Leases

12 Months Ended

Dec. 31, 2022

(All Registrants)

LG&E and KU have entered into various operating leases primarily for office space, vehicles and railcars. The leases generally have fixed payments with expiration dates ranging from 2023 to 2040, some of which have options to extend the leases from one year to ten years and some have options to terminate at LG&E's and KU's discretion.

PPL has also entered into various operating leases primarily for office and warehouse space. These leases generally have fixed payments with expiration dates ranging from 2024 through 2030. RIE has various operating leases, primarily related to a transmission line, buildings, land, and fleet vehicles used to support the electric and gas operations, with lease terms ranging between 1 and 50 years. In measuring lease liabilities, the Company excludes variable lease payments, other than those that

depend on an index or rate, or are in substance fixed payments, and includes lease payments made at or before the commencement date. The variable lease payments were not material for the year ended December 31, 2022.

PPL Electric also has operating leases which do not have a significant impact to its operations.

(PPL, LG&E and KU)

Lessee Transactions

The following table provides the components of lease cost for the Registrants' operating leases for the years ended December 31:


	2022		2021		2020
PPL
Lease cost:
Operating lease cost	$	20	$	24	$	28
Short-term lease cost	6		6		7
Total lease cost	$	26	$	30	$	35

LG&E
Lease cost:
Operating lease cost	$	6	$	6	$	8
Short-term lease cost	1		1		1
Total lease cost	$	7	$	7	$	9

KU
Lease cost:
Operating lease cost	$	9	$	10	$	13
Short-term lease cost	2		1		1
Total lease cost	$	11	$	11	$	14

The following table provides other key information related to the Registrants' operating leases at December 31:


	2022		2021		2020
PPL
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	26	$	23	$	24
Right-of-use asset obtained in exchange for new operating lease liabilities	15		12		17

LG&E
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	8	$	6	$	7
Right-of-use asset obtained in exchange for new operating lease liabilities	4		4		6

KU
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	12	$	10	$	11
Right-of-use asset obtained in exchange for new operating lease liabilities	5		7		9

The following table provides the total future minimum rental payments for operating leases, as well as a reconciliation of these undiscounted cash flows to the lease liabilities recognized on the Balance Sheets as of December 31, 2022.


	PPL		LG&E		KU
2023	$	24	$	6	$	9
2024	17		5		7
2025	12		3		4
2026	5		1		1
2027	4		1		—

Thereafter	7		—		—
Total	$	69	$	16	$	21

Weighted-average discount rate	3.1%		3.17%		3.4%

Weighted-average remaining lease term (in years)	4		3		3
Current lease liabilities (a)	$	22	$	6	$	8
Non-current lease liabilities (a)	42		9		12
Right-of-use assets (b)	60		13		19

(a) Current lease liabilities are included in "Other Current Liabilities" on the Balance Sheets. Non-current lease liabilities are included in "Other deferred credits and noncurrent liabilities" on the Balance Sheets. The difference between the total future minimum lease payments and the recorded lease liabilities is due to the impact of discounting.

(b) Right-of-use assets are included in "Other noncurrent assets" on the Balance Sheets.

Lessor Transactions

Third parties leased land from LG&E and KU at certain generation plants to produce refined coal used to generate electricity. The leases were operating leases and expired in 2021. Payments were allocated among lease and non-lease components as stated in the agreements. Lease payments were fixed or determined based on the amount of refined coal used in electricity generation at the facility. Payments received were primarily recorded as a regulatory liability and amortized in accordance with regulatory approvals. There are certain leases in which RIE is the lessor. Revenue under such leases was immaterial for the year ended December 31, 2022.

The following table shows the lease income recognized for the years ended December 31:


	2022		2021	2020









PPL	$	6	11	16
LG&E	2		5	6
KU	—		5	9