Vincent Sorgi
President and Chief Executive Officer at PPL
Thank you, Andy, and good morning, everyone. Welcome to our fourth quarter and year-end investor update. I'm excited for today's call as we closed out 2023 in strong fashion and our future continues to look very bright and I look forward to highlighting why that is on today's call.
Turning to Slide 4, I'm very proud of what our PPL team was able to accomplish in 2023. In short, it was a year of challenges met and promises kept. Most importantly, we delivered electricity and natural gas safely and reliably to our more than 3.5 million customers. This included top quartile T&D reliability at each of our utilities, including record reliability for our companies in Kentucky and Rhode Island and top decile performance in Pennsylvania.
Our generation reliability in Kentucky was among the very best in the nation. We achieved all this despite heightened storm activity in each of our service territories. At the same time, and despite over $0.10 per share impact from mild weather and storms, we delivered on every one of our financial commitments to our shareowners, namely; we achieved ongoing earnings of $1.60 per share, exceeding the midpoint of our ongoing earnings forecast by $0.02 and delivering over 8% growth from pro forma 2022.
We achieved this through our strong focus on operational efficiency and outperformance in key areas that Joe will cover in his financial review. We also executed $2.4 billion in planned capital spend on time and on budget to advance a reliable, resilient, affordable and cleaner energy future. We exceeded our annual O&M savings target for 2023 through our strong enterprise-wide focus on technology and business transformation, achieving $75 million in savings from our 2021 baseline, reinforcing our continuous improvement mindset, and putting us solidly on track to deliver our targeted $175 million in O&M savings by 2026.
These operational and financial achievements were matched by strong results elsewhere in the business that position us for future success. Underpinned by sound planning and effective management of regulatory proceedings, we secured constructive regulatory outcomes in Kentucky and Rhode Island. In Kentucky, we secured approval for about $2 billion in generation replacement investments as part of our CPCN process that concluded in November of last year. The KPSC's decision ensures that we can continue to meet our customers' future energy needs safely, reliably and affordably while advancing a cleaner energy mix in the state.
And in Rhode Island, we secured approval of our first infrastructure, safety and reliability plans since acquiring Rhode Island Energy. In addition, we received the green light to deploy advanced metering functionality across Rhode Island as we lay a foundation for a smarter, more resilient, more reliable and more dynamic electric grid capable of supporting the state's leading climate goals.
Finally, we continue to provide a smooth and seamless transition to PPL ownership for our Rhode Island Energy stakeholders, completing all planned 2023 integration milestones and keeping us on track to exit our remaining transition service agreements with National Grid in mid-2024.
These achievements are a direct result of our focus on execution, our disciplined investment strategy, our ability to adjust when challenges arise, our experienced leadership team and clarity of purpose across PPL as we pursue our Utility of the Future strategy. Looking ahead, we recognize we still have room to improve as we pursue our vision to be the best utility company in the U.S. And in 2024, we're determined to make continued progress as we seek to maximize long-term value for both our customers and share owners.
Turning to Slide 5, today we announced the results of our updated business plan, which extends our projected growth outlook through at least 2027. In connection with this update, today, we announced our 2024 ongoing earnings forecast range of $1.63 to $1.75 per share. The midpoint of this range, $1.69 per share represents 7% growth from our 2023 ongoing earnings per share target, consistent with our long term growth targets.
In addition, today, we announced a quarterly common stock dividend of $0.2575 per share. This represents a 7.3% increase from the current quarterly dividend of $0.24 per share and aligns with our commitment to dividend growth, in line with our EPS growth targets. We've extended our 6% to 8% annual EPS and dividend growth targets through at least 2027, based off the midpoint of our 2024 earnings forecast range.
In addition to today's updated growth forecast, our updated capital plan includes $14.3 billion from 2024 to 2027 to strengthen grid reliability and resiliency and advance a cleaner energy mix without compromising on affordability. The new plan is expected to drive average annual rate base growth of 6.3% through 2027, up from the prior growth rate of 5.6%. We plan to fund these additional investments supported by our exceptional balance sheet as our credit metrics remain well within our targets throughout the plan period without the need for equity issuances through at least 2027.
As I highlighted in my recap of 2023, we've made outstanding progress towards our multi-year target of at least $175 million in annual O&M savings by 2026. Based on the progress we made last year, we remain solidly on track to deliver our 2024 targeted savings of $120 million to $130 million. In terms of rate case timing in the plan, we do not anticipate any base rate case filings in 2024 in Pennsylvania, Kentucky or Rhode Island.
Looking beyond 2024, our current projections would have us filing a base rate case a bit sooner in Kentucky than previously anticipated due to several factors including the CPCN decision and additional capital investment needs on the T&D side of the business. Currently, we believe the earliest we would file a rate case in Kentucky will be in the first half of 2025.
For Rhode Island, the earliest we would file is late 2025, which is consistent with the prior plan. Finally, in Pennsylvania, recall that we have not been in for a base rate case since 2015 and we have no plans to go in again before 2026 at the earliest. The DSIC mechanism in Pennsylvania has operated as designed to support long-term infrastructure investment between rate cases. We do see an increased need to invest more to improve reliability on the distribution system and filed with the Pennsylvania PUC a request to modify our long-term infrastructure improvement plan or LTIIP, which includes an increase in planned DSIC-eligible investment over a five year period.
We are considering filing a waiver request with the Pennsylvania PUC in the near future, requesting modifications to the DSIC mechanism to support accelerated replacement of aging infrastructure. As always, our focus is on maintaining affordability for our customers and we will continue to evaluate the need for future rate cases, based on a variety of factors including capital plans, interest rates, market conditions and regulatory lag.
Turning to Slide 6, our updated plan and business outlook supports our Utility of the Future strategy, which is core to everything we do. What does that mean to us? It means updating our design criteria and continuing to harden our transmission and distribution systems to protect against climate change and keep our systems and data secure against cyber threats.
It means expanding our industry-leading use of technology, including smart grids, automation, data analytics, AI and technologies that haven't even been invented yet to build a self-healing grid. It means investing in R&D to drive innovation to advance technologies that can be scaled safely, reliably and affordably to meet our customers' evolving energy needs and to actually achieve net zero, like the Carbon Capture project that was awarded a $72 million DOE grant at our Cane Run combined-cycle plant in Kentucky.
At the same time, it means expanding transmission and incorporating grid-enhancing technologies to connect more renewables and improve reliability for our customers; advancing a cleaner generation mix while keeping energy safe, reliable and affordable; expanding our ability to reliably manage two way power flows on the distribution network as we connect significantly more distributed energy; driving operational efficiencies to support an affordable clean energy transition; partnering with our customers and state and local officials to enable growth and economic development in our communities; and lastly, expanding self-service options for our customers using digital tools to enhance the customer experience.
Turning to Slide 7. As you can hear, creating the Utilities of the Future requires change across our entire business, and it requires significant investments to support a net zero economy. The industry and others are projecting a 200% to 300% increase in electricity demand, which will require additions of reliable generation unless we see unprecedented amounts of energy conservation. At the same time, aging fossil fuel plants in this country are being retired very rapidly without replacements of reliable, dispatchable generation capacity. And considering that fossil fuel generation represents more than 50% of our total capacity in the U.S., that presents a potentially major problem if this transition is not managed appropriately.
The math simply doesn't add up, when we don't have proven, scalable technology currently available to actually achieve net zero carbon emissions that customers can afford. Most technologies used in our industry took 40 years to commercialize from the demonstration phase. We need to cut that time frame in half, at least, to meet net zero by 2050 targets, especially as we think about the big four new potential technologies, nuclear SMRs, carbon capture and sequestration, long duration energy storage, and hydrogen.
In the meantime, we need to leverage commercially-viable resources that exist today to reduce our carbon footprint while maintaining reliability; those that are dispatchable, can ramp up and down quickly, and are vital to balancing the gaps left on the system by intermittent renewables. That is why natural gas generation is the key to achieving decarbonization in this country, and it actually allows us to deploy more renewables than we would otherwise be able to do because of the reliability benefits of natural gas.
In a nutshell, this is what makes the energy transition such a challenge, being able to deliver the clean energy future in a way that maintains reliability and affordability for our customers. However, with every challenge brings opportunity, and that's why we know our Utility of the Future strategy is the right approach for this dynamic energy landscape. It's why our generation transition plan in Kentucky is reasoned and deliberate and ensures we can maintain the reliability and resiliency our customers and public officials demand.
We actually need to figure out a way to do the same in deregulated markets like PJM and ISO New England. And it's why becoming more efficient is such a critical component of our strategy, because for every dollar of O&M we can take out of the business, we can spend $8 on capital without impacting the customer bill. The energy transition simply won't happen if customers cannot afford it. This is how we will achieve our long-term vision and how we intend to enhance the value we deliver for all stakeholders. It requires us to lead from the front, and that is exactly what we've been doing and what we will continue to do in 2024 and beyond.
Turning to Slide 8, and our priorities for 2024. In addition to advancing our Utility of the Future strategy, our 2024 priorities also include, achieving at least the midpoint of our earnings per share forecast; executing $3.1 billion in infrastructure investments to maintain safe, reliable and affordable energy for our customers and modernize the grid; delivering on our 2024 O&M savings to targets as we deploy scalable technologies across our portfolio, take advantage of economies of scale created by our centralization efforts, and continue to leverage data analytics to reduce costs and optimize asset planning and maintenance.
Finally, we need to complete our integration of Rhode Island Energy and exit all remaining Transition Service Agreements with National Grid. Bottom line, we're eager to showcase PPL's strengths once again in 2024, and we are poised to lead on these very significant issues facing our industry. We have tremendous conviction in our strategy and business plan and in our ability to execute them both, and we look forward to, once again delivering on our commitments to customers and share owners.
That concludes my business and strategic update. I'll now turn the call over to Joe for the financial update.
