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Analyzing PPL Corporation’s Return on Equity

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PPL’s return on equity

PPL’s (PPL) adjusted ROE (return on equity) generally stays above the average of its US regulated utility peers because it earns higher ROE from its United Kingdom regulated segment. Faster investment recovery, multiyear rate plans, and performance incentives obtained near 15% ROE from its UK operations. On the other hand, US regulated peers get near 10%.

PPL’s consolidated ROE fell steadily over the past few years due to weakness in its Merchant Power segment. However, since the separation of the segment last year, the ROE rose to over 11% levels.

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In comparison, WEC Energy Group (WEC) has an authorized rate of return of 12.7%—one of the highest in the industry. Sempra Energy (SRE) earns a ROE of ~10.5% in California.

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