Amortization of:
Prior service cost	1		—		1		1
Actuarial gain	(1)		—		(1)		(1)
Net periodic defined benefit costs	$	1	$	1	$	2	$	3

(PPL Electric, LG&E and KU)

PPL Electric is allocated costs of defined benefit plans sponsored by PPL Services and LG&E and KU are allocated costs of defined benefit plans sponsored by LKE. LG&E and KU are also allocated costs of defined benefit plans from LKS for defined benefit plans sponsored by LKE. See Note 12 for additional information on costs allocated to LG&E and KU from LKS. These allocations are based on participation in those plans, which management believes are reasonable. For the periods ended September 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				Nine Months
	2020		2019		2020		2019
PPL Electric	$	3	$	3	$	9	$	8
LG&E (a)	9		1		14		3
KU	4		—		5		—

(a)    Allocations to LG&E increased in 2020 primarily due to the merger of plans sponsored by LKE and LG&E effective January 1, 2020 into the LG&E and KU Pension Plan.

(All Registrants)

The non-service cost components of net periodic defined benefit costs (credits) (interest cost, expected return on plan assets, amortization of prior service cost and amortization of actuarial gain and loss) are presented in "Other Income (Expense) - net" on the Statements of Income. See Note 13 for additional information.

Cash Flows - U.S. Pension Plans

(PPL, LKE and LG&E)

During the nine months ended September 30, 2020, LKE contributed $22 million to its pension plans. LKE anticipates making $23 million in additional contributions in the fourth quarter of 2020.