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Income and Other Taxes (Tables)

12 Months Ended

Dec. 31, 2015

Components of Income (Loss) From Continuing Operations Before Income Taxes

"Income from Continuing Operations Before Income Taxes" included the following.

		2015		2014		2013

Domestic income		$	968	$	922	$	669
Foreign income			1,100		1,207		1,059
	Total	$	2,068	$	2,129	$	1,728

Components of Deferred Tax Assets and Liabilities

Significant components of PPL's deferred income tax assets and liabilities were as follows.

			2015		2014
Deferred Tax Assets
	Deferred investment tax credits		$	50	$	52
	Regulatory obligations			123		131
	Accrued pension costs			217		200
	Federal loss carryforwards (a)			587		129
	State loss carryforwards (b)			319		225
	Federal and state tax credit carryforwards			201		196
	Foreign capital loss carryforwards			387		446
	Foreign loss carryforwards			4		6
	Foreign - pensions			171		182
	Foreign - regulatory obligations			12		23
	Foreign - other			8		11
	Contributions in aid of construction			139		138
	Domestic - other			209		194
	Unrealized losses on qualifying derivatives			15		46
	Valuation allowances (b)			(662)		(622)
		Total deferred tax assets		1,780		1,357

Deferred Tax Liabilities
	Domestic plant - net			3,875		3,079
	Taxes recoverable through future rates			162		156
	Other regulatory assets			332		322
	Reacquired debt costs			28		31
	Foreign plant - net			777		854
	Domestic - other			24		17
		Total deferred tax liabilities		5,198		4,459
Net deferred tax liability			$	3,418	$	3,102

(a) Increase in Federal loss carryforwards primarily relates to the extension of bonus depreciation and the impact of bonus depreciation related to the provision to return adjustments.

(b) Includes $77 million of deferred tax assets related to state loss carryforwards and related valuation allowances previously reflected on the PPL Energy Supply Segment. The deferred tax assets and related valuation allowance remain with PPL after the spinoff.

Summary of Operating Loss Carryforwards and Tax Credit Carryforwards

At December 31, PPL had the following loss and tax credit carryforwards.

		2015		Expiration

Loss carryforwards
	Federal net operating losses (a)	$	1,660	2029-2035
	Federal charitable contributions		15	2020
	State net operating losses (a) (b)		5,269	2017-2035
	State charitable contributions		34	2016-2020
	Foreign net operating losses (c)		21	Indefinite
	Foreign capital losses (d)		2,152	Indefinite

Credit carryforwards
	Federal investment tax credit		125	2025-2028
	Federal alternative minimum tax credit		40	Indefinite
	Federal - other (e)		29	2016-2035
	State - other		5	2022

(a) Includes an insignificant amount of federal and state net operating loss carryforwards from excess tax deductions related to stock compensation for which a tax benefit will be recorded in Equity when realized.

(b) A valuation allowance of $254 million has been recorded against the deferred tax assets for these losses.

(d) A valuation allowance of $387 million has been recorded against the deferred tax assets for these losses.

(e) A valuation allowance of $12 million has been recorded against the deferred tax assets for these credits.

Schedule of Valuation and Qualifying Accounts of Deferred Tax Assets

The changes in deferred tax valuation allowances were as follows.

			Additions
	Balance at				Charged to						Balance
	Beginning		Charged		Other						at End
	of Period		to Income		Accounts			Deductions			of Period

2015	$	622	$	24	$	77	(b)	$	61	(a)	$	662
2014		585		57		6			26			622
2013		632		25					72	(a)		585

(a) The reductions of the U.K. statutory income tax rates in 2015 and 2013 resulted in $44 million and $67 million in reductions in deferred tax assets and the corresponding valuation allowances. See "Reconciliation of Income Tax Expense" below for more information on the impact of the U.K. Finance Acts 2015 and 2013.

(b) Valuation allowance related to deferred tax assets previously reflected on the PPL Energy Supply Segment. The deferred tax assets and related valuation allowance remain with PPL after the spinoff.

Components of Income Tax Expense (Benefit) From Continuing Operations

Details of the components of income tax expense, a reconciliation of federal income taxes derived from statutory tax rates applied to "Income from Continuing Operations Before Income Taxes" to income taxes for reporting purposes, and details of "Taxes, other than income" were as follows.

				2015		2014		2013
Income Tax Expense (Benefit)
	Current - Federal			$	(26)	$	18	$	(102)
	Current - State				25		26
	Current - Foreign				89		152		181
			Total Current Expense		88		196		79
	Deferred - Federal				699		299		259
	Deferred - State				68		120		84
	Deferred - Foreign				41		96		(53)
			Total Deferred Expense, excluding operating loss carryforwards		808		515		290

	Investment tax credit, net - Federal				(4)		(5)		(5)
	Tax expense (benefit) of operating loss carryforwards
		Deferred - Federal (a)			(396)		8		14
		Deferred - State			(31)		(22)		(18)
			Total Tax Expense (Benefit) of Operating Loss Carryforwards		(427)		(14)		(4)
	Total income taxes from continuing operations			$	465	$	692	$	360

	Total income tax expense - Federal			$	273	$	320	$	166
	Total income tax expense - State				62		124		66
	Total income tax expense - Foreign				130		248		128
			Total income taxes from continuing operations	$	465	$	692	$	360

(a) Increase in Federal loss carryforwards primarily relates to the extension of bonus depreciation and the impact of bonus depreciation related to provision to return adjustments.

In the table above, the following income tax expense (benefits) are excluded from income taxes from continuing operations.

			2015		2014		2013

Discontinued operations - PPL Energy Supply Segment			$	(30)	$	198	$	(180)
Stock-based compensation recorded to Additional Paid-in Capital						(4)		(2)
Valuation allowance on state deferred taxes related to issuance costs of Purchase Contracts
	recorded to Additional Paid-in Capital							(2)
Other comprehensive income				(2)		(190)		159
Valuation allowance on state deferred taxes recorded to other comprehensive income				(4)				(7)
		Total	$	(36)	$	4	$	(32)

Reconciliation of Income Tax Expense Derived From Statutory Tax Rate

				2015		2014		2013
Reconciliation of Income Tax Expense
	Federal income tax on Income from Continuing Operations Before Income Taxes at
		statutory tax rate - 35%		$	724	$	745	$	605
Increase (decrease) due to:
	State income taxes, net of federal income tax benefit				31		28		17
	Valuation allowance adjustments (a)				24		55		24
	Impact of lower U.K. income tax rates (b)				(176)		(180)		(144)
	U.S. income tax on foreign earnings - net of foreign tax credit (c)				8		63		21
	Federal and state tax reserves adjustments (d)				(22)		(1)		(49)
	Impact of the U.K. Finance Acts on deferred tax balances (b)				(91)		(1)		(97)
	Depreciation not normalized				(5)		(7)		(8)
	State deferred tax rate change (e)						(1)		15
	Interest benefit on U.K. financing entities				(20)		(5)		(7)
	Other				(8)		(4)		(17)
			Total increase (decrease)		(259)		(53)		(245)
Total income taxes from continuing operations				$	465	$	692	$	360
Effective income tax rate					22.5%		32.5%		20.8%

(a) During 2015, PPL recorded $24 million of deferred income tax expense related to deferred tax valuation allowances. PPL recorded state deferred income tax expense of $12 million primarily related to increased Pennsylvania net operating loss carryforwards expected to be unutilized and $12 million of federal deferred income tax expense primarily related to federal tax credit carryforwards that are expected to expire as a result of lower future taxable earnings due to the extension of bonus depreciation.

As a result of the PPL Energy Supply spinoff announcement, PPL recorded $50 million of deferred income tax expense during 2014 to adjust the valuation allowance on deferred tax assets primarily for state net operating loss carryforwards that were previously supported by the future earnings of PPL Energy Supply. See Note 8 for additional information on the spinoff.

During 2013, PPL recorded $23 million of state deferred income tax expense related to a deferred tax valuation allowance primarily due to a decrease in projected future taxable income at PPL Energy Supply over the remaining carryforward period of Pennsylvania net operating losses.

(b) The U.K. Finance Act 2015, enacted in November 2015, reduced the U.K. statutory income tax rate from 20% to 19% effective April 1, 2017 and from 19% to 18% effective April 1, 2020. As a result, PPL reduced its net deferred tax liabilities and recognized a deferred tax benefit during 2015 related to both rate decreases.

The U.K. Finance Act 2013, enacted in July 2013, reduced the U.K. statutory income tax rate from 23% to 21% effective April 1, 2014 and from 21% to 20% effective April 1, 2015. As a result, PPL reduced its net deferred tax liabilities and recognized a deferred tax benefit during 2013 related to both rate decreases.

During 2014, PPL recorded $47 million of income tax expense primarily attributable to taxable dividends.

During 2013, PPL recorded $28 million of income tax expense resulting from increased taxable dividends offset by a $19 million income tax benefit associated with a ruling obtained from the IRS impacting the recalculation of 2010 U.K. earnings and profits that was reflected on an amended 2010 U.S. tax return.

(d) In 2015, PPL recorded a $12 million tax benefit related to the settlement of the IRS audit for the tax years 1998-2011.

In May 2013, the Supreme Court ruled that the U.K. Windfall Profits Tax (WPT) imposed on privatized utilities, including WPD, is a creditable tax for U.S. federal income tax purposes. As a result of the Supreme Court ruling, PPL recorded a tax benefit of $44 million during 2013, of which $19 million relates to interest.

In 2013, PPL recorded a federal and state income tax reserve benefit of $7 million related to stranded cost securitization. The reserve balance at December 31, 2013 related to stranded costs securitization was zero.

(e) During each period, PPL recorded adjustments related to its December 31 state deferred tax liabilities as a result of annual changes in state apportionment and the impact on the future estimated state income tax rate.

Details of Taxes Other Than Income

		2015		2014		2013
Taxes, other than income
	State gross receipts (a)	$	89	$	102	$	98
	Foreign property		148		157		147
	Domestic Other		62		58		53
	Total	$	299	$	317	$	298

(a) The decrease in 2015 was primarily due to the settlement of a 2011 gross receipts tax audit resulting in the reversal of $17 million of previously recognized reserves.

Summary of Income Tax Examinations

With few exceptions, at December 31, 2015, these jurisdictions, as well as the tax years that are no longer subject to examination, were as follows.

PPL

PPL Electric

LKE

LG&E

U.S. (federal)

2011 and prior

Pennsylvania (state)

2011 and prior

Kentucky (state)

2010 and prior

U.K. (foreign)

2012 and prior

PPL Electric Utilities Corp [Member]

Income Taxes [Line Items]

Components of Deferred Tax Assets and Liabilities

Significant components of PPL Electric's deferred income tax assets and liabilities were as follows.

			2015		2014
Deferred Tax Assets
	Accrued pension costs		$	92	$	85
	Contributions in aid of construction			111		110
	Regulatory obligations			56		39
	State loss carryforwards			27		30
	Federal loss carryforwards (a)			146		51
	Other			87		54
		Total deferred tax assets		519		369

Deferred Tax Liabilities
	Electric utility plant - net			1,803		1,453
	Taxes recoverable through future rates			135		132
	Reacquired debt costs			18		20
	Other regulatory assets			213		173
	Other			13		16
		Total deferred tax liabilities		2,182		1,794
Net deferred tax liability			$	1,663	$	1,425

(a) Increase in Federal loss carryforwards primarily relates to the extension of bonus depreciation and the impact of bonus depreciation related to the provision to return adjustments.

Summary of Operating Loss Carryforwards and Tax Credit Carryforwards

At December 31, PPL Electric had the following loss carryforwards.

		2015		Expiration

Loss carryforwards
	Federal net operating losses	$	411	2031-2035
	Federal charitable contributions		3	2020
	State net operating losses		410	2030-2032
	State charitable contributions		13	2016-2020

Components of Income Tax Expense (Benefit) From Continuing Operations

Details of the components of income tax expense, a reconciliation of federal income taxes derived from statutory tax rates applied to "Income Before Income Taxes" to income taxes for reporting purposes, and details of "Taxes, other than income" were as follows.

				2015		2014		2013
Income Tax Expense (Benefit)
	Current - Federal			$	(80)	$	60	$	(15)
	Current - State				23		15		(4)
			Total Current Expense (Benefit)		(57)		75		(19)
	Deferred - Federal				287		70		109
	Deferred - State				12		16		16
			Total Deferred Expense, excluding operating loss carryforwards		299		86		125

	Investment tax credit, net - Federal						(1)		(1)
	Tax expense (benefit) of operating loss carryforwards
		Deferred - Federal			(75)				4
		Deferred - State			(3)				(1)
			Total Tax Expense (Benefit) of Operating Loss Carryforwards		(78)				3
	Total income tax expense			$	164	$	160	$	108

	Total income tax expense - Federal			$	132	$	129	$	97
	Total income tax expense - State				32		31		11
			Total income tax expense	$	164	$	160	$	108

Reconciliation of Income Tax Expense Derived From Statutory Tax Rate

			2015		2014		2013
Reconciliation of Income Taxes
	Federal income tax on Income Before Income Taxes at statutory tax rate - 35%		$	146	$	148	$	111
Increase (decrease) due to:
	State income taxes, net of federal income tax benefit			25		22		16
	Federal and state tax reserves adjustments (a)			2		(1)		(9)
	Federal and state income tax return adjustments			(2)		1		(1)
	Depreciation not normalized			(4)		(6)		(6)
	Other			(3)		(4)		(3)
		Total increase (decrease)		18		12		(3)
Total income tax expense			$	164	$	160	$	108
Effective income tax rate				39.4%		37.8%		34.1%

(a) PPL Electric recorded a tax benefit of $7 million during 2013 to federal and state income tax reserves related to stranded cost securitization. The reserve balance at December 31, 2013 related to stranded costs securitization was zero.

Details of Taxes Other Than Income

			2015		2014		2013
Taxes, other than income
	State gross receipts (a)		$	89	$	102	$	98
	Property and other			5		5		5
		Total	$	94	$	107	$	103

(a) The decrease in 2015 was primarily due to the settlement of a 2011 gross receipts tax audit resulting in the reversal of $17 million of previously recognized reserves.

LG And E And KU Energy LLC [Member]

Income Taxes [Line Items]

Components of Deferred Tax Assets and Liabilities

Significant components of LKE's deferred income tax assets and liabilities were as follows.

			2015		2014
Deferred Tax Assets
	Federal loss carryforwards (a)		$	280	$	46
	State loss carryforwards			35		36
	Tax credit carryforwards			181		182
	Regulatory liabilities			66		92
	Accrued pension costs			53		53
	Income taxes due to customers			17		20
	Deferred investment tax credits			50		51
	Derivative liability			18		45
	Other			55		44
	Valuation allowances			(12)
		Total deferred tax assets		743		569

Deferred Tax Liabilities
	Plant - net			2,076		1,639
	Regulatory assets			119		143
	Other			11		12
		Total deferred tax liabilities		2,206		1,794
Net deferred tax liability			$	1,463	$	1,225

(a) Increase in Federal loss carryforwards primarily relates to the extension of bonus depreciation and the impact of bonus depreciation related to the provision to return adjustments.

Summary of Operating Loss Carryforwards and Tax Credit Carryforwards

At December 31, LKE had the following loss and tax credit carryforwards.

		2015		Expiration

Loss carryforwards
	Federal net operating losses	$	801	2029-2035
	State net operating losses		934	2028-2035
	State capital losses		1	2016

Credit carryforwards
	Federal investment tax credit		125	2025-2028
	Federal alternative minimum tax credit		28	Indefinite
	Federal - other		27	2016-2035
	State - other		5	2022

Schedule of Valuation and Qualifying Accounts of Deferred Tax Assets

Changes in deferred tax valuation allowances were:

	Balance at								Balance
	Beginning								at End
	of Period		Additions			Deductions			of Period

2015			$	12	(a)				$	12
2014	$	4				$	4	(b)
2013		5					1	(b)		4

(a) Represents tax credits expiring in 2016 through 2020 that are more likely than not to expire before being utilized.

(b) Primarily related to the expiration of state capital loss carryforwards.

Components of Income Tax Expense (Benefit) From Continuing Operations

				2015		2014		2013
Income Tax Expense (Benefit)
	Current - Federal			$	2	$	(247)	$	(59)
	Current - State				1		8		10
			Total Current Expense (Benefit)		3		(239)		(49)
	Deferred - Federal				405		437		244
	Deferred - State				32		23		20
			Total Deferred Expense, excluding benefits of operating loss carryforwards		437		460		264
	Investment tax credit, net - Federal				(3)		(4)		(4)
	Tax benefit of operating loss carryforwards
		Deferred - Federal			(198)		(8)		(4)
		Deferred - State							(1)
			Total Tax Benefit of Operating Loss Carryforwards		(198)		(8)		(5)
	Total income tax expense from continuing operations (a)			$	239	$	209	$	206

	Total income tax expense - Federal			$	206	$	178	$	177
	Total income tax expense - State				33		31		29
			Total income tax expense from continuing operations (a)	$	239	$	209	$	206

(a) Excludes current and deferred federal and state tax expense (benefit) recorded to Discontinued Operations of less than $1 million in 2015 and 2014, and $1 million in 2013. Also, excludes deferred federal and state tax expense (benefit) recorded to OCI of less than $(1) million in 2015, $(36) million in 2014 and $18 million in 2013.

Reconciliation of Income Tax Expense Derived From Statutory Tax Rate

				2015		2014		2013
Reconciliation of Income Taxes
	Federal income tax on Income Before Income Taxes at
		statutory tax rate - 35%		$	211	$	194	$	193
Increase (decrease) due to:
	State income taxes, net of federal income tax benefit				22		20		20
	Amortization of investment tax credit				(3)		(4)		(4)
	Valuation allowance adjustment (a)				12
	Other				(3)		(1)		(3)
			Total increase (decrease)		28		15		13
Total income tax expense from continuing operations				$	239	$	209	$	206
Effective income tax rate					39.6%		37.8%		37.4%

(a) Represents a valuation allowance against tax credits expiring from 2016 through 2020 that are more likely than not to expire before being utilized.

Details of Taxes Other Than Income

			2015		2014		2013
Taxes, other than income
	Property and other		$	57	$	52	$	48
		Total	$	57	$	52	$	48

Louisville Gas And Electric Co [Member]

Income Taxes [Line Items]

Components of Deferred Tax Assets and Liabilities

Significant components of LG&E's deferred income tax assets and liabilities were as follows.

			2015		2014
Deferred Tax Assets
	Federal loss carryforwards (a)		$	76
	Regulatory liabilities			38	$	51
	Deferred investment tax credits			13		14
	Income taxes due to customers			17		18
	Derivative liability			18		32
	Other			15		9
		Total deferred tax assets		177		124

Deferred Tax Liabilities
	Plant - net			896		698
	Regulatory assets			75		90
	Accrued pension costs			28		28
	Other			7		8
		Total deferred tax liabilities		1,006		824
Net deferred tax liability			$	829	$	700

(a) Increase in Federal loss carryforwards primarily relates to the extension of bonus depreciation.

Components of Income Tax Expense (Benefit) From Continuing Operations

				2015		2014		2013
Income Tax Expense (Benefit)
	Current - Federal			$	(15)	$	(25)	$	52
	Current - State				3		10		16
			Total Current Expense (Benefit)		(12)		(15)		68
	Deferred - Federal				190		114		33
	Deferred - State				13		6		(2)
			Total Deferred Expense, excluding benefits of operating loss carryforwards		203		120		31
	Investment tax credit, net - Federal				(1)		(2)		(2)
	Tax benefit of operating loss carryforwards
		Deferred - Federal			(76)				(3)
			Total Tax Benefit of Operating Loss Carryforwards		(76)				(3)
	Total income tax expense			$	114	$	103	$	94

	Total income tax expense - Federal			$	98	$	87	$	80
	Total income tax expense - State				16		16		14
			Total income tax expense	$	114	$	103	$	94

Reconciliation of Income Tax Expense Derived From Statutory Tax Rate

				2015		2014		2013
Reconciliation of Income Taxes
	Federal income tax on Income Before Income Taxes at
		statutory tax rate - 35%		$	105	$	95	$	90
Increase (decrease) due to:
	State income taxes, net of federal income tax benefit				11		10		10
	Amortization of investment tax credit				(1)		(2)		(2)
	Other				(1)				(4)
			Total increase (decrease)		9		8		4
Total income tax expense				$	114	$	103	$	94
Effective income tax rate					38.1%		37.9%		36.6%

Details of Taxes Other Than Income

			2015		2014		2013
Taxes, other than income
	Property and other		$	28	$	25	$	24
		Total	$	28	$	25	$	24

Kentucky Utilities Co [Member]

Income Taxes [Line Items]

Components of Deferred Tax Assets and Liabilities

Significant components of KU's deferred income tax assets and liabilities were as follows.

			2015		2014
Deferred Tax Assets
	Federal loss carryforwards (a)		$	97
	Regulatory liabilities			28	$	41
	Deferred investment tax credits			36		37
	Income taxes due to customers					2
	Derivative liability					13
	Other			7		7
		Total deferred tax assets		168		100

Deferred Tax Liabilities
	Plant - net			1,164		922
	Regulatory assets			44		53
	Other			6		7
		Total deferred tax liabilities		1,214		982
Net deferred tax liability			$	1,046	$	882

(a) Increase in Federal loss carryforwards primarily relates to the extension of bonus depreciation.

Components of Income Tax Expense (Benefit) From Continuing Operations

				2015		2014		2013
Income Tax Expense (Benefit)
	Current - Federal			$	(21)	$	(95)	$	51
	Current - State				1		6		12
			Total Current Expense (Benefit)		(20)		(89)		63
	Deferred - Federal				240		212		66
	Deferred - State				19		14		8
			Total Deferred Expense, excluding benefits of operating loss carryforwards		259		226		74
	Investment tax credit, net - Federal				(2)		(2)		(2)
	Tax benefit of operating loss carryforwards
		Deferred - Federal			(97)				(3)
			Total Tax Benefit of Operating Loss Carryforwards		(97)				(3)
	Total income tax expense (a)			$	140	$	135	$	132

	Total income tax expense - Federal			$	120	$	115	$	112
	Total income tax expense - State				20		20		20
			Total income tax expense (a)	$	140	$	135	$	132

(a) Excludes deferred federal and state tax expense (benefit) recorded to OCI of less than $(1) million in 2015, 2014 and 2013.

Reconciliation of Income Tax Expense Derived From Statutory Tax Rate

				2015		2014		2013
Reconciliation of Income Taxes
	Federal income tax on Income Before Income Taxes at
		statutory tax rate - 35%		$	131	$	124	$	126
Increase (decrease) due to:
	State income taxes, net of federal income tax benefit				13		13		14
	Amortization of investment tax credit				(2)		(2)		(2)
	Other				(2)				(6)
			Total increase (decrease)		9		11		6
Total income tax expense				$	140	$	135	$	132
Effective income tax rate					37.4%		38.0%		36.7%

Details of Taxes Other Than Income

			2015		2014		2013
Taxes, other than income
	Property and other		$	29	$	27	$	24
		Total	$	29	$	27	$	24