Good morning and welcome to the PPL Corporation Fourth Quarter Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Andy Ludwig, Vice President of Investor Relations, Please go ahead sir.

Thank you, Rocco. Good morning everyone and thank you for joining the PPL conference call of fourth quarter and full year 2019 financial results. We provided slides for this presentation. And our earnings release issued this morning on the Investors section of our website. Our presentation and earnings release, which we'll discuss during today's call contain 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 earnings from ongoing operations or ongoing earnings a non-GAAP measure on this call. For reconciliations to the GAAP measure, you should refer to the appendix of this presentation and our earnings release. I'll now turn the call over to Bill Spence PPL Chairman and CEO.

Thank you, Andy, and good morning everyone. We are pleased that you joined us for our 2019 year-end earnings call. With me today are Vince Sorgi, PPL, President and Chief Operating Officer and Joe Bergstein, Chief Financial Officer. Moving to Slide 3, our agenda this morning begins with an overview of 2019 results and PPL's business outlook for 2020. Vince will then review some of PPL's recent operational highlights and outlook for 2020 as well as discuss PPL's clean energy transition strategy including our decision to set a more aggressive goal to reduce PPL's carbon emission. Following Vince's remarks, Joe will provide a more detailed financial review of 2019 and 2020 along with our updated earnings forecast for 2021. I'll conclude by taking a few moments to highlight what has truly been a decade of transformation and growth for PPL. And PPL is marking its 100th anniversary thanks to our employees hard work and dedication and the unparalleled support of our communities. As always, we'll leave ample time to answer your questions. Turning to Slide 4, in 2019 PPL continued to deliver on its commitments to the share owners, customers, and the communities we serve. We remain steadfast in our strategy to deliver best in sector operational performance, invest in a sustainable energy future, provide superior customer service, maintain a strong financial foundation and engage and develop our people. Our results in 2019 reflect this strategy. We exceeded the midpoint of our earnings guidance for the 10th straight year delivering on growing earnings of $2.45 per share. We remained committed to dividend growth, increasing our dividend for the 17th time in 18 years and returning more than 1 billion in dividends to share owners. As we delivered on these financial commitments, we continue to extend our track record of operational…

Thanks Bill. As we turn to a new year and a new decade, I just want to express how proud I am on the operational excellence that our seven utilities continue to deliver for our customers. Our sector continues to rapidly evolve and our teams are meeting the challenges and finding opportunities to leverage technological advancements and decarbonization initiatives that are driving real value for our customers. We believe that PPL is well positioned to further enhance its networks and continue to build these utilities of the future as we look ahead. I'd like to highlight some of the operational developments from this past year and briefly discuss our strategic priorities for each segment for 2020 and beyond. I'll also provide an update on our five year capital expenditure plan. Turning to Slide 7, starting with the U.K. during 2019 WPD continue to demonstrate this leadership in support of the UKC carbonization goals. WPD was the first U.K. network operator to publish an electric vehicle strategy building on knowledge gained through the company's electric nation easy smart charging initiative. The company has begun to proactively ready its network for increasing numbers of electric vehicles, anticipating the potential for up to 3 million EVs in our service territory by 2030. WPD also continues to deliver an industry leading innovation program, including finding ways to connect more distributed generation to local networks. Through 2019 WPD connected nearly 10 gigawatts of distributed generation to its network, about six gigawatts of which was renewable energy. In addition, WPD is leading the way in developing markets for flexibility services and demand response solutions to help maintain grid resiliency and control costs to U.K. customers. These flexibility solutions should enable the deferral of some network spend, which Ofgem is keen to see the DNOs deliver. As…

Thanks, Vince, and good morning everyone. I'll begin with a brief financial overview on Slide 14. While PPL delivered an outstanding quarter of financial performance earning $0.57 of ongoing earnings per share, I'll focus my review this morning on our full year results. We have included a walk in the appendix of today's presentation and our news release for additional details on fourth quarter results. Looking at the full year, we achieved 2019 reported earnings of $2.37 per share compared with $2.58 per share a year ago. Adjusting for special items, primarily reflecting mark-to-market changes related to unrealized foreign currency, economic hedges, 2019 earnings from ongoing operations of $2.45 per share exceeding the midpoint point of our forecast by $0.05 per share. This compares to $2.40 per share that we earned last year, which included significant weather benefits of about $0.08 per share. Looking forward to 2020, we announced the formal guidance range of $2.40 cents to $2.60 per share which reflects updates for current market conditions and our foreign currency hedge position. We also were updating our 2021 estimates primarily reflecting changes to foreign currency forecast which are lower than our prior forecast. Let's turn to Slide 15 for an update on our earnings results for the full year. Walking from our 2018 results on the left, we first make weather adjustments for compatibility purposes of the underlying businesses. As I mentioned, weather was $0.08 favorable compared to normalized weather results in 2018. For 2019, we experienced slightly favorable weather. The net result for the $0.07 per share decline year-over-year across all of our utilities. We also adjust for the effect of dilution. We settled the remaining 43 million shares on our forward equity transaction in November of 2019, which is the primary driver of the $0.10 per share…

Thank you, Joe. Before we open up the call for Q&A, I'd like to take a moment to reflect on what has truly been a remarkable decade for PPL. Over the past 10 years, we've doubled our market cap. We've unfailingly exceeded the midpoint of our earnings forecast, we've grown our dividend 18%. we've won 21 JD Power awards for customer satisfaction in the U.S., we've consistently ranked highest for customer satisfaction among the network operators in the U.K, we've invested $27 billion to make our network smarter, to improve reliability and to advance a cleaner energy future, we've cut average customer interruptions by over a third in the U.K. and by more than 20% in the U.S. since 2010. All the while we've kept electricity costs reasonable for our customers and remain deeply engaged with the communities we serve. And last but not least, we have dramatically transformed PPL. A decade ago we were primarily a Pennsylvania hybrid utility facing stiff headwinds in competitive markets. Today, we are one of the nation's largest investor owned utility company with 100% of its earnings driven by stable, high-performing regulated businesses. In short, we are stronger today than we were a decade ago. We're better positioned to invest in the future and as we celebrate our Centennial, we are poised to power progress for another hundred years. When our Directors first met a century ago, they did so at a pivotal time. The country was beginning to move from a patchwork quilt of isolated lighting companies to a coordinated network of regional utilities, power plants and transmission lines. Or in that moment, PPL would help drive that change, extending electricity service throughout the regions we serve, expanding to meet the needs and demands a rapid industrial growth and just helping to improve quality of life for generations of customers. Today, we again find ourselves at a pivotal moment for our industry, which is investing in new technologies to reshape not only how we deliver power, but how we produce it as well. In this moment, we remain as committed as ever to powering progress, to fostering innovation, to creating long-term shareowner value, and to making a positive impact on society. In closing, I'm proud of our past achievements. I'm equally excited about our future and I'm convinced that PPLs best days are ahead. With that operator. Let's open the call for questions please.

Absolutely. [Operator Instructions] Today's first question comes from Ali Agha of STRH. Please go ahead.

First question I just wanted to reconcile your 2020 guidance of 2.40 to 2.60 with -- the numbers you'd been showing us for quite a while up until recently, a 2020 projected range of 2.54 to 2.58. I guess when I think about the mid points, I know there was a narrower range, but the midpoint was certainly higher than what you're showing us today. Could you just reconcile what changed from the numbers you had been sharing with us?

Sure. I'll make a couple of opening comments and I'll pass it on to Joe. As one of the things you just pointed out was the very tight range that we had established for 2020. Having said that, we still are kind of within that range but towards the lower end. Operationally, when you look at the assumptions behind the 2020, we're largely consistent with the prior forecast, the primary change was really a significant decline in corporate bond rates in the U.K. resulting in some lower discount rates, which had a negative impact on our U.K. pension obligations. Those factors really resulted in about a $0.06 impact compared to our prior plan. But as I mentioned, despite this, we're still in the prior range for 2020. Joe, did you want to say anything more?

Yes. We saw a sharp decline in corporate bond rates in the U.K. that lowered the discount rates resulting in the increased U.K. pension obligations under U.S. GAAP. The discount rates declined by more than a 100 basis points. It went from about 3% to less than 2% and that's really what's causing the difference from our prior forecast. Again, to Bill’s point operationally, everything else remains unchanged.

I got it. Then, second question, Vince, I just wanted to be clear when you talked about, the CapEx opportunities that you're seeing across the different utility segments did I hear it right that over this five year period, '19 through '24 or '20 through '24, I should say, that you're seeing potentially another 800 million of additional CapEx or was the number even larger than that? I just wanted to be very clear. What's the opportunity size that you see that's not yet embedded in your official CapEx numbers?

Yes. Sure. Ali, in my remarks, I indicated that was about a 0.5 billion. So 500 million.

500 million, and I think separately, you also talked about 300 million of AMI. That's not yet in that, is that correct?

Yes. That's part of the 500.

Well that's part of the 500. I got you. Okay.

Yes. The other thing I would note is that, just changing that FX assumption from $1.40, our previous assumption down to $1.30 as indicated on our Slide 12, cut about 300 million from the forecast. So depending on when we get out, particularly to 2022 and beyond to the extent the FX rate goes back up that'll come back into the forecast. And we do think that there's a skew to the upside when it comes to the FX rate given where we see Brexit today and U.K. political front. So, we're expecting some of that may come back in. But that was 300 million alone.

Right. And last question Bill, I know in the past you've talked about from your vantage point, you still think that the U.K. business is disproportionally too big as a contributor to earnings for PPL. Just wondering how you look at that today and is there any new tools available to you or what's your thinking on how to correct that today, if you still think that it's disproportionately too large of a business mix for you?

Sure. Well, first I'd say we are comfortable with the current business mix and believe it will deliver long-term value for our shareowners and that there are many opportunities as Vince described in his remarks. As I have said in the past, the unprecedented U.K. volatility that we've been experiencing over the past few years, I would have preferred to be less weighted towards the U.K. But quite frankly, we probably share a similar view for any jurisdiction where we've got a significant weighting such as in the U.K. I do think for those things that were within our control we've got a great track record of operational excellence and financial investments that that I think are going to pay dividends for the future. And I think the opportunities we outlined today will continue to enable us to be successful for very long time.

Our next question today comes from Shar Pourreza of Guggenheim Partners. Please go ahead.

I just wanted to just touch sort of the guidance in your outlook just a little bit deeper. And obviously if you just kind of look at your out of year plan, the CapEx steps down and remains flat, Kentucky rate-based kind of declines. There's a modest step up in Pennsylvania. Can you maybe just give a little bit more details in the puts and takes and what could move you higher? And I'm kind of curious on when you can present the timing of an update, understanding that you guys are very, very conservative when it comes to the outer years i.e., the capital opportunities associated with EV deployment in the U.K. Why not have included some of the stuff in your capital alloc today? Like why, why take such a conservative stance?

Yes. So I'll make a comment or two and then turn it to Vince. If you look at the overall CapEx plan, [indiscernible] and the rate base growth that's associated with that, looking at in my view, a minimum 4% rate-based growth with earnings that will follow that with the caveat that of course, exchange rates and pension deficits funding can push that higher or lower. But I think in my view, because of the upsides that Vince talked about, I look at the plan as a minimum 4% probably more in the 4% to 6% over the longer term as we fill in some of the gaps with more certain projects and really scrub things a little bit better in the outer years. As you indicated, we have historically been pretty conservative with our forecast. And we continue to be the really driven by what we know about current projects, but also what we see is the current kind of FX rate which has been pretty volatile over time. And again, I mentioned earlier that I believe we have a skew to the upside with the FX rate as the Brexit process becomes a lot more clear. Vince, do you want to add anything to the potential upside?

And Shar, to your question about kind U.K. EV spend and how we're thinking about that when we would update, so the 200 million a year that we've included, so basically an incremental billion that we're expecting over really to -- that's based on our initial estimates going into electrification initiatives that would be required to funded by the DNOs. When you look at the process going forward for RIIO 2, right, the sector methodology consultation will be coming out Q2, Q3 of this year. This is on Slide 28, by the way, in the deck, the methodology decision wouldn't be coming out until Q4 and then the companies will be submitting our submissions in Q2 of 2021. So to be honest with you, we're going through the process right now on planning for those submissions the business plan of submissions while were consulting with Ofgem on the methodology. And so I think we just need to get through that process a little more, Shar, before we would I think update the view of EV or electrification spending going into ED2. But to your point, I think there's certainly could be an opportunity there for incremental capital, especially coming out of what Jonathan Brealey published really on his first day on the job with his de-carbonization plan. So, we think that all fits very nicely into what we've been talking about. But I think we need to get through the process a little more before we would go beyond our initial estimate.

Got it. And then just sticking sort of with your conservative theme here just around the FX. I mean you did highlight, obviously you're taking a little bit more of a conservative stance, but your assumptions do trail sort of consensus and forwards. So just maybe talk a little bit about that at a deeper level. And then what's sort of the timing of the '21 hedging program. Are there any sort of, any mandated thresholds or you're able to keep it open based on kind of your fundamental views?

Joe, you wan to talk about the FX to start.

So I guess the first part of your question, [Shawn] [ph] on our forecast range relative to four market spot rates and market forecast. We are lower than those for the reasons I said in my prepared remarks. We expect volatility in the exchange rate during 2020 as the UK continues through the transition period. And we'll hedging 2021 during that time period. Thank for tests are in a range of $1.35 to $1.45 for 2021. So there's certainly some potential upside to our forecast and as we've looked at 2022 as bank forecasts are actually in the mid 140s range. So that sensitivity of a penny of FX to a penny of earnings, that's, that's $0.15 of upside. If the bank forecasts are accurate in 2022 relative to where we sit today. Got it.

Got it. And then just one last one is, Bill, I know, you may or may not want to answer this, but I know the board has been obviously very patient around how you guys are thinking about the stock and the valuation. But it does kind of still continue to trade even if you look at it from a sum of the parts, multiple wrap basis post-Brexit. Is there any other strategic steps that you can take to maximize value for shareholders outside of the plan you sort of present today and outside of the, obviously incremental opportunities given the fact that your plan very conservative?

Well, obviously, I'm not going to speculate on potential M&A, but when I look at the overall strategy for the things that we can control, it's actually worked really well. I think in terms of meeting all of the things that we do control, we obviously can't control the politics in the U.K. or the exchange rate. I think that as we look forward, particularly as we get through 2020, it's very likely that we'll know a lot more about where Brexit ultimately lands and what the currency landscape looks like for sure. Having said that, we're always looking at strategic or improvements to the base case that we can make that would create shareowner value. So we'll continue to do that as a Board and as a management team wherever and always if there are opportunities I think to create some additional shareowner value. But we are always on the lookout for how do we improve the base case and the plan that we have and I will continue to do that.

And our next question today comes from Greg Gordon at Evercore ISI. Please go ahead.

Thanks. Actually Shar actually set me up reasonably well there. We didn't even plan this. When I look at like what you can control, obviously, operationally you guys are still top-notch across all your businesses. But given the things that you can't control in '20 and '21 and then the other thing you can only to some degree control in '22, which is the reset of under RIIO-ED2. If I step back and look at this from a high level, is it fair to look at the big picture as the next few years; you've got some earnings challenges that could create a more or less flat earnings profile, but the setup going into '22 and beyond creates a lot of growth opportunities from a decarbonization perspective on both your platforms to start growing the business again at a pretty steady and long trajectory?

Yes, Greg. I would say overall, with the guidance we just gave here today from '20 to '21, at least looking at the midpoints, looks flat. As we indicated, depending on the FX rates, in particular, that could move up and show some growth. I think the underlying businesses, kind of to your point, continue to grow. The rate base is continuing to grow. And I think we are going to be set up well going into both decarbonization opportunities in the U.K. as well as domestically. So I think that, depending on your outlook for the FX, will dictate whether there's growth from 2020 to 2021.

Right. And then, look, 2022, I know you haven't given guidance. So I'm not trying to sort bait you into giving me guidance. But, we did go through in RIIO-ED1, when you transitioned, there was a reset year on revenues that you had to overcome. And you've talked about on prior calls how you can manage through fast pot, slow pot allocations and how you think that because you're best-in-class operator, you'll do better than average on the outcome and that hopefully the DNOs will do better on the margin than some of the other utility segments. But it is fair to say that '22 has its own set of challenges as well that you're going to have to manage, correct?

Well, I think, again, I think it really depends on what the forecast that you want to use for foreign currency rates. Because I think we're -- in my view, kind of toward the low end. If you look at what FX rates have done really since the election, there was a temporary bound, but really stayed around $1.30. It's pretty much been range bound for the last couple of months. And you look at the forward forecast and a lot of them, as Joe indicated, are $1.35 and better, particularly much better when we get to 2022. So I would expect just on the strength of the FX that by the time we get to 2022 we'll see some earnings growth. Joe, I don't know if you want to add.

I guess if we just look at the underlying business, absent FX, sort of all else equal, given we are talking about 2022 we would see growth in the businesses. And really the reason we're flat from 2020 to 2021 based on the midpoints is because of our strong hedge position for 2020 relative to the hedge position we have in 2021. So that's really what's showing a flat year-over-year earnings is because we actually have a decline in the FX rate that's hedged and assumed in 2020 compared to what we've used in the forecast for 2021. So I think there is, on the underlying businesses, we see growth. And then we'll have to see what FX does. But certainly as we move through 2020, you expect some clarity on the transition; get back into what we would expect and hope to be more normal times around the FX rate that could add additional growth on top of that.

Yes. Greg. it's Vince. Just also the RIIO2 transition is 2023, not 2022.

Oh gosh, sorry.

Yes. I think on Joe's point on expected growth into 2022, right on the money.

Got you. And then I think back to the strategic decisions that you guys made when you decided to aggressively diversify and you bought more utility assets in the U.K. and you bought the Kentucky business and you did it at a really opportune time to diversify it away quite well from your exposure to the declining margin outlook for merchant power. And I can't help but think that this decarbonization opportunity which is going to be huge for your company in Kentucky and in the U.K., is also a huge opportunity. And to build a little bit on Shar's question on strategic options, would that play into a decision to think about how you could potentially scale up with a partner to better -- potentially better execute on that transition?

Well, probably -- I shouldn't say probably. I will not speculate on M&A. But in terms of your underlying thesis around the decarbonization opportunity, I agree with that, and I believe that particularly in the U.K., it's one of the reasons why we continue to have a positive outlook on the U.K. We've weathered probably the strongest of the storms so far, particularly with renationalization threats which are now obviously not a threat at all, given the strong election outcome in the U.K. So that risk is now behind us and we still have the risk of Brexit that's keeping the markets a little bit jittery. But beyond that, I think things will stabilize. We'll have a much better view of not only RIIO-ED2, but also where the FX starts to land. And I think for the going forward setup for the business was I think we're in very good shape.

Our next question today comes from Praful Mehta of Citigroup. Please go ahead.

So maybe staying unfortunately with the theme on the strategic side. And I guess one of the points that I took away from all the answers was, clearly, you would look to at least benefit from reducing the proportion of the U.K. business. So I just wanted to understand --I know that there was a constraint around selling the U.K. business because of tax and the leakage there. If you were to partner up and use that to increase the size of the company, effectively reducing the proportion of the U.K. business, what kind of constraints should we think about on the tax side or other side that could limit any kind of strategic decisions around that decision?

Well, again, I'm not going to speculate around M&A. However, as we've indicated in the past, an outright sale either in full or partially of the U.K. business does create multiple challenges, all of which destroy shareowner value. And if you look at the valuation of the company today, I think it's even more challenging today than it probably was when our stock was in the upper $28 to $30 range, so in the upper 20s. So, I think with where we are today, that strategic decision continues to be a big challenge for us. In terms of where the renationalization risk being removed, clearly you've seen the values of the U.K. utilities move up significantly after the election, and we still have what we believe is one of the strongest, if not the strongest, distributor network operator in the U.K. So we believe, on its own, its value has increased. But again, for us to de-weight and sell the business, that would be destructive to shareowners.

Yes. I get that and I remember that. What I'm asking is, if rather than selling the U.K. business, PPL as a whole would partner with somebody else and that way reducing the proportion of the U.K. business, do those same constraints apply on the tax side or any other side that we should be thinking about as we think about the strategic direction?

Yes. Let me ask Joe to comment on that.

Hi, Praful. I think that it's a very hypothetical question and it would be dependent on the other party and a lot of aspects of that, and so it's really hard to give an answer in that. I would say we -- to the earlier point, we look at all sorts of ways to create shareowner value. And obviously tax implications and what that would do to shareowner value is something that we focus closely on. But I think it'd be very difficult to say in a hypothetical situation and depending on who the other party may be.

Fair enough. And that makes sense. Just a couple of quick cleanup questions. On Slide 25, when I look at the rate base growth that you've projected through '24, I saw a meaningful decline in rate base growth both for the U.K. business and Kentucky. Obviously, this was slightly different timing; '18 to '23 versus '19 to '24. But I'm just trying to understand. The U.K. sounds like mostly pension related and exchange rate and mostly exchange rate, I guess and Kentucky, you guys have talked about. Is there anything else we should be thinking about around the rate base growth profile as you think about the different segments?

So looking at that Slide 25, you can see there that the rate base growth in the U.K. is about 5.5%. It's not materially different, I don't believe, from where it was previously. I think it might have been as high as 6%. I think the biggest decrease is really in the Kentucky operation, where we're only projecting a 1.5% growth much about or much because of the reasons that Vince articulated in his opening remarks. And in the PA transmission, that's really been probably the larger decrease when you look at the overall mix because for a period of time we were growing double-digit there. And then on the distribution side, I think it's been fairly consistent in the 4% to 6%. So I think the two big changes are lower in Kentucky and lower on the Pennsylvania transmission side.

Yes. Thanks. Sorry, I did mean Pennsylvania transmission. Sorry, so thanks for that. And finally, just on Slide 26, when I look at incentive revenues, there has been a slight decrease in that projection as well for the U.K. So I just want to understand, is that also exchange rate or anything else on the incentive side?

It's purely exchange rate.

Our next question today comes from Julien Dumoulin-Smith of Bank of America. Please go ahead.

Hey, team, well done, again. And just going to play a cleanup here on some of the last questions. So can we talk a little bit more specifically on the timeline here for AMI and Kentucky? You talked about $300 million. Sort of procedurally, how do we get that done, when I know there's been some talk historically about that? And also, perhaps more importantly, decarbonization in the U.K. How do you think about that, the timeline be able to reflect some of that and how would that manifest itself in terms of CapEx here? Just to be a little bit more specific on that process. And I got a follow-up.

Okay. Sure. Vince, go ahead.

Sure, Julien. On the AMI, we would likely time that with the next rate case. As you know, in Kentucky, we've been on this every other year, rate case cycle. The last rate case -- new rates were effective May 1 of 2019. If we were to continue that cadence, yes, right, you would see a rate case becoming effective in the first half of 2021. So AMI, I would say, we would factor that into that upcoming rate case. And then, I apologize, what was the second part of your question?

How does the decarbonization in the U.K. get reflected? How does that manifest itself? What kind of order of magnitude of spending we're talking about? I know you guys talked about $500 million upside in the five year outlook. I mean, when you think about decarbonization, that probably seems like a bigger number here. But I don't want to put words in your mouth. And what time period? Are we talking about in the current ED? Are we talking about the next one, if you can provide some context?

Sure. So, the bulk of the incremental electrification CapEx we've included in the ED2 initial estimate. So we have about $1 billion over five years, call it $200 million a year in that five year period. And again, that's based on our initial assumptions. The team is working through our business plan submission, and that will be filed mid-2021 as part of the RIIO2 process. I would say depending how aggressive the government initiatives and Ofgem's policies become on the tail end of ED1, we could see deploying some capital in our current rate -- our current business plan time frame on electrification initiatives. We think we have enough leeway within the existing plan that we would be able to divert some spending towards that. Therefore, it wouldn't be a drag on the returns because, as you know, the revenues are kind of set for the ED1 period. So we would have to basically shift capital away from other things to EVs. We have innovation capital. Other things that I would say are placeholders that we could redeploy there. So I think we have enough flexibility in the back end of ED1 and you'll see a significant up tick in E2, which could once we get the business plans done, could be higher than what we're currently projecting at that $1 billion over the five years.

Yes. It's probably obvious, but anything that we would shift from the current ED1 to ED2 to accommodate any electrification initiatives would wind up showing up in ED2 because presumably it's all work that is necessary to be done, not necessarily for electrification put for reliability and customer service reasons.

And our next question today comes from Anthony Crowdell of Mizuho. Please go ahead.

I want to follow up on Greg's earlier question. If I think of 2021 and '22 earnings, in order to see some growth there, in order to see like an earnings growth that matches rate base growth, do I need to see an improvement in the exchange rate?

No.

And then, also on currency for -- I think some of the currency hedges are options where it preserves the upside. Any thought on why not locking in '21 now since, I don't know if there is many moving parts to '21 earnings with rate cases, and also '22, I think that you just mentioned, Kentucky, not locking those options now and preserving the upside, but maintaining a base versus if there is any further fallout in the U.K.?

The options, Anthony are for 2020 not in 2021. So I think given where the options are priced and where the spot rate is, we'll prefer to see what happens within those option rates because we're protected on the downside. Clearly, you could see some appreciation on the upside, but they are in 2020, not 2021.

Sorry, just to add to that. To the extent that we wanted to put options on for the bulk of 2021, that can be pretty expensive. So we probably wouldn't look to do that unless there were some shifts in our thoughts around the currency. But for now, I think we'll look opportunistically to hedge in at $1.30 and above wherever we can. And we'll start to ramp up a lot of our hedging by probably mid-year.

And just lastly, if you could update us on the pension assumptions. I don't believe there is a major change in your pension assumptions in the U.K. I thought there was like 10% degradation from 2020 to 2021, but I just wanted to double-check with you guys.

We had projected about $0.05 change from 2020 to 2021, and our assumptions haven't changed materially around that at this point.

Ladies and gentlemen, this concludes the question-and-answer session. I'd like to turn the conference back over to Bill Spence for any final remarks.

Okay. Thank you, Rocco. And thanks everyone for joining us today. We'll visit with you again on the first quarter earnings call. Thank you.

And thank you, sir. Today's conference has now concluded, we thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.