Robert J. Durian
Executive Vice President and Chief Financial Officer at Alliant Energy
Thanks, John. Good morning, everyone. Yesterday, we announced first quarter 2023 GAAP earnings of $0.65 per share. The primary drivers of the quarter-over-quarter EPS variances were the impacts of warmer temperatures than last year, resulting in lower retail electric and gas sales for this quarter. Higher interest expense due to additional financings and increasing interest rates and the timing of income tax expense that will reverse later this year. These items were partially offset by higher earnings resulting from increasing revenue requirements and allowance for funds used during construction from Wisconsin Power & Light's capital investments.
For the full year, we are reaffirming our earnings guidance of $2.82 to $2.96 per share. The midpoint of that range is a 6% increase over 2022 adjusted earnings per share. Details on our quarter earnings drivers and 2023 full year earnings guidance can be found on Slide 3.
To assist you in modeling our quarterly earnings this year, I wanted to provide some additional context to a few of the quarterly 2023 drivers. First, in anticipation of continuing inflationary pressures, we accelerated our cost transformation efforts in the second half of 2022. We do not anticipate the same heightened spend in the second half of 2023 for such efforts. Thus, we are anticipating that most of our year-over-year O&M savings will occur in the second half of 2023.
Second, we anticipate quarter-over-quarter variances related to interest expense were at their highest level in the first quarter with the quarter-over-quarter variances expected to taper as we proceed through the year. This quarterly interest expense impact is based on the cadence of our financings in 2022 versus 2023.And third, income tax expenses recorded each quarter based on an estimated annual effective tax rate and the proportion of full year earnings generated each quarter. This causes fluctuations in the amounts of tax expenses quarter-over-quarter, but it will not have an impact on our full year earnings. We've already executed a large portion of our 2023 financing plan to fund our investments in renewable projects and to support refinancing of $400 million debt maturity in 2023.In March, Alliant Energy issued $575 million of 3.875% convertible senior notes maturing in 2026. These convertible notes offered us an attractive financing opportunity given the current interest rate environment.
In March, WPL also issued $300 million of 4.950% Green Bonds maturing in 2033. The proceeds from this offering will be used for the development and acquisition of solar generating units, which are a key component of our clean energy blueprint. We have taken proactive steps to significantly reduce exposure to higher interest rates with these two debt issuances and an interest rate swap all executed in the first quarter of 2023. These actions will help insulate us from interest rate increases and produce better-than-expected interest expense relative to our annual plan. Earlier this year, we also closed on the sale of 25 megawatts of our West Riverside natural gas facility to MG&E. And we are working towards a closing on the sale of 100 megawatts of West Riverside to WEC Energy later this quarter. The sales of these partial interests in West Riverside were included in our plans and are expected to provide combined proceeds of approximately $125 million.
We're also making progress with plans to start transferring 2023 renewable tax credits later this year after we received guidance from the treasury on the requirements for such transfers under the inflation Reduction Act. We have seen strong interest in transferring these tax credits, and the proceeds from these asset transfers will help fund our future utility investments and reduce some of our future financing needs. The remaining financings for 2023 include plans to issue up to $300 million of long-term debt IPO and plans to raise up to $225 million of new common equity through our at-the-market program. The ATM is in addition to the $25 million of common equity that we expect to raise under our DRIP plan.
The 2023 financing plan is driven by robust capital expenditure plans, and supports our objective to maintain the capital structures at our two utilities, consistent with their most recent regulatory decisions.
We've included our key regulatory initiatives for 2023 on Slide 5. Starting in Wisconsin. Last week, WPL filed an electric and gas rate review for test years 2024 and 2025. The filing includes recovery of several investments that support sustainability and resiliency while keeping customer value and competitive rates top of mind. These investments include nearly 1.1 gigawatts of solar generation in the state by mid-2024 and 274 megawatts of energy storage by 2025.WPL is also exploring opportunities to enhance the value of its existing natural gas assets with new projects to increase output and efficiency. Finally, we plan to continue investing in underground distribution and standardizing system voltage to enhance resiliency while reducing O&M expenses.
Next steps in the rate review process included a discovery phase and audit by the PSCW staff and interveners, with a hearing anticipated in early fall and a final decision expected from the PSCW later this year. More details on the rate review, including key terms requested in this filing can be found on Slides 6 and 7.
Additionally in Wisconsin, WPL recently submitted its 2022 fuel reconciliation filing. This field reconciliation filing is requesting future recovery of $117 million of additional field costs incurred by WPL in 2022 due to higher energy cost to serve its customers. WPL currently anticipates a decision from the PSCW on this filing in the third quarter of this year. While our utilities experienced higher fuel costs in 2022 driven by elevated commodity prices, during the first three months of 2023, we have experienced significant reductions in natural gas prices which will help lower fuel costs for our Wisconsin customers in the future. And in Iowa, we have already started passing these lower fuel cost benefits on to our customers through the monthly fuel cost tariff. Looking forward in Wisconsin, we are preparing applications to request approval for capacity and efficiency improvements for some of our natural gas-fired peaking units. Also, we are awaiting the PSCW decision on the proposed 274 megawatts of battery storage projects. These projects were part of the capital expenditure plan announced in the third quarter of 2022 and are part of the proposed revenue requirement WPL's recently filed rate review for test periods 2024 and 2025.
Moving on to our Iowa jurisdiction. In late 2021, we filed for advanced rate making principles for approximately 400 megawatts of solar generation and 75 megawatts of battery storage. In January of this year, we provided additional testimony and evidence to the Iowa Utilities Board as requested in this proceeding. This testimony and evidence further demonstrated that IPL is taking prudent action to meet its customers' need for capacity, and our projects represent cost-effective solutions compared to alternative options available in the market. Last week, the IUB approved advance ratemaking principles for 200 megawatts of build-transfer solar projects at the Duane Arnold location. And we are proceeding with the judicial review requesting a District Court decision to enable the IUB to issue advanced frame-making principles for the 200 megawatts of Creston and Weaver self-build solar projects and 75 megawatts of battery storage projects.
We are confident these projects will provide customer benefits including reliability and resiliency and remain committed to executing these projects. With an active regulatory calendar, we look forward to getting to know and engage with the new commissioner in Wisconsin, Summer Strand and the two new Board members in Iowa, Sarah Martz and Eric Helen. We congratulate them on their appointments. We appreciate your continued support of our company and look forward to meeting with many of you in the coming months. As always, we will make our Investor Relations materials available on our website.
At this time, I'll turn the call back over to the operator to facilitate the question-and-answer session.
