Vincent Sorgi
President and Chief Executive Officer at PPL
Thank you, Andy, and good morning, everyone. Welcome to our first quarter investor update. Let's start with our financial results and a few highlights from the quarter on Slide 4.
Today, we reported first quarter GAAP earnings of $0.42 per share. Adjusting for special items, first quarter earnings from ongoing operations were $0.54 per share representing a 12.5% increase over ongoing earnings of $0.48 per share a year ago. This increase was supported by additional returns on capital investments and higher sales volumes as we saw milder weather last year compared to this year.
Looking ahead, we remain confident in our ability to deliver on our 2024 ongoing earnings forecast of $1.63 to $1.75 per share, with a midpoint of $1.69 per share. We are also on track to complete approximately $3.1 billion in infrastructure improvements this year to strengthen grid reliability and resiliency and advance a cleaner energy mix without compromising on affordability for our customers. At the same time, we remain confident in our long-term business plan as we execute our strategy to create the utilities of the future. We're well positioned to achieve our projected 6% to 8% annual earnings per share and dividend growth through at least 2027. As we outlined in February, our capital plan includes $14.3 billion in infrastructure improvements from 2024 to 2027. And across PPL, we continue to drive greater efficiency through our utility of the future strategy to help keep energy affordable for our customers. With this in mind, we're on pace to achieve our annual O&M savings target of at least $175 million by 2026.
Moving to Slide 5 with an operational and regulatory update. We were pleased to secure positive outcomes in our second annual infrastructure, safety and reliability or ISR proceedings before the Rhode Island PUC. ISR plans are submitted annually in Rhode Island and outline proposed capital investments and related operating costs to strengthen safety, reliability and resiliency of our electric and gas distribution networks. The plans approved this March address Rhode Island Energy's proposed spending from April 1, 2024, to March 31, 2025.
In its decision, the PUC unanimously approved to $326 million in planned spending and investment. This includes approximately $300 million in capital investments, including $132 million for electric and $168 million for gas and $26 million in operating costs for vegetation management, restoration paving on gas main replacement projects, system inspections and other work. These investments are critical to maintaining and improving the safety and reliability of electricity and gas service for our customers in Rhode Island and will help to enable the clean energy transition in the state.
Shifting to Pennsylvania. Last week, PPL Electric Utilities filed a petition with the Pennsylvania PUC to raise the company's distribution system improvement charge cap from 5% to 9% of distribution revenues for bills rendered on or after January 1, 2025. The disc accelerates the repair and replacement of aging infrastructure by allowing utilities to recover the cost of investments in eligible property. As we confront more frequent and powerful storms and aging infrastructure, we believe an increase is needed to maintain and improve reliability moving forward. We expect minimal impact to customer bills because of this change, and we look forward to engaging with the commission as they consider our request. We expect a decision on this petition by year-end.
PPL Electric Utilities also recently filed its latest default service plan with the PAPUC. The plan, which was filed in Q1 reflects our strong focus on energy affordability and outlines the company's strategy to procure generation supply for customers who don't choose the third-party energy supplier. To best support our customers, the proposed plan includes modifications to lessen price volatility, improve affordability, support resource adequacy and foster the growth and development of renewable generation in Pennsylvania. During the planned design, PPL Electric leverage data analytics to optimize the proposed procurement strategy for affordability. We expect the modifications to result in lower supply cost for our customers during the term of the plan, which is from June 1, 2025 through May 31, 2029. We expect a decision from the PAPUC on this plan by year-end as well.
Moving to Slide 6. We continue to advance plans to support prospective data center development in both Pennsylvania and Kentucky. As we work with data center companies, we feel we are very well positioned to serve their needs for a variety of reasons. For starters, we have capacity on our grid such that the needed investment by the data centers is not too significant. This also enables connection to our grids in a timely manner, supporting their desired commercial operation date.
In addition, our reliability is very strong with top quartile reliability. Our states also have an abundance of reasonably priced land available for these data centers. Further, we are close to large metropolitan markets in New England and Mid-Atlantic regions. And finally, we have programs in both states that provide incentives for data centers to locate in our service territories.
Our current business plan does not reflect the investments or load related to these large data center projects, so any meaningful deployment in this space would represent upside to the plan. In Pennsylvania, we continue to see record numbers of requests within our service territory, including some very large centers that are projecting more than a gigawatt of load at full capacity. We currently have approximately 3 gigawatts of data center demand in advanced stages. The potential upside for PPL comes in the form of additional required investments in transmission and returns on the related rate base through the FERC formula rate.
Currently, we estimate that each data center would require on average, $50 million to $150 million of capital investment, and that's PPL share, depending on the size, location and specific needs of the data center. As the sensitivity of the $125 million of PPL investment, would result in about $0.01 of EPS. And despite this added investment, we expect that our retail customers in Pennsylvania will benefit as well as the transmission component of the bill will decrease as they are spread over increased load.
In Kentucky, we are also actively working with several large data centers. The data centers we're currently seeing in Kentucky range between 300 and 500 megawatts each. Like Pennsylvania, any transmission upgrades would be additive to our capital plan, although those will be more modest than the levels we are currently seeing in Pennsylvania due to the smaller size of the data centers. The more significant upside potential from additional data center demand is due to the vertically integrated nature of our Kentucky business as a significant ramp in electricity demand could also result in incremental generation needs in our service territory. Any additional generation investment would also represent upside to our current capital plan.
From a timing perspective, based on our ongoing dialogue, we would expect to have a better sense of these opportunities in the latter half of the year and into 2025. Ultimately, data centers are key to American competitiveness and AI deployment moving forward and we are actively engaged to support their expansion.
Moving to Slide 7 and some items on the horizon. On April 25, the EPA announced the suite of final rules related to fossil fuel-fired power plants. The four rules announced are, Section 111, Greenhouse Gas, CO2 Standards, which requires that all coal-fired plants and new baseload gas-fired plants control 90% of their carbon pollution via carbon capture technology or other means by 2032.
The affluent limitation guidelines, which establishes more stringent discharge standards for three different wastewaters generated at coal-fired plants. The coal combustion residuals rule, which requires additional coal ash management for inactive CCR units, which were formerly exempt. And the Mercury and Air Toxic Standards rule or MATS, which tightens the emission standard for toxic metals by 67% and finalizes a 70% reduction in the emission standard for mercury from coal-fired plants.
We expect these rules to be challenged by various parties and that it will likely take years to go through the legal process. Should these rules be upheld in the courts, it could exacerbate the resource adequacy concerns in the 2030s while resulting in significant incremental environmental capital investments and/or additional capital needs for generation replacement in the latter part of our planning period and beyond. These rules will also be considered in the request for proposal recently issued by LG&E and KU for renewable energy.
The RFP is seeking to evaluate alternatives to procure lease cost long-term supply of renewable energy to serve our customers. These potential additions would help to address load growth, diversification of the generation portfolio and the newly issued EPA regulations. Proposals are due back by the end of the second quarter, and we expect to complete our review in the fourth quarter.
Looking ahead in Kentucky, LG&E and KU expect to file their triennial Integrated Resource Plan in the fourth quarter of this year. The IRP will be a comprehensive review of electricity supply and demand within our service territories over a 15-year planning horizon. We'll also update our load forecast for our service territories which will include updated assumptions for electrification, industrial growth and potential data center development as well as any updates to energy efficiency trends. The supply forecast will include the results of our recently approved CPCN late last year to retire 600 megawatts of coal generation and replace that with a combination of efficient combined cycle natural gas, solar and battery storage capacity.
We will also include recommendations received from the KPSC during our last IRP filing including updates to our demand side management and energy efficiency programs, transmission needs and recently issued environmental regulations. Following our IRP filing, we'll then conduct another climate assessment and expect to publish an updated report in 2025.
That concludes my strategic and operational update. I'll now turn the call over to Joe for the financial update.
