PPL (PPL -1.02%)
Q4 2021 Earnings Call
Feb 18, 2022, 11:00 a.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Good morning and welcome to the PPL Corporation fourth quarter earnings conference call. All participants will be in a listen-only mode. [Operator instructions] After today's presentation there will be an opportunity to ask questions. [Operator instructions] Please note, this event is being recorded.
I would now like to turn the conference over to Andy Ludwig, vice president of investor relations. Please go ahead.
Andy Ludwig -- Vice President of Investor Relations
Thank you. Good morning, everyone, and thank you for joining the PPL Corporation conference call on fourth-quarter and full-year 2021 financial results. We provided slides for this presentation in our earnings release issued this morning on the investor section of our website. Before we get started, I'll draw your attention to Slide 2 and a brief cautionary statement.
Our presentation in the earnings release, which we'll discuss during today's call contains forward-looking statements about future operating results or other future events. Actual results may differ materially from these forward-looking statements. Please refer to the appendix of this presentation and PPL's SEC filings for a discussion of factors that could cause actual results to differ from the forward-looking statements. We will also refer to non-GAAP measures including earnings from ongoing operations and adjusted gross margins on this call.
For reconciliations for the comparable GAAP measures, please refer to the appendix. Participating on our call this morning are Vince Sorgi, PPL president and CEO; Joe Bergstein, chief financial officer; and Greg Dudkin, chief operating officer. With that, I'll now turn the call over to Vince.
Vince Sorgi -- President and Chief Executive Officer
Thank you, Andy, and good morning, everyone. We appreciate you joining us for our 2021 year-end earnings call. Moving to Slide 3 and the agenda for today's call. I'll begin this morning with an overview of 2021 and what was clearly a significant transition year for PPL.
I'll highlight key achievements we made throughout the year, including our progress in strategically repositioning PPL for future growth and success. Joe will provide a financial update including the previously discussed reset of our first quarter dividend we announced this morning and a detailed overview of our 2021 financial results. And as always, we'll leave ample time for your questions. Turning to Slide 4.
I'm incredibly proud of how our team performed and what was truly a remarkable year for PPL. As we began a new century in our company's history, we took bold steps to strategically reposition PPL as a US-focused energy company committed to sustainable growth and well-positioned to lead the clean energy transition while maintaining affordability and reliability for our customers. We completed the sale of our UK utility business in June. Achieving exceptional value at almost $11 billion while eliminating risks associated with foreign operations.
We then took steps to strengthen PPL's balance sheets by reducing $3.5 billion of our holding company debt, which provides us with significant financial flexibility going forward. We advanced our planned acquisition of Narragansett Electric, which will expand and diversify our US presence, add another high-quality regulated utility to our portfolio, and create additional opportunities to leverage our proven operating model to drive value for customers and shareowners. We anticipate receiving a final order from the Rhode Island division of public utilities and carriers with respect to the acquisition by March of 2022. While strategic repositioning was a key priority in 2021 to set PPL up for long-term success, we also remain focused on achieving our near-term objectives.
In 2021, we continued our track record of earning equity returns that were in line with those allowed by our regulators. We also achieved constructive regulatory outcomes in 2021 with the settlements on the Pennsylvania FERC ROE challenge and the rate case in Kentucky, which will provide added stability and predictability to our plan over the next several years. We also returned over $2 billion to share owners through dividends as well as share repurchases, which included the completion of our targeted $1 billion in share buybacks through December 31. And true to our mission, we delivered energy safely, reliably, and affordably for our 2.5 million customers in the United States.
And as the pandemic refused to yield, we stayed resilient acted responsibly to protect our employees, and remain focused on continuous improvement. From Kentucky to Pennsylvania, we delivered exceptional service throughout 2021. We maintain transmission and distribution reliability as well as generation availability that was among the best in the industry. Despite PPL electric utilities experiencing significant storms during 2021, it maintained top quartile performance for safety, which measures the average number of outages our customers experienced.
Meanwhile, our Kentucky operations posted their second-best year on record for the state. When severe weather struck either in Pennsylvania or Kentucky, we responded quickly and effectively. For example, after December tornadoes tore through portions of our service territory in Kentucky damaging or destroying more than 500 transmission and distribution poles. We restored power to most customers within 48 hours.
Similarly, when the remnants of Hurricane Ida swept through our Pennsylvania service territory, knocking out power to tens of thousands of customers, we mobilized quickly and effectively to get the lights back on as soon as possible. Our restoration performance in the wake of Hurricane Ida was recognized with an EEI Emergency Response Award. This performance is the result of the investments we've made in our grid and our dedicated employees who pride themselves on delivering a superior level of service each day. And that service was once again reflected in our customer satisfaction scores.
We were honored to receive four new JD Power awards in 2021 for electric utility residential and business customer satisfaction with PPL Electric Utilities and Kentucky Utilities both ranking highest among similarly sized utilities in their respective regions. And following an independent survey of customers at 140 of the largest utilities in the US, PPL Electric and Kentucky Utilities were recognized by Escalent as two of the most trusted utility brands in the nation. Across PPL, we also continue to foster a culture of innovation, investing in advanced technology and data analytics to deliver industry-leading reliability and enterprisewide cost efficiencies. This resulted in multiple industry awards in 2021, including the use of dynamic line rating, technology, and the use of data analytics to better target vegetation management.
With an eye toward keeping reliability strong and empowering our customers, we also continue to invest in the future. This included executing more than $2 billion in infrastructure improvements to further strengthen grid resilience, modernize our networks, incorporate advanced technology, and pave the way for increased electrification and renewable energy in our service territories. Turning to Slide 5. Over the past year, we also delivered on our commitments to deliver a sustainable PPL for our shareowners, employees, and the communities we serve.
We made significant progress in advancing our clean energy strategy. We adopted a net-zero carbon emissions goal, accelerated our interim emissions reduction target to 70% from 2010 levels by 2035 and 80% by 2040. And we also accelerated our coal plant retirements scheduled. Separately we announced the commitment of over $50 million in new investment to fund research and development in the clean energy space with our planned investment in EIP and EPRI's low carbon resources initiative.
We also launched a new partnership to study carbon capture at a natural gas combined cycle power plant and reached new agreements to provide an additional 125 megawatts of solar power to major Kentucky customers. In November, we published our latest comprehensive climate assessment report, which highlights the risks associated with climate change and the opportunities in responding to it and evaluating potential future emissions under multiple scenarios. This included a scenario consistent with limiting global warming to 1.5 degrees Celsius. Our climate assessment outlines our clean energy strategy and goals to enable a responsible transition that balances our commitments to the environment, our customers, our employees, and our communities.
LG and KU also submitted their triannual joint Integrated Resource Plan, which reflected a significant increase in projected renewable additions in the 15-year planning horizon compared to our prior plan. We expect the trend of more rapid decarbonization of our generation fleet in Kentucky to continue with further improvement in cost and technology for renewables, as well as other clean energy technologies. In addition to our focus on advancing our clean energy transition, we also remain very engaged in the communities we serve and with our employees throughout 2021. We continue to move PPL forward by creating a more diverse and inclusive workplace.
We implemented an enterprisewide diversity equity inclusion strategy, adopted DEI commitment, increased diversity within our leadership ranks, overall workforce in the board, and we expanded our support for social justice and equity initiatives in the communities we serve. In addition, we continue to create new opportunities for business resource groups for employees of all backgrounds and experiences to collaborate, share perspectives, and contribute to PPL's success. Our strong commitment to diversity and inclusion received recognition from multiple organizations in 2021, with PPL being named the best place to work for LGBTQ equality and disability inclusion, as well as a top company for ESG. And this January, PPL once again was named the best place to work for LGBTQ equality, marking the sixth straight year PPL has received this recognition.
During our fall giving campaign, PPL employees, and retirees collectively raised more money than ever before. More than $7 million in individual pledges and corporate matching contributions will help lift individuals, families, and the community. And in the aftermath of the Kentucky tornadoes, we responded quickly providing financial support to assist Kentucky families and businesses. In other highlights, we continue to build an exceptional management team that we believe will lead PPL to its best years to come.
We promoted Greg Dudkin to the chief operating officer and our leveraging his experience in building one of the most advanced utilities in the nation and PPL Electric Utilities to drive further value for stakeholders across all the PPL operating companies. We're extremely excited to have Wendy Stark on our team as our new general counsel. Wendy's extensive experience in regulatory matters and her deep knowledge of our industry have made her a great addition to PPL. We named two new utility precedents in Pennsylvania and Kentucky, with Stephanie Raymond in Pennsylvania, and John Crockett in Kentucky.
Stephanie is the first female utility president in our company's 100-year history. We also named a highly qualified and experienced leadership team in Rhode Island led by Dave Bonenberger from PPL and numerous talented employees from National Grid to lead our electric and gas operations pending the completion of the acquisition. We also took steps to strengthen our corporate governance during the year. Our board of directors appointed an outstanding leader and experienced board member as independent Board Chair in Craig Rogerson, reflecting PPL's continued commitment to strong corporate governance and independent oversight by a diverse, engaged board.
And Heather Redman, co-founder and managing partner of Flying Fish Partners was a welcomed addition to our highly experienced Board of Directors and brings a wealth of expertise in disruptive technologies and the energy industry. In summary, across our business, we made tremendous progress in 2021 as we pursued our strategy to deliver sustainable value for all stakeholders and position PPL for future growth and success. With that, I'll now turn the call over to Joe for the financial update. Joe?
Joe Bergstein -- Chief Financial Officer
Thank you, Vince, and good morning, everyone. Let's turn to Slide 7 for the financial update. Today, we announced fourth quarter reported earnings of $0.18 per share. Special items in the fourth quarter were $0.04 per share, primarily due to integration expenses associated with the planned acquisition of Narragansett Electric and discontinued operations associated with the UK utility business.
Adjusting for special items, fourth quarter earnings from ongoing operations were $0.22 per share. Our fourth quarter results bring our total 2021 results to a net loss of $1.93 per share. Special items for 2021 were $2.98 per share, primarily due to discontinued operations associated with the UK utility business, a UK tax rate change prior to the sale, and a loss on the early extinguishment of debt. Adjusting for special items, 2021 earnings from ongoing operations for $1.05 per share.
Before turning to the 2021 earnings walk, I'll highlight a few other financial updates. The most notable being the first quarter dividend we announced this morning. As we indicated on our third quarter earnings call, we plan to update the dividend following the January 3 payment as we continue to progress on PPL's strategic repositioning. Recall that we had maintained the dividend at the prior rate despite the sale of WPD, providing $350 million of dividends to reward long-term shareowners as we work to close the transactions and deploy the cash proceeds from the WPD sale in a value-accretive manner.
Today, we've announced the first quarter 2022 dividend of $0.20 per share payable on April 1. The updated quarterly dividend aligns with our earnings projections for PPL's current businesses and a targeted payout ratio of 60% to 65%. We plan to provide an updated annualized dividend rate and growth projections to align with earnings growth during an Investor Day following the completion of the Narraganset regulatory review process. We recognize that it would have been optimal to declare the April 1 dividend when we provide our annualized earnings forecast.
However, since we haven't completed the Narragansett regulatory review process, we wanted to be transparent today by providing clarity on the dividend reset following the sale of WPD. We plan to reflect any increase in the dividend due to the inclusion of Narragansett in our forecasts when we provide a comprehensive financial update at Investor Day. As Vince noted, one of the key financial highlights for 2021 was a reduction in our holding company debt as we allocated a significant amount of the WPD sales proceeds to strengthen PPL's balance sheets. We had a unique opportunity to establish one of the leading credit profiles in the sector, an attribute we see as increasingly important with a growing capital needs to fund the clean energy transition and now amid the backdrop of rising interest rates.
In other financial updates, we amended and extended our credit facilities during the fourth quarter to better align our liquidity needs. Post the strategic repositioning. In short, we slightly reduced the capacity of PPL capital funding to $1.25 billion from $1.45 billion, as we no longer need the same level of liquidity without the foreign currency risk associated with the UK. We've also included an option to add Narragansett as a co-borrower to the PPLcapital funding credit facility pending the closing of the acquisition.
And we continue to target 16% to 18% CFO and FFO to debt metrics, including the Narragansett Electric acquisition. We believe these actions provide a very strong financial foundation and place PPL among the best credit profiles in our industry. Let's move to our full-year 2021 earnings results on Slide 8. I would note that while I will compare 2021 earnings to our 2020 results, the periods are not truly comparable given the sale of the UK businesses, the reallocation of certain costs, the balance sheet recapitalization along with the outcome of the transmission ROE challenge.
Similar to prior quarters, we have adjusted the 2020 corporate other amounts to reflect certain costs previously allocated to the UK regulated segment, primarily interest expense and other support costs. These costs totaled about $0.07 per share for the year. Turning to the ongoing segment drivers. Our Pennsylvania Regulated segment earned $0.61 per share, a $0.04 year-over-year decrease.
Earnings results in Pennsylvania were primarily driven by a reduction in the transmission formula rate return on equity, lower peak transmission demand, and higher operation and maintenance expense. These decreases were partially offset by returns on additional capital investments in transmission. Turning to our Kentucky segment, we earned $0.61 per share in 2021, a $0.6 increase over comparable results one year ago. The increase was primarily due to higher base retail rates effective July 1.
Lower interest expense, primarily due to lower interest costs that were previously allocated to the Kentucky regulated segment and lower interest rates. Partially offsetting these items were higher operation and maintenance expenses related to several factors including support costs, generation plant costs, T&D costs, and higher depreciation due to the additions to PP&E. Results at corporate and others were $0.03 higher compared to the prior year. Factors driving earnings results at corporate and other, primarily included lower interest expense primarily due to less outstanding long-term holding company debt, partially offset by interest costs previously allocated to the Kentucky segment, partially offsetting this increase were several factors that were not individually significant.
Moving to Slide 9. The capital investments made in Pennsylvania and Kentucky during 2021, support grid modernization, grid resiliency and reliability, and improved service for our customers. Of the $2 billion of capex that Vince noted, we invested about $1 billion in each of the segments. In Pennsylvania, investments in distribution were made to maintain top quartile industry reliability and performance and investments in more advanced IT systems.
Meanwhile, on the transmission side, investments were primarily related to asset health reliability with a focus on smart relays, equipment monitoring, and automation to support of more advanced grid. Our Kentucky investments were primarily related to replacing the aging transmission, infrastructure, maintaining and enhancing our electric distribution network, generation outages, environmental compliance, and grid modernization. This resulted in total rate base growth of nearly 6%. Even as a rate based related to our coal-fired generation facilities decline.
That concludes my prepared remarks, and I'll turn the call back over to Vince for some closing comments.
Vince Sorgi -- President and Chief Executive Officer
Thank you, Joe. As I mentioned at the outset of my remarks, 2021 was very much a transition year for PPL. It was about reimagining PPL and laying a firm foundation for the company's future growth. And I believe we achieved just that.
Looking forward, our focus is on completing the acquisition of Narragansett Electric and introducing a new PPL to shareholders. The PPL that is committed to delivering sustainable value for shareowners backed by one of the strongest balance sheets in the US utility sector, distinguished by best-in-class customer service, committed to net-zero carbon emissions, and well-positioned to lead the clean energy transition while maintaining affordable reliable service for our customers. We look forward to sharing further details on our strategy and the exciting growth prospects for the new PPL at our Investor Day. With that operator, let's open the call for Q&A.
Questions & Answers:
Operator
[Operator instructions] And our first question will come from Shar Pourreza of Guggenheim Partners. Please go ahead.
Shar Pourreza -- Guggenheim Partners -- Analyst
Hey, good morning, guys.
Vince Sorgi -- President and Chief Executive Officer
Good morning, Shar.
Shar Pourreza -- Guggenheim Partners -- Analyst
So, Vince, perhaps if we can just start on the process in Rhode Island, it seems like there's been some noise around things like cost and mutual assistance versus grid's ownership in the docket. Any kind of color you can provide around your interactions of the decision target date approaches by the end of this month?
Vince Sorgi -- President and Chief Executive Officer
Yeah, sure. First of all, let me just say that we think we've met the standard for approval in the state, and we are looking forward to the decision coming out from the division. And Again, as we stated really from the outset of this process, we believe that PPL is uniquely positioned to serve Rhode Island customers at this point in time. When you look at our long history of providing energy safely, reliably, affordably for our customers, we consistently rank among the very best for customer satisfaction.
We've been a clear leader in developing and deploying the kind of smart grid technology that's going to be critical to helping Rhode Island meet its very ambitious carbonization goals. And with the additional commitments that we've made, we believe the transaction is clearly in the public interest in Rhode Island. So I'll just reiterate that we believe we've met the standard, and we're looking forward to the decision.
Shar Pourreza -- Guggenheim Partners -- Analyst
Got it. Got it. I get it. Just as there is a high level of confidence that we're going to close, OK.
And then just, Vince, you completed the billion-dollar buybacks, right, increased capex by $1 billion at EEI, could we just check back on the remaining amount of unallocated cash here? And how you're thinking about the toggle allocation between buybacks and more capex in light of the current EPS guidance?
Vince Sorgi -- President and Chief Executive Officer
Yeah, Shar. I would say we don't have a detailed update on that. We'll provide a full update at Investor Day. Really, it's important that we get through the regulatory process in Rhode Island.
Of course, we've made some commitments as part of the process. They want to make sure we factor all of that into the proceeds discussion, and we'll update with the full update on the Investor Day call.
Shar Pourreza -- Guggenheim Partners -- Analyst
Got it, understood. And then just a little bit more of a minor thing is maybe just can you comment on the Safari sale process? I mean it seems like there was some interest there previously. I guess, what drove the decision to put it on the block and any material amount of cash expected there?
Vince Sorgi -- President and Chief Executive Officer
Well, Shar, as we're not going to comment on market rumors, so.
Shar Pourreza -- Guggenheim Partners -- Analyst
OK. Try to get it past the events, but you're too good. All right. Thanks, guys.
Appreciate it.
Operator
The next question comes from Paul Zimbardo of Bank of America. Please go ahead.
Paul Zimbardo -- Bank of America Merrill Lynch -- Analyst
Hi. Good morning.
Vince Sorgi -- President and Chief Executive Officer
Good morning.
Paul Zimbardo -- Bank of America Merrill Lynch -- Analyst
I know you comment a little bit on Joe, but just on the decision around the dividend and the timing now versus maybe wait until you have clarity in a month or so. Just any perspective there. And it sounds like the plan would be more of a kind of a one-time bump assuming Narragansett closes versus a faster growth rate on the dividend. But just any perspective you can provide there would be helpful.
Vince Sorgi -- President and Chief Executive Officer
Yeah, sure, Paul. While it's certainly possible that we'll receive the decision as early as next week from the division, we're not certain of that, and we are still in the middle of the regulatory approval process. And as we discussed on the third quarter call, we did want to reduce the uncertainty related to the anticipated reset of the dividend following the UK sale. And just without the firm timeline for the Rhode Island transaction, we just felt it was appropriate to keep our normal cadence, which as you know, we would normally announce our first quarter dividend on our call -- on our year-end call.
And so as we were contemplating whether to move from that normal cadence and potentially hold off the call. We also realized that if we didn't do it today, we actually risk ending up doing it in [Inaudible] which would not be the preferred approach, of course. So we wanted to make sure that we could provide an opportunity for questions around what we've said. And that was really the nature of the decision to announce it today versus waiting.
And then in terms of the second part of your question, as Joe noted, the Q1 dividend is based on our current operations only, and we would plan to increase that following the closing of the Narragansett transaction. And again, we'll provide that full update once we close the deal and then conduct the Analyst Day for the investor call.
Paul Zimbardo -- Bank of America Merrill Lynch -- Analyst
OK, great. And then one last question on the strategic corporate initiative costs you incurred in the quarter, particularly at Kentucky, as well as just the corporate overall? Just what is the thought process there? And is there anything you're considering specifically with that Kentucky property?
Vince Sorgi -- President and Chief Executive Officer
Joe, you want to [Inaudible].
Joe Bergstein -- Chief Financial Officer
Yes. No, I think the costs associated with the strategic repositioning were normal in nature related to the Narragansett Electric acquisition, really the amount that's associated with Kentucky is really immaterial. Nothing related to any strategy going on in Kentucky. It's all essential for the Narragansett acquisition.
Paul Zimbardo -- Bank of America Merrill Lynch -- Analyst
OK, great. Thank you. Have a nice weekend.
Vince Sorgi -- President and Chief Executive Officer
Thanks, Paul.
Joe Bergstein -- Chief Financial Officer
Thanks, Paul.
Operator
The next question comes from Durgesh Chopra of Evercore ISI. Please go ahead.
Durgesh Chopra -- Evercore ISI -- Analyst
Hey, team. Good morning. Thank you for taking my question. I know there's a -- good morning.
Good morning. I know there's an update coming, post the Narragansett transaction. But just so we have the numbers, right? Am I right that with the share buybacks and I'm focused on the leftover cash with the share buybacks and the additional capex announced at the US utilities, you still have roughly about $1 billion left to allocate? Do I have that number right?
Joe Bergstein -- Chief Financial Officer
Well, Durgesh. We'll get into the total use of proceeds and any -- and how that's utilized when we get to the Investor Day.
Durgesh Chopra -- Evercore ISI -- Analyst
OK, that's fair. And then just one. And you may not be able to answer this also, but I'll just ask. Is the sort of 2022 going to be the best year for any term? Any long-term projections that you give out or long-term earnings growth targets that you give out?
Vince Sorgi -- President and Chief Executive Officer
Yes, that's the plan, Durgesh.
Durgesh Chopra -- Evercore ISI -- Analyst
OK, thank you, guys. Appreciate the time.
Vince Sorgi -- President and Chief Executive Officer
Sure.
Operator
The next question comes from Paul Patterson of Glenrock Associates. Please go ahead.
Paul Patterson -- Glenrock Associates -- Analyst
Hello. Can you hear me?
Joe Bergstein -- Chief Financial Officer
Yes, Paul.
Vince Sorgi -- President and Chief Executive Officer
Yeah, we can, Paul.
Joe Bergstein -- Chief Financial Officer
We can hear you.
Paul Patterson -- Glenrock Associates -- Analyst
So just to sort of follow up on this, when I guess how should we think of -- I mean, I know you guys are obviously feeling confident about the Narragansett closure, but it doesn't appear that there's any settlement and it appears that there's some uncertainty just generically speaking. Sort of the dividend action that you guys have been describing, how should we think about what the scenario would be if the deal doesn't come about if you don't get approval for it?
Vince Sorgi -- President and Chief Executive Officer
Yeah, Paul, I don't really want to talk about hypotheticals, we are we're really focused again, I'll just go back to what I said to Shar, we think, we've clearly met the standard for approval in the state with what we bring to the table in terms of our operating experience, the financial strength of our company. Of course, the commitments that we've made throughout the process there. So we and National Grid are very focused on getting to closing. We spent the last year on transition planning, integration planning, hiring, or getting 1,100 people like NFI, and ready to start on day one.
Paul, we are all very focused on getting this deal over the goal line and bringing real value to our line.
Paul Patterson -- Glenrock Associates -- Analyst
OK. But given the the the idea that the target date and again, I mean, are you hearing -- let me ask you this. Are you're hearing that there's any change in the target date decision because that almost just a week away and it would seem to me that. With the dividend action everything that perhaps, with -- you could have sort of waited to do the earnings release and everything else.
Unless you think that there's maybe a potential that that target date isn't -- that's going to be pushed back or something. How should we think about when we're going to get more clarity up Rhode Island? Is it still the target date kind of thing or is this something else we should think about?
Vince Sorgi -- President and Chief Executive Officer
Yeah, look, Paul, I think based on the schedule that we have, right? The targeted decision date is the 25th. But we just -- we recognize that there's a lot in this case through the written testimony, the briefs, the oral hearings. We just want to recognize the fact that the 25th is the target, and there's a lot that the hearing officer in the division needs to get through. And so there's been no change in the 25th, that's the target.
But we're just trying to be realistic that there's no guarantee that we're going to get into.
Paul Patterson -- Glenrock Associates -- Analyst
OK. Thanks
Vince Sorgi -- President and Chief Executive Officer
Sure.
Operator
The next question comes from Michael Lapides of Goldman Sachs. Please go ahead.
Michael Lapides -- Goldman Sachs -- Analyst
Hey, guys, thank you for taking my question. I actually wanted to just ask about Pennsylvania and Kentucky items. First, in Kentucky. Can you remind us as a result of the [Inaudible] when the material fleet generation changes or transformation would likely play out over that extended time frame? Like what happens in the next three to five years? What happens in the year [Inaudible].
Vince Sorgi -- President and Chief Executive Officer
Sure. So we have the next round of retirements. You may recall or in 2024, based on our reserve margins, we don't anticipate a significant need to replace generation. Those retiring the next group would be in 2028.
We would need to replace the 2028 retirements and so probably see capital start to be spent in the 2026-ish timeframe for that and then the next round of retirements are this side of 2035. So I think in 2034, '35-ish. And so you'll see the capital in the early '30s to prepare for those times.
Michael Lapides -- Goldman Sachs -- Analyst
Got it. And given the move in commodity prices, both natural gas, power, and coal you see for the next couple of years, your co-plans actually running at a higher capacity factor in Kentucky than maybe what you had seen previously? Or is there an opportunity to maybe save O&M and scale back the output levels of that source and either run gas units more or buy more power from the market?
Vince Sorgi -- President and Chief Executive Officer
Yeah. So it's a good question. So as you know, we're incredibly focused on decarbonizing the overall generation fleet. But we -- you bring up a good point around the cost of natural gas versus the cost of coal.
So as we think about it, Michael, we'll continue to look at how we best utilize the fleet to ensure reliability for the lowest cost for customers, but at the same time, decarbonizing. So that could be additional renewables -- renewable PPAs or on renewals. We're always looking at -- does it make sense to shift between natural gas and coal [Inaudible]. Those are all things that we continue to iterate as we look at decarbonization -- the overall decarbonization strategy for the coal.
Michael Lapides -- Goldman Sachs -- Analyst
Got it. And then one last Kentucky question. Can you just remind me, I remember -- I think I remember correctly, smart meter implementation in the company, it's been a while? But does Kentucky has a similar level of that relative to the other [Inaudible] in Pennsylvania?
Vince Sorgi -- President and Chief Executive Officer
Yeah, so we've done two rounds of smart meter deployment in Pennsylvania. We are doing our initial deployment in Kentucky. We're expecting that to be completed in 2026. And then you haven't asked, but in Rhode Island, they don't have smart meters, but that would be something we would be deployed very quickly after acquisition.
And getting around as well.
Michael Lapides -- Goldman Sachs -- Analyst
Got it. Thank you, guys. Very much appreciated.
Vince Sorgi -- President and Chief Executive Officer
Sure.
Operator
The next question comes from Steve Fleishman of Wolfe Research. Please go ahead.
Steve Fleishman -- Wolfe Research -- Analyst
Thanks. I appreciate it. I've got a few questions, Vince. So I guess, first of all, I thought you had said in the past that you were going to use a pro forma base for your growth rate, including like a full year of it NEC, not just 2022.
Is that correct? Or are you going to use the 2022 calendar year?
Vince Sorgi -- President and Chief Executive Officer
No, that's -- yes, sorry, if I wasn't clear on that with your response. Yeah, we think it would be 2022 pro forma.
Steve Fleishman -- Wolfe Research -- Analyst
OK. And just -- you have a new pay -- a dividend then you gave a payout ratio so you can kind of back into what earnings power from the core businesses roughly or expected to be without any NEC. Is that a fair representation of 2022 core businesses, without NEC?
Vince Sorgi -- President and Chief Executive Officer
That's reasonable, yes.
Steve Fleishman -- Wolfe Research -- Analyst
OK. And then just on NEC, has the -- I know initially, the Attorney General had talked about being opposed. Have they given an official opposition now with the commission? Or where does that stand?
Vince Sorgi -- President and Chief Executive Officer
Yeah, Steve, I don't think that the Attorney General has modified their original position as we've gone through.
Steve Fleishman -- Wolfe Research -- Analyst
OK. And so there's no -- at this point, there are no like settlement talks going on, there's just going to be a decision?
Vince Sorgi -- President and Chief Executive Officer
At this point, we are we're just waiting for the decision on that [Inaudible].
Steve Fleishman -- Wolfe Research -- Analyst
OK. OK. And then just on -- another thing you had talked about was potential, I think you're potentially trying to kind of resolve future rate cases as part of this, too. But if you have to just get a decision like when would be the next rate case in Rhode Island?
Vince Sorgi -- President and Chief Executive Officer
Yeah, so we've agreed to not file a rate case for a period of three years of the time of [Inaudible].
Steve Fleishman -- Wolfe Research -- Analyst
OK.
Vince Sorgi -- President and Chief Executive Officer
And so that I think in Rhode Island at nine, ten months to get from a tiny file to the time to complete, so. Depending on when it closes, that can give you kind of [Inaudible].
Steve Fleishman -- Wolfe Research -- Analyst
OK. So that's [Inaudible] at least your proposal, that's a condition of your filing.
Vince Sorgi -- President and Chief Executive Officer
Yes. So that is a commitment that we made upfront. So that is a commitment that has been made.
Steve Fleishman -- Wolfe Research -- Analyst
OK. And then. So maybe just to sum up on the dividend, so you have this new dividend level based on the existing businesses, you'll -- when you close NEC, you'll reset some payout additional dividends related just to that business as well. And then beyond that, dividends would grow in line with earnings growth.
Is that kind of a way to rebuild this up?
Vince Sorgi -- President and Chief Executive Officer
That's exactly correct.
Steve Fleishman -- Wolfe Research -- Analyst
OK. Last question. Can you give any information on what Safari has in terms of earnings or EBITDA and any debt? On Safari, is there's any separate debt in 2021?
Joe Bergstein -- Chief Financial Officer
Yes. So it's included in our corporate and other segments, Steve, and we don't break it out from that as part of that, it's really not material to the overall [Inaudible] corporation earnings, and it's just not a level of detail that we provide given its materiality.
Steve Fleishman -- Wolfe Research -- Analyst
Is there any debt on it or is it just part of PPL corporate?
Joe Bergstein -- Chief Financial Officer
That is PPL corporate.
Steve Fleishman -- Wolfe Research -- Analyst
OK. All right. Thank you.
Vince Sorgi -- President and Chief Executive Officer
Thanks, Steve.
Operator
The next question comes from Ryan Levine of Citi. Please go ahead.
Ryan Levine -- Citi -- Analyst
Good morning.
Vince Sorgi -- President and Chief Executive Officer
Good morning, Ryan.
Ryan Levine -- Citi -- Analyst
I was hoping that you could elaborate on what factors drove where PPL wants to be in terms of dividend payout ratio relative to the range that you highlighted in your slide deck. And any color as to how you're thinking about that for subsequent dividend decisions?
Vince Sorgi -- President and Chief Executive Officer
Yeah, I'll let Joe cover the details, but just high level, right? We wanted to make sure, again, this is a broader strategic repositioning, obviously starting with the sale of the UK acquisition of Veeco. The dividend reset was a natural part of that. So making sure that again, we have one of the strongest balance sheets. We want to make sure that the dividend is sized appropriately for the new businesses going forward.
and make sure that we're set up to be able to grow that dividend in line with earnings going forward. And we think we've positioned ourselves very well to accomplish all of that with where we set it. But Joe, if there's any color you [Inaudible].
Joe Bergstein -- Chief Financial Officer
Ryan, we've said for a while that we would set the dividend at 60% to 65% of earnings. And with the dividend announcement today, we're in that range on the base business as we move forward and include Narragansett in the forecast and provide the update, we would expect to continue the dividend in the 60% to 65% range.
Ryan Levine -- Citi -- Analyst
Thank you, and then you highlighted some of the preview to the analyst day of starting with pro forma 2022 EPS and growing it up there. It's going to be a five-year growth that you're looking to provide and the other color you could share around about details that we should expect to get updated at the future Analyst Day.
Joe Bergstein -- Chief Financial Officer
Yeah, it'll be a comprehensive update, but we haven't provided a lot of information since the sale of WPD, we recognize that. We've repositioned the company significantly and we're going to -- we'll provide a lot of detail on the new PPL including the growth rate and the duration of the growth rate. So we'll hold all of that for now until we get there, but you should expect a detailed update at that time.
Ryan Levine -- Citi -- Analyst
OK. Appreciate the color. Thank you.
Operator
The next question comes from Gregg Orrill of UBS. Please go ahead.
Gregg Orrill -- UBS -- Analyst
Yeah. Thank you.
Vince Sorgi -- President and Chief Executive Officer
Good morning, Gregg.
Gregg Orrill -- UBS -- Analyst
Good morning. Regarding the dividend, assuming Narragansett Electric closes, when would you provide that new level? Would that be in the closing or at the Analyst Day or how would that work?
Vince Sorgi -- President and Chief Executive Officer
Yeah, so we would provide an update on that at Investor Day. Based on the current schedule, which would support a March closing, as we've been saying, we would then target to have Investor Day within a few weeks of closing. And so now that potentially could put a second quarter dividend in play for the advances.
Gregg Orrill -- UBS -- Analyst
OK. Thank you.
Operator
The next question comes from Anthony Crowdell of Mizuho. Please go ahead.
Anthony Crowdell -- Mizuho Securities -- Analyst
Hey, good morning, Vince.
Vince Sorgi -- President and Chief Executive Officer
Good morning.
Anthony Crowdell -- Mizuho Securities -- Analyst
Thanks for taking my question. Just hopefully two quick ones. Just not specific to Narragansett. I know you don't want to talk about the approval process there, but just it's the first transaction in Rhode Island.
What's the process if the emerging gets declined? Is there a refiling process or can the kind of company appeal to a higher court?
Vince Sorgi -- President and Chief Executive Officer
So there is an appeal process. Anthony, certainly we're focused on getting the approval done. And it really depends on what would be in the order. So it's really hard to predict, what our next steps would be.
Could potentially be cured by a refiling. And then we also have the option to appeal, but really speculating at this point. We're hopeful that we've met -- again, we think we've set the standard for approval and we're hopeful that, that decision will come out in our favor when it comes out.
Anthony Crowdell -- Mizuho Securities -- Analyst
Do you know what court the appeal takes place in? Where is it with the same regulator?
Vince Sorgi -- President and Chief Executive Officer
I'm not sure about that. [Inaudible].
Anthony Crowdell -- Mizuho Securities -- Analyst
OK, and then if I could just pivot probably off of Michael's question earlier on Kentucky, just how should we think about the growth in Kentucky from this level? Just if you could maybe give some clarity on that?
Vince Sorgi -- President and Chief Executive Officer
Yeah, we're not providing really growth targets for any parts of the business at this point, but we will provide full updates on all of that on Investor Day. And To Joe's point, we recognize that we've been in this kind of point between selling WPD and closing Veeco without providing a lot of financial detail and we commit to doing that on the Investor Day, but we're not ready to do that
Anthony Crowdell -- Mizuho Securities -- Analyst
Great, thanks for taking my question, Vince.
Vince Sorgi -- President and Chief Executive Officer
Thank you.
Operator
This concludes our question-and-answer session. I would like to turn the conference back over to Vince Sorgi for any closing remarks.
Vince Sorgi -- President and Chief Executive Officer
Thanks, and I just want to thank everybody for joining us this morning. We certainly look forward to introducing the new PPL to investors. We remain very confident as we've talked a little bit today that our strategic repositioning will deliver long-term value for our shareowners. We do see robust capital investment opportunities going forward to deliver a clean energy future.
That investment will fuel competitive earnings and dividend growth going forward, and we believe we can deliver that clean energy future in a way that's affordable to our customers with no equity needs in the foreseeable future given the strength of our balance sheet. So again, we're -- we look forward to seeing you all at the Investor Day and providing all the details that I know you're looking forward to the new PPL. Thanks, everybody.
Operator
[Operator signoff]
Duration: 50 minutes
Call participants:
Andy Ludwig -- Vice President of Investor Relations
Vince Sorgi -- President and Chief Executive Officer
Joe Bergstein -- Chief Financial Officer
Shar Pourreza -- Guggenheim Partners -- Analyst
Paul Zimbardo -- Bank of America Merrill Lynch -- Analyst
Durgesh Chopra -- Evercore ISI -- Analyst
Paul Patterson -- Glenrock Associates -- Analyst
Michael Lapides -- Goldman Sachs -- Analyst
Steve Fleishman -- Wolfe Research -- Analyst
Ryan Levine -- Citi -- Analyst
Gregg Orrill -- UBS -- Analyst
Anthony Crowdell -- Mizuho Securities -- Analyst