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Acquisitions, Development and Divestitures | 9 Months Ended
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Sep. 30, 2021
Business Combinations [Abstract] |
Mergers, Acquisitions and Dispositions Disclosures | 9. Acquisitions, Development and Divestitures (PPL) Discontinued Operations Sale of the U.K. Utility Business On March 17, 2021, PPL WPD Limited (WPD Limited) entered into a share purchase agreement (WPD SPA) to sell PPL's U.K. utility business to National Grid Holdings One plc (National Grid U.K.), a subsidiary of National Grid plc. Pursuant to the WPD SPA, National Grid U.K. would acquire 100% of the issued share capital of PPL WPD Investments Limited (WPD Investments) for £7.8 billion in cash. WPD Limited would also receive an additional amount of £548,000 for each day during the period from January 1, 2021 to the closing date if the dividends usually declared by WPD Investments to WPD Limited are not paid for that period. On June 14, 2021, the sale of the U.K. utility business was completed. The transaction resulted in cash proceeds of $10.7 billion inclusive of foreign currency hedges executed by PPL. PPL received net proceeds, after taxes and fees, of $10.4 billion. WPD Limited and National Grid U.K. each made customary representations and warranties in the WPD SPA. National Grid U.K., at its expense, purchased warranty and indemnity insurance. WPD Limited agreed to indemnify National Grid U.K. for certain tax related matters. See Note 11 for additional information. PPL has not had and will not have any significant involvement with the U.K. utility business after completion of the sale. Loss on Sale The following table summarizes the pre-tax loss recorded upon completion of the sale.
| Loss on sale for the nine month period ended September 30, 2021
Sales proceeds, net of realized foreign currency hedge losses (a) | $ | 10,732 |
Unrealized foreign currency hedge losses recognized in 2020 | 125 |
Less: Costs to sell (b) | 69 |
Less: Carrying value (c) | 12,397 |
Loss on sale | $ | (1,609) |
(a)Includes the fixed and additional consideration of £7,881 million specified in the WPD SPA, converted at a spot rate of $1.4107 per GBP, offset by $386 million of realized foreign currency hedge losses to hedge the proceeds from the sale. (b)I ncludes bank advisory, legal and accounting fees to facilitate the transaction. (c)Represents the carrying value of the U.K. utility business at the time of sale and includes the realization of AOCI of $3.6 billion, which arose primarily from currency translation adjustments and defined benefit plans associated with the U.K. utility business. Summarized Results of Discontinued Operations The operations of the U.K. utility business are included in "Income (Loss) from Discontinued Operations (net of income taxes)" on the Statements of Income. Following are the components of discontinued operations in the Statements of Income for the periods ended September 30:
| Three Months |  | Nine Months
| 2021 |  | 2020 |  | 2021 |  | 2020
Operating Revenues | $ | — |  |  | $ | 485 |  |  | $ | 1,344 |  |  | $ | 1,575 |
Operating Expenses | — |  |  | 235 |  |  | 466 |  |  | 684 |
Other Income (Expense) - net | — |  |  | 46 |  |  | 202 |  |  | 242 |
Interest Expense (a) | — |  |  | 88 |  |  | 209 |  |  | 271 |
Income before income taxes | — |  |  | 208 |  |  | 871 |  |  | 862 |
Gain (Loss) on sale | — |  |  | — |  |  | (1,609) |  |  | — |
Income taxes | 2 |  |  | 44 |  |  | 752 |  |  | 157 |
Income (Loss) from Discontinued Operations (net of income taxes) | $ | (2) |  |  | $ | 164 |  |  | $ | (1,490) |  |  | $ | 705 |
(a)No interest from corporate level debt was allocated to discontinued operations. Summarized Assets and Liabilities Held for Sale The following major classes of assets and liabilities of the U.K. utility business were reclassified on PPL's Balance Sheet to "Current assets held for sale" and "Current liabilities held for sale" as of December 31, 2020:
|  |  | Held for Sale at December 31, 2020
Cash and cash equivalents |  |  | $ | 266 |
Accounts receivable and unbilled revenues |  |  | 389 |
Price risk management assets |  |  | 146 |
Property, plant and equipment, net (a) |  |  | 14,392 |
Goodwill |  |  | 2,558 |
Other intangibles |  |  | 413 |
Pension benefit asset |  |  | 682 |
Other assets |  |  | 137 |
Total Assets |  |  | $ | 18,983 |
Short-term debt and long-term debt due within one year |  |  | $ | 994 |
Accounts payable |  |  | 220 |
Customer deposits |  |  | 217 |
Accrued interest |  |  | 190 |
Long-term debt |  |  | 7,938 |
Total deferred income taxes |  |  | 1,032 |
Price risk management liabilities |  |  | 137 |
Other deferred credits and liabilities |  |  | 295 |
Total Liabilities |  |  | $ | 11,023 |
Net assets (b) |  |  | $ | 7,960 |
(a)Depreciation of fixed assets ceased upon classification as held for sale in the first quarter of 2021. (b)The net assets and liabilities held for sale exclude $4.0 billion of AOCI related to the U.K. utility business that are required to be included in the carrying value of an entity classified as held for sale when assessing impairment and determining the gain or loss on sale. Prior to the sale, AOCI related to the U.K. utility business was reported as a component of PPL’s equity. Acquisitions Share Purchase Agreement to Acquire Narragansett Electric On March 17, 2021, PPL and its subsidiary, PPL Energy Holdings, entered into a share purchase agreement (Narragansett SPA) with National Grid USA (National Grid U.S.), a subsidiary of National Grid plc to acquire 100% of the outstanding shares of common stock of Narragansett Electric for approximately $3.8 billion in cash. On May 3, 2021, an Assignment and Assumption Agreement was entered into by PPL, PPL Energy Holdings, PPL Rhode Island Holdings and National Grid U.S. whereby certain interests of PPL Energy Holdings in the Narragansett SPA were assigned to and assumed by PPL Rhode Island Holdings. Pursuant to that Assignment and Assumption Agreement, PPL Rhode Island Holdings became the purchasing entity under the Narragansett SPA. The acquisition is expected to be funded with proceeds from the sale of the U.K. utility business. PPL has agreed to guarantee all obligations of PPL Energy Holdings and PPL Rhode Island Holdings under the Narragansett SPA and the related Assignment and Assumption Agreement. The closing of the acquisition, which is currently expected to occur by March 2022, is subject to the receipt of certain U.S. regulatory approvals or waivers, including, among others, authorizations or waivers from the Rhode Island Division of Public Utilities and Carriers, the Massachusetts Department of Public Utilities, the Federal Communications Commission (FCC), and the FERC, as well as review under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and other customary conditions to closing, including the execution and delivery of certain related transaction documents. The waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, with respect to the acquisition, expired on June 2, 2021. On July 14, 2021, the FCC consented to the Transfer of Control Application for the transfer of control of certain communications licenses held by Narragansett Electric from National Grid U.S. to PPL. The Massachusetts Department of Public Utilities granted a waiver of jurisdiction with respect to the acquisition on July 16, 2021. On September 23, 2021, the FERC issued an order authorizing, as consistent with the public interest, the disposition of jurisdictional facilities that will result in PPL Rhode Island Holdings, LLC, acquiring 100% of the outstanding shares of common stock of Narragansett Electric. The regulatory approvals and waiver remain subject to any applicable appeal periods. The remaining required regulatory approval from the Rhode Island Division of Public Utilities and Carriers is proceeding as expected. PPL Energy Holdings and PPL Rhode Island Holdings and National Grid U.S. have each made customary representations, warranties and covenants in the Narragansett SPA, including, among others, customary indemnification provisions and covenants by National Grid U.S. to conduct the Narragansett Electric business in the ordinary course between the execution of the Narragansett SPA and the closing of the acquisition. The consummation of the transaction is not subject to a financing condition. In connection with the acquisition, National Grid U.S. and one or more of its subsidiaries and Narragansett Electric will enter into a transition services agreement, pursuant to which National Grid U.S. and/or one or more of its affiliates will agree to provide certain transition services to Narragansett Electric and its affiliates to facilitate the operation of Narragansett Electric following the consummation of the acquisition and the transition of operations to PPL, as agreed upon in the Narragansett SPA.

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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