PPL Corp. sells Western Power Distribution, buys Narragansett Electric

Allentown-based energy company PPL Corp. is expanding its presence in the U.S. with the acquisition of Narragansett Electric, a Rhode Island-based utility owned by National Grid.

PPL is buying Narragansett Electric for $3.8 billion and is assuming $1.5 billion of the company’s debt.

At the same time, PPL is selling off its U.K.-based utility business, Western Power Distribution (WPD), to National Grid in a deal valued at £7.8 billion, which is about $10.8 billion in US dollars. The transactions are part of a strategic repositioning by PPL to transform it into a purely U.S.-focused energy company.

“The strategic transactions we are announcing today immediately unlock value for shareowners and achieve the objectives we set out in launching the process to sell our U.K. utility business,” Vincent Sorgi, PPL president and CEO, said. “They will refocus our business mix squarely on strong, rate-regulated U.S. utilities; strengthen our credit metrics; enhance long-term earnings growth and predictability; and provide us with greater financial flexibility to invest in sustainable energy solutions for those we serve.”

The sale of WPD is expected to net PPL about $10.2 billion. Portions of the proceeds from the sale of WPD will be used to finance the acquisition of Narragansett Electric.

“We believe these transactions, which follow our highly competitive U.K. sale process, represent wins for PPL, National Grid, and the customers we serve,” Sorgi said. “In National Grid, we’ve found a respected partner that has a long track record of strong operations in the U.K., is eager to build on WPD’s success, is focused on advancing U.K. decarbonization initiatives, and shares a strong commitment to employees, customers, and the communities we serve in the U.K. We believe National Grid will continue to deliver positive outcomes for all of WPD’s stakeholders.”

The net cash proceeds from the moves will be used to strengthen PPL’s balance sheet and enhance its opportunities for strategic growth.

“We expect to leverage our proven track record of operational excellence, award-winning customer service, strong reliability, and cost efficiency to continue to improve service and deliver energy safely, reliably, and affordably to Rhode Island families and businesses,” Sorgi said. “In addition, we’re eager to play a key role in advancing Rhode Island’s decarbonization goals. We believe our experience in automating electricity networks can help the state achieve its target of 100% renewable energy by 2030. And we look forward to being a strong community partner in Rhode Island, something that has been a hallmark of PPL for more than a century.”

The sale of WPD is anticipated to close in four months, pending approvals, while the deal for Narragansett Electric will close within a year. Once the deals are finalized, PPL will serve approximately 3.5 million electricity and gas customers, including 780,000 customers from Narragansett Electric.