Rejji P. Hayes
Executive Vice President and Chief Financial Officer at CMS Energy
Thank you, Garrick and good morning, everyone. As Garrick noted, we had a solid third quarter, delivering adjusted earnings of $0.61 per share, driven by numerous cost reduction initiatives which have largely offset the headwinds that we have faced throughout the year most recently in the form of a severe storm that hit our electric service territory in August.
To put the weather we have experienced in 2023 into perspective, we are approaching a record level of storm activity this year, which further supports the needed investments in our electric system that Garrick highlighted, and we have seen heating and cooling degree days of 11% and 24% below historical levels respectively on a year-to-date basis. That said, we do not make excuses and have implemented numerous countermeasures throughout the year to mitigate these risks and are well positioned to deliver on our financial objectives this year, the benefit of customers and investors.
As such, we are reaffirming our guidance for the year and on a year-to-date basis, we're on track with adjusted EPS of $2.06 per share given our progress in the aforementioned countermeasures which I'll elaborate on shortly. In the waterfall chart on slide seven, for clarification purposes all of the variance analysis therein are measured relative to the comparable periods in 2022. The actuals are quantified on a year-to-date basis and the prospective period reflects the final three months of the year.
Starting with actuals with respect to weather. The previously noted unfavorable weather experience in 2023 has driven $0.49 per share of negative go. Rate relief, net of investment-related expenses has resulted in $0.20 per share of positive variance, driven by last year's constructive electric and gas rate case settlements. From a cost perspective, our financial performance through the third quarter has been significantly impacted by higher operating and maintenance or O&M expenses to the tune of $0.21 per share of negative variance due to higher service restoration expenses attributable to storms.
However, it is worth noting that our operational O&M expenses exclusive of service restoration expense are down roughly 10% versus the third quarter of 2022, which highlights the significant cost performance we've realized across the business. To that end and as previously noted, we implemented numerous cost reduction initiatives early in the year, such as reducing our use of consultants and contractors, limiting hiring, accelerating longer-term IT projects and eliminating other discretionary spending.
We have also supplemented these efforts with a voluntary separation program or VSP that reduced our salaried workforce by roughly 10%. And more importantly, as we leverage the CE Way our lean operating system, we will continue to eliminate waste and increase productivity going forward. Rounding out the first nine months of the year, you'll note that $0.27 per share of positive variance highlighted the catch-all bucket in the middle of the chart.
We've seen this bar increase throughout the year, as a result of our continued success in realizing cost savings through financing efficiencies, liability management, strong tax planning and favorable non-weather sales in our electric business during the summer. As we look ahead to the fourth quarter, as always we plan for normal weather, which we expect will have a neutral impact on our financial performance versus the fourth quarter of 2022.
And we expect a similar financial impact for rate relief net of investment-related costs as the benefits of our recent gas rate case settlement and our 2022 electric rate case settlement are largely offset by the absence tax benefits associated with the prior gas rate case settlement. From a cost perspective as noted during our Q2 call, we anticipate lower overall O&M expense at the utility, driven by the ongoing benefit cost reduction initiatives, which equates to $0.17 per share of targeted variance. It is also worth noting that the Q4 2022 comp for this bucket is notably soft given the higher-than-average O&M expenses incurred during that period.
Closing out the glide path for the remainder of the year, you'll note in the penultimate that yellow bar on the right that we're anticipating $0.23 to $0.29 per share a positive variance. As we've discussed previously, the key drivers here are the absence of significant discretionary actions taken in the fourth quarter of 2022 related to last year's electric rate case settlement and the filing of our voluntary refund mechanism which collectively equate to $0.12 per share.
The remaining notable items that we anticipate in this bucket are from North Star our non-utility business achieving its full year guidance and favorable non-weather sales at the utility, which have trended well over the past few quarters. All in, we remain confident in our ability to meet our EPS guidance for the year. And as always we'll take none of this positive momentum for granted and will approach these last two months of the year with the usual degree of paranoia by maintaining our cost discipline and flex additional opportunities as needed to deliver the consistent financial results you have come to expect.
Moving on to the balance sheet. On slide eight, we highlight our recently reaffirmed credit ratings from S&P in August. As you know, we continue to target mid-teens FFO to debt on a consolidated basis over our planning period to preserve our solid investment-grade credit ratings. Our financing strategy and strong balance sheet position us well given the market volatility we've seen recently. At the utility, our annual rate case cadence and the use of forward-looking test years allow us to incorporate higher interest rates into our filings and recover the associated costs with minimal lag.
At the parent where funding costs are non-recoverable, we have limited refinancing risk in the near term with $250 million due in 2024 and 2025 and $300 million coming due in 2026. And as noted during our second quarter call, the 2024 maturity has already been prefunded with proceeds from our convertible debt issuance in May. It is also worth noting that 100% of the debt of the parent companies fixed is over 40% is hybrid in nature thus receiving equity credit from the rating agencies.
In addition to strong liability management, we have continued to plan conservatively. And debt funding costs have increased in the current environment they remain consistent with the assumptions embedded in our long-term financial plan. As always, we remain focused on maintaining a strong financial position which coupled with a supportive regulatory construct and predictable operating cash flow generation supports our solid investment-grade ratings for the benefit of our customers and investors.
Moving on to the financing plan. Slide nine offers more specificity on the balance of our planned funding needs in 2023. In short, I'm pleased to report that our financing plan for the year is largely completed. In fact at the utility, we've completed all of our planned first mortgage bond issuances for the year at a weighted average coupon of approximately 4.8%, which is below our planned estimate.
The only remaining opco financing is a securitization funding to address the recovery of the undepreciated rate base in our recently retired coal facilities. As for the parent company given the timing of the aforementioned convertible bond issuance, we've been able to delay the settlement of the equity forwards at price last year. So the roughly $440 million of forward equity contracts will be settled in the fourth quarter.
As I've said before, our approach to our financing plan is similar to how we run the business. We plan conservatively and capitalize on opportunities as they arise. This approach has been tried and true year in and year out and has enabled us to deliver on our operational and financial objectives irrespective of the circumstances to the benefit of customers and investments.
And with that, I'll hand it back to Garrick for his final remarks and for the Q&A session.
