Rejji P. Hayes
Executive Vice President & Chief Financial Officer at CMS Energy
Thank you, Garrick, and good morning, everyone.
On Slide 7, you'll see our standard waterfall chart, which illustrates the key drivers impacting our financial performance for the first six months of 2024 and our year ago expectations. For clarification purposes, all of the variance analysis herein are in comparison to 2023, both on a year-to-date and a year-to-go basis. In summary, through the first half of 2024, we delivered adjusted net income of $485 million or $1.63 per share, which compares favorably to the comparable period in 2023, largely due to higher rate relief net of investment costs. And while we have seen some glimpses of favorable weather, particularly in June, overall weather continues to be a headwind through the first half of the year, equating to $0.05 per share of negative variance and that figure includes the warm winter weather experience in our service territory in the first quarter, which I'll remind you, have the second lowest number of heating degree days in the past 25 years.
As mentioned, rate relief, net investment-related expenses, one of the key drivers of our first half performance resulted in $0.13 per share of positive variance due to constructive outcomes achieved in our electric rate order received in March and last year's gas rate case settlement. From a cost perspective, our financial performance in the first half of the year was negatively impacted by heavy storm activity, including a notable weather system that impacted our service territory in late June resulted in $0.03 per share, a negative variance versus the comparable period in 2023. Rounding out the first six months of the year, you'll note the $0.13 per share of positive variance highlighted in the catch-off bucket in the middle of the chart. The primary sources of upside here were related to solid operational performance at NorthStar and higher weather-normalized electric sales.
Looking ahead, as always, we plan for normal weather, which equates to $0.20 per share of positive variance for the remaining half of the year, given the mild temperatures experienced in the final six months of 2023. From a regulatory perspective, we'll realize $0.12 per share of positive variance, largely driven by the aforementioned electric rate order received from the commission earlier this year and the constructive outcome achieved in our recently approved gas rate case settlement, which Garrick summarized earlier. Closing out the glide path for the remainder of the year, as noted during our Q1 call, we anticipate lower overall O&M expense at the utility driven by the usual cost performance fueled by the CE Way and the residual benefits from select sustainable cost reduction initiatives implemented in 2023 such as our voluntary separation plan, among others.
Collectively, we expect these items to drive $0.09 per share, a positive variance for the remaining six months of the year. Lastly, in the penultimate bar on the right-hand side, you'll note a significant negative variance, which largely consists of the absence of select onetime countermeasures from last year and the usual conservative assumptions around weather-normalized sales and non-utility performance among other items. In aggregate, these assumptions equate to $0.35 to $0.41 per share of negative variance. In summary, despite a challenging first half of the year, we are well positioned to deliver on our 2024 financial objectives to the benefit of customers and investors.
Moving on to our financing plan. Slide 8 offers more specificity on the balance of our planned funding needs in 2024, which at this point are limited to debt issuances at the utility. I'll bring to your attention a relatively modest increase to our 2024 planned financing of the utility. Specifically, we are now planning to issue approximately $675 million in the second half of the year versus the implied estimates in our original guidance of $500 million to rebalance the rate-making capital structure at the utility in accordance with recent rate case outcomes. Although not highlighted in the table on the slide, I'm pleased to report that we have completed all of our planned tax credit sales for the year at levels favorable to our plan and ahead of schedule.
I'll also reiterate that we have no planned long-term financings as apparent in 2024, but remain opportunistic should we see a cost-efficient opportunity to pull ahead some of our 2025 financing needs. As I've said before, our approach to our financing plan is similar to how we run the business. We plan conservatively and capitalize on opportunities as they arise. This approach has been tried and true year in and year out and has enabled us to deliver on our operational and financial objectives, irrespective of the circumstances to the benefit of our customers and investors, and this year is no different.
And with that, I'll hand it back to Garrick for his final remarks before the Q&A session.
