Andrew Cooper
Senior Vice President and Chief Financial Officer at Pinnacle West Capital
Thank you, Jeff, and thanks again to everyone for joining us today. Earlier this morning, we released our third quarter 2024 financial results. I'll review those results and highlight key drivers and provide an update to full-year 2024 financial guidance. Finally, I will provide insight into our 2025 and long-term financial outlook.
We earned $3.37 per share this quarter, a decrease of $0.13 compared to the third quarter last year. This decline was driven by several factors, higher O&M and depreciation expenses as well as financing costs and income tax timing. Offsetting these items were positive impacts from the new rates implemented earlier this year and as Jeff mentioned, another summer of record breaking heat, which contributed positively compared to last year.
We continue to see strong sales growth across customer classes. For the third quarter, weather-normalized sales growth was 5.9% with contributions from residential and both small and large C&I customer groups. With the continued expansion of our C&I customers, we saw 10.3% C&I growth this quarter. This marks the third consecutive quarter with over 10% growth in the sector. Foundational to our sales growth has also been our continued strong retail customer growth, which came in at 2.3% for the quarter.
Given these positive growth trends and this year's strong contribution from weather, we have updated our 2024 financial guidance. We now expect 2024 earnings in the range of $5.00 per share to $5.20 per share and have adjusted our sales growth expectations to 4% to 6% for the year, consistent with our long-term sales growth forecast. Additionally, with the sustained growth and recognizing the ability to utilize some of the weather benefit to derisk both future operating expense and capital investment. We've increased our forecasted O&M for the year to a range of $1.01 billion to $1.03 billion and increased our capital expenditure plan for the year from $1.95 billion to $2.05 billion.
As we look toward 2025, we expect an earnings per share range of $4.40 to $4.60 per share. The anticipated decrease in 2025 compared to initial weather-normalized 2024 earnings guidance is due to additional costs associated with regulatory lag, including debt and equity financing costs and higher D&A, as well as the end of a positive OPEB amortization and onetime gain from the sale of Bright Canyon in the prior period. These were partially offset by continued customer sales growth and O&M management, highlighting the strong core fundamentals of our business.
The growth outlook for 2025 remains robust for our service territory. We expect customer growth within a range of 1.5% to 2.5% for both 2025 and the long-term -- long-term as Arizona continues to be a highly-attractive destination for both residents and businesses. We are seeing a record number of new customer leader sets on-track to set more than 35,000 in 2024, the highest number since the Great Recession and expect this trend to continue. Additionally, we anticipate weather normalized sales growth for both 2025 and longer-term through 2027 in the range of 4% to 6%, with 3% to 5% contributed by growth in the extra high load factor C&I sector where demand remains strong and existing customers continue to ramp-up.
In fact, Taiwan Semiconductor recently reiterated its commitment to build out three fabs in Arizona by the end-of-the decade. The first fab end entered engineered wafer production earlier this year with volume production expected to start in early 2025. Looking further ahead, we remain confident in our long-term trajectory. We are reaffirming our 5% to 7% EPS growth guidance based on the midpoint of our original 2024 guidance range of $4.60 to $4.80. Our financial strategy is designed to support this growth with a continued focus on balancing investment, cost recovery and customer affordability.
Our capital plan through 2027 includes $9.65 billion of investments, a 24% increase from the plan we shared earlier this year. This plan is focused on strengthening infrastructure, improving reliability and meeting the demands of a rapidly growing service territory, including investments into new generation resources and into our strategic transmission plan. These investments are expected to drive rate base growth of 6% to 8%. Notably, over 40% of our future capital investments in this plan are expected to qualify for the system reliability benefit surcharge just approved in our last rate case or through our FERC formula rates, both allowing for improved timeliness of cost recovery.
To support the capital plan, we have also updated our financing strategy through 2027. Our plan includes a mix of debt and equity in support of a balanced utility capital structure and matched to our spending profile. Our updated equity needs during this planning period are lower than the target of 40% of new capital we established on our Q4 2023 call in February and represent a very modest increase in the expected annual equity run rate from $200 million annually to a range of approximately $250 million to $300 million annually.
As we've stated previously, we continue to believe that an at-the-market equity issuance program would match well with our planned accretive capital investment profile. We are always exploring alternative financing options as well and believe that all of the above approach provides us the flexibility to utilize lease cost best fit financing methods while maintaining a solid balance sheet, targeting metrics consistent with our current credit ratings. As we execute our capital and financing activities to reliably serve our rapidly growing customer-base, we remain committed to maintaining a cost efficient operation.
Our long-term goal remains to reduce O&M per megawatt-hour and while we have the final scheduled major outage at our Four Corners Unit 5 facility in spring of 2025, our broader focus on lean operations and efficiency will drive continued cost management into the future. As we look ahead to 2025 and beyond, we remain confident in our long-term financial strategy, while recognizing and continuing to address the challenges of continued financial adds. Our strong customer growth across classes and robust sales growth, particularly in the semiconductor and broader manufacturing sector, continues to highlight the unique benefits of our service territory. This coupled with our improving regulatory environment that is focused on timely recovery provides a compelling future. The investments we are making today lay the foundation for sustained growth and value creation for years to come, and we remain focused on delivering reliable, affordable service while maintaining a strong financial position.
This concludes our prepared remarks. I will now turn the call-back over to the operator for questions.
