Brian Van Abel
Executive Vice President & Chief Financial Officer at Xcel Energy
Thanks, Bob, and good morning, everyone. For the full year 2023, we had ongoing earnings of $3.35 per share, compared to $3.17 per share in 2022. The most significant earnings drivers for the year include the following. Higher electric and natural gas margins increased earnings by $0.10 per share. This reflects $0.10 of unfavorable weather as compared to last year. Lower O&M expenses increased earnings by $0.06 per share, which reflects the impact of cost containment actions. Lower conservation and DSM expense increased earnings by $0.06 per share, which is largely offset in lower margins. Higher other income increased earnings by $0.05 per share, primarily due to Rabbi trust performance, which is largely offset in O&M expenses. Lower other taxes, primarily property taxes, increased earnings by $0.04 per share. And in addition, other items combined to increase earnings by $0.06 per share. Offsetting these positive drivers, higher interest charges, which decreased earnings by $0.14 per share, driven by rising interest rates and increased debt levels to fund capital investment, and higher depreciation and amortization expense, which decreased earnings by $0.05 per share, reflecting our capital investment program.
Turning to sales. Full-year weather-adjusted electric sales increased by 1%, consistent with our guidance assumptions. For 2024, we expect electric sales to increase by 2% to 3%.
Shifting to expenses. O&M expenses decreased $47 million, or approximately 2% for the year. This is consistent with our annual guidance and reflects management action to offset inflation and other challenges we face during the year.
During the fourth quarter, we also made constructive progress on several rate case proceedings. In December, we filed a settlement in our Texas electric rate case, which reflects a rate increase of $65 million, an acceleration of the Tolk depreciation life to 2028, and an ROE of 9.55% and an equity ratio of 54.5% for AFUDC purposes. The commission decision is anticipated in the first quarter of 2024.
In November, Wisconsin Commission approved an electric rate increase of $1 million and a natural gas increase of $5 million based on an ROE of 9.8% and an equity ratio of 52.5%. The decision reflects adjustments for our residential affordability program, updated fuel and purchase power costs, and other items which are earnings-neutral. Rates were effective January 2024.
In November, we filed a Minnesota natural gas rate case, requesting a $59 million rate increase based on an ROE of 10.2% and an equity ratio of 52.5% in the forward test year. In December, the commission approved our request for interim rates of $51 million, subject to refund starting this January. Final decision is expected later this year.
As far as future filings, we plan to file a Colorado natural gas case in the next week or so. In addition, we also anticipate filing a revised wildfire mitigation plan in Colorado in the first half of 2024.
Updating our progress on production tax card to transferability, we executed multiple contracts in 2023 totaling $400 million. We anticipate executing $500 million of PTC sales in 2024. Transferability reduces near-term funding needs, and most importantly, lowers the cost of our renewable energy projects for our customers.
Moving to our capital forecast. We've updated our five-year capital plan for the decision in the Colorado resource plan, which now reflects an investment of $39 billion. This base capital plan supports investment in renewable generation, transmission to deliver the clean energy, and customer-facing investments for a reliable and resilient advanced grid. The base plan results in an annual rate based growth of approximately 9%. Not included in our base plan is approximately $5 billion for renewables and firm capacity associated with RFPs at NSP and SPS and future filings in Colorado.
We've updated our base financing plan, which reflects the incremental debt and equity financing needs for these investments. Please note that the guidance assumptions in our earnings release have also been updated to reflect changes to the capital forecast for this year. As a reminder, we anticipate any incremental capital investment will be funded by approximately 4% equity.
It is important to recognize that we've always maintained a balanced financing strategy, which includes a mix of debt and equity to fund accretive growth, while maintaining a strong balance sheet and credit metrics. Maintaining solid credit metrics and favorable access to capital markets are critical to fund our clean energy transition, maintain a competitive cost of capital, and keep customer bills low, especially, in a higher interest rate environment.
Finally, we remain committed to our long-term EPS growth objective of 5% to 7%, which we believe is conservative. We now expect to deliver earnings at or above the top end of the range in 2025, starting in 2025. In addition, we will rebase future annual guidance off actual results. As a result of the significant capital investment opportunities and equity funding needs, we now expect to grow the dividend at the low end of our current 5% to 7% dividend growth range, with a target payout ratio of 50% to 60%. This will reduce our equity financing needs over time, lower financing risk, and give us even more dry powder and financial flexibility in the future.
Now we'll conclude with a brief update of the Marshall wildfire litigation. The statute of limitations ended in December, and as expected, we saw a significant increase in the number of claims. As of now, we are aware of 298 lawsuits with approximately 4,000 claims. In early February, there will be a hearing at which time a schedule may be determined. We believe a trial will likely begin in 2025.
With that, I'll wrap up with a quick summary. We're executing on an ambitious investment plan for our customers to deliver clean, reliable energy. That investment enabled Xcel Energy to deliver 2023 ongoing earnings within our guidance range for the 19th year in a row. For the 20th consecutive year, we increased our dividend to investors. We resolved multiple rate cases and filed foundational plans for our natural gas utility to reach its net-zero goals. We retired our Sherco Unit 2 coal plant early and reduced carbon emissions by 53% from 2005 levels. We received approval for our groundbreaking portfolio of clean energy resources in Colorado. We updated our base five-year capital plan to $39 billion, which reflects 9% rate based growth. We have additional capital backlog in all of our jurisdictions. We have a strong line of sight to achieving -- to achieve earnings at or above the top end of our 5% to 7% long-term EPS growth rate. And finally, our electric and natural gas customers have some of the lowest bills in the country, while continuing the safe and reliable service they expect from Xcel Energy.
This concludes our prepared remarks. Operator, we'll now take questions.
