Jeanne M. Jones
Executive Vice President and Chief Financial Officer at Exelon
Thank you, Calvin, and good morning, everyone. Today, I will cover our first quarter financial update and progress on our 2024 rate case schedule, including key developments in Illinois. Starting on Slide six, we show our quarter-over-quarter adjusted operating earnings log. As Calvin mentioned, Exelon earned $0.68 per share in the first quarter of 2024 versus $0.70 in the first quarter of 2023, reflecting lower results of $0.02 per share over the same period.
Earnings are lower in the first quarter relative to last year driven primarily by $0.04 of higher interest expense due to the rise in interest rates and higher levels of debt at the holding company and at some of our utilities. $0.03 of higher restoration and damage repair costs associated with the challenging storm season across the Mid-Atlantic and $0.02 of lower return on ComEd's distribution investments, including no return on its pension asset resulting from the December rate order.
This was partially offset by $0.07 of higher distribution rates at our other utilities associated with incremental investments net of other expenses. Results of $0.68 per share in the first quarter represents an approximate 28% contribution of the midpoint of our projected 2024 operating earnings guidance range, which is right in line with historical patterns, but slightly behind where we expected to be for Q1. This is a direct result of the continued warmer-than-normal temperatures in our non-decoupled jurisdictions, and the challenging storm activity experienced throughout the first three months of 2024. As we look ahead to the next quarter, the relative EPS contribution is expected to be approximately 15% of the midpoint of our projected full year earnings guidance range, which contemplates the update to ComEd's revenue requirement approved by the Illinois Commerce Commission to go into effect in May bills. In combination with Q1 results, this would result in recognizing 43% of projected full year earnings which is slightly behind how we have performed historically, but in line with our latest outlook, given various new rates expected to go into effect towards the second half of the year across several jurisdictions.
As we demonstrated in 2023, weather-related volatility is a risk we expect to manage alongside other changes in the plan. The ComEd rehearing provides for incremental revenue relief relative to the final order, which underpinned our base case for the year. As we progress through the year, you can expect us to balance this opportunity with management of our costs and utility work plans, regulatory outcomes and weather over the remaining quarters to deliver against the expectations laid out for the year. We remain on track for full year operating earnings of $2.40 to $2.50 per share in 2024 with the goal of being at midpoint or better of that range. Lastly, we are reaffirming the fully regulated operating EPS compounded annual growth target of 5% to 7% from the 2023 guidance midpoint through 2027 with the expectation to be at the midpoint or better of that growth range. Moving to slide seven.
There are several positive developments to highlight in the ongoing regulatory matters in Illinois. Starting with the most recent on April 18, the ICC issued an order on the rehearing of ComEd's December MYP order that reset rates, which went into effect in May, providing for an increase of $150 million in 2024 relative to the December 2023 order. The order also increased the 2025 to 2027 revenue requirements over the approved revenue requirements in those years. While we are encouraged the revenue requirements on rehearing were largely uncontested and the rehearing process was completed nearly two months ahead of schedule. Obtaining approval of the refiled grid plan remains top priority.
That leads me to the next key development. After three months of robust stakeholder engagement to address feedback from the commission in which ComEd hosted two public meetings and a series of six workshops on 10 different topics, the revised grid plan was filed with the ICC on March 13. Based on this engagement, ComEd have made a number of changes to the original grid plan, including the following: First, we reduced overall investment levels and bill impacts by up to 30% to better ensure affordability for customers. We also included additional affordability analysis anchored around energy burden, which is the total home energy cost as a percentage of household income, and we demonstrated that new rates under the proposed grid plan result in electric bills at levels well less than half the threshold considered to be energy burdened.
And third, we outlined in detail how every customer and community benefits from the clean energy transition. Specifically, through focused grid investments in disadvantaged communities, more than 40% of the benefits of grid modernization and clean energy have been demonstrated to support equity investment eligible communities customers. Lastly, we enhanced our support for the value of grid investments to ComEd customers through a new cost effectiveness framework. ComEd's analysis details the present value benefits of grid plan investments totaling over $7 billion as compared to the present value of the revenue requirements of $4.4 billion.
These quantifiable benefits driven largely by reliability and emissions reductions do not capture other qualitative value like cybersecurity protection, safety, customer engagement, low-income customer assistance and health improvements from improved air quality. The refiled grid plan not only satisfies all statutory requirements and supports the achievement of statutory objectives, it also represents a collaboration among ComEd, Commission staff and other stakeholders on implementation of the groundbreaking Climate and Equitable Jobs Act. CEJA has put the state of Illinois on a path to advance ambitious plans to combat climate change, a goal that is equally important to policymakers and utilities alike. In support of these objectives, on March 7, the Commission issued an order that a procedural schedule to be adopted for the grid and rate plan proceeding that will allow the commission to issue a final order in December 2024 and implement rates that will go into effect by the start of 2025.
The administrative law judges subsequently adopted a proposed procedural schedule in line with this timing. ComEd also filed its final distribution formula rate reconciliation with the ICC on April 26, seeking a onetime recovery of $627 million in rates effective January 1, 2025. A key driver of the increase includes the impact of U.S. treasury yields that increased in 2023 relative to the prior year. As a reminder, the formula rate construct was historical and that it set rates based on prior year expenditures. As such, in addition to collecting actual costs from 2023, trued up from '21 and '22 costs, the reconciliation reflects higher O&M expenses due in part to the inclusion of beneficial electrification and credit card convenience fees required by CEJA as well as additional investments in infrastructure to support safe, reliable service for customers and growth of new business in the state supported by its economic development policies. Storm recovery was also a material driver of the under-recovery, per statute an order is expected on the reconciliation in December.
As I mentioned, obtaining approval of ComEd's refiled grid plan is our priority early approval of the rehearing, coupled with the adoption of a procedural schedule for an order on the refiled grid plan before the end of 2024 are the first steps to getting Illinois back on track to achieve its clean energy goals. Turning to slide eight. As Calvin mentioned, there have been some important developments on the regulatory front for our East Coast jurisdictions since the beginning of the year. Let me begin with the most recent filing. On March 28, PECO filed both electric and gas distribution rate cases with the Pennsylvania Public Utility Commission. In its electric rate case, PECO is requesting a $399 million net revenue increase by 2025 to support significant investments in infrastructure to maintain and improve safety, reliability and customer service for its customers. To reduce the impacts of severe weather, PECO has proposed a storm reserve mechanism designed to defer storm cost variances to the balance sheet to be collected or refunded in the next base rate case.
Additionally, PECO is seeking to recover $111 million in its gas distribution rate case to support continued replacement of existing natural gas mains and service lines, with new plastic pipe intended to enhance safety, improve service and reduce methane emissions. As part of the case, PECO has requested a weather normalization adjustment designed to adjust customers' gas bills for actual versus normal weather on each individual customer bill when bills are issued.
Both the proposed storm reserve and weather normalization adjustments would reduce the variability of revenues relative to our costs and at the same time, benefit customers by ensuring that they only pay for actual storm costs and by making their gas bills more predictable. Further strengthening the experience for our customers are the planned infrastructure investments to modernize the electric grid, make it stronger, more weather resistant and less vulnerable to storm damage.
Despite the impacts of several severe storms in 2023, PECO customers experienced the lowest power outage in company history with 86% of PECO customers experiencing 0 or one outage in 2023. PECO's investment plans outlined in the electric and gas rate cases are designed to build upon this strong foundation, delivering enhanced reliability performance to its customers. Orders are expected from the PAPUC for both rate cases before the end of 2024. On April 18, the Delaware Public Service Commission unanimously approved Delmarva Power settlement agreement with modification for its electric distribution rate case.
The settlement was for a $42 million gross increase in distribution rates premised on an ROE of 9.6%. The decision improves recovery of investments in infrastructure to mean safety and reliability and improved service for our customers. It also helps better align revenues with costs, specifically high storm expenses through a newly established rider that allows for deferral of storms exceeding $5 million. As permitted by Delaware Law, Delmarva Power implemented full allowable rates on July 15, 2023, subject to refund. I'll close with an update on the progress in Pepco's electric distribution rate cases in Washington, D.C. and Maryland.
The procedural schedule and Pepco DC's multiyear rate plan filing has been adjusted to accommodate an intervenor's request for additional time to review the rebuttal testimony from Pepco. Pepco anticipates D.C.'s Commission to issue a subsequent order with an updated hearing and briefing schedule in the coming weeks. A final order is expected by the third quarter. Additionally, in Maryland, evidentiary hearings were conducted, and brief filed in March and April, respectively, as part of Pepco's pending multiyear electric rate case.
The hearings allowed Pepco Maryland, the opportunity to demonstrate the benefits afforded by a multiyear rate plan relative to traditional rate making. Multiyear plans in Maryland have enabled investments necessary to improve reliability and customer service, modernize the distribution system and support state environmental goals that have served our customers and community as well. We continue to believe Pepco's proposed investment plans are well suited for Maryland to meet its aggressive clean energy goals in an affordable manner.
A final order is expected from the commission by June 10 per statute. More details on the rate cases can be found on Slides 19 through 29 of the appendix. I will conclude with a review of our balance sheet activity on Slide nine. As you heard on our last earnings call, we project to continue to have approximately 100 basis points of cushion on average for our consolidated corporate credit metrics above the threshold specified by the agencies. And while we continue to await specific guidance and implementation of the corporate alternative minimum tax, I'll remind you that our plan continues to incorporate the assumption that the regulations will not allow for repairs. It's implemented in a way that mitigates the cash impact, we'd expect an increase of approximately 50 basis points to our consolidated credit metrics on average over the plan putting us more on the higher end of our targeted 100 to 200 basis points of cushion.
From a debt financing perspective, we successfully raised $1.7 billion at corporate and approximately $1 billion for the PHI entities in the first quarter. To date, we have completed 55% of our planned 2024 long-term debt financing needs, including all of our corporate needs, positioning us well for any market volatility in the balance of the year. As a reminder, we continue the pre-issuance hedging program that was initiated in 2022 to manage the ongoing interest rate volatility. In addition, we continuously monitor the capital markets and regularly assess our plans for future issuance timing, sizing, tenor and tranching strategy to ensure we achieve optimal outcomes.
The strong investor demand for our debt offerings continues to be a testament to the strength of our balance sheet and to our value proposition as a premier T&D utility with a low-risk platform. To reiterate our equity needs, there has been no change in our guidance to issue $1.6 billion over the 2024 to 2027 period to fund the estimated $34.5 billion capital plan in a balanced manner. Specifically, we expect to issue $150 million of equity at the holding company in 2024 and the balance of approximately $475 million annually over 2025 through 2027. We will continue to update you as we make progress on that plan.
Thank you. I'll now turn the call back to Calvin for his closing remarks.
