Martin J. Lyons
Chairman, President and Chief Executive Officer at Ameren
Thanks, Andrew. Good morning, everyone, and thank you for joining us today. Beginning on Page 4, our strategic plan highlights our steadfast commitment to providing safe and reliable energy in a sustainable manner. We do this by investing in rate-regulated infrastructure, enhancing regulatory frameworks and advocating for responsible energy policies, while optimizing operating performance through ongoing continuous improvement in order to keep rates affordable.
Our strong 2023 operating and financial results, which we will cover today, reflect execution on our key business objectives for the year, which will continue to create value for our customers, communities, shareholders and the environment in the years ahead. I'd like to express appreciation for my Ameren co-workers' unwavering commitment to our strategy.
Turning to Page 5. This page summarizes our strong sustainability value proposition. Our operations and investments in 2023 made the energy grid safer, smarter, cleaner, more reliable and resilient, supporting thousands of jobs in our local communities in Missouri and Illinois and driving a positive impact on the economies of each state. In the process, we helped hundreds of local, small and diverse businesses grow, and we gave back to numerous charitable organizations to help our neighbors in need. For example, last year, almost 60% of our total sourceable spend was with suppliers in our Missouri and Illinois communities, while 26% was with local, small and diverse suppliers, creating jobs and economic growth and contributing to thriving communities in the areas where we operate.
The positive impact of our investments was reinforced by our top-quartile reliability performance in 2023 as measured by the frequency of outages. At the same time, our Ameren-supplied residential customer rates on average were below the Midwest average. Today, we published our updated sustainability investor presentation called Leading the Way to a Sustainable Energy Future available at amerenvestors.com. I encourage you to take some time to read more about our strong sustainability value proposition.
Turning to Page 6. When I reflect on the business objectives we laid out at the start of 2023, I am pleased to say that we made some great strides in each of our three strategic pillars. That said, we did not achieve the results expected in our Illinois gas and electric regulatory proceedings. On Page 7, we lay out our key strategic accomplishments for 2023 in more detail.
This past year, we invested $3.6 billion in infrastructure, spread strategically across our business segments in order to improve service for our customers. These investments are needed to reduce the frequency and duration of outages in the face of volatile weather events such as this past summer when we experienced the most impactful storms in the last 10 years. Ameren Illinois' work in restoring power to nearly 200,000 customers in the wake of the June 29, 2023 derecho was recognized with an emergency response award by the Edison Electric Institute at its recent Winter Membership Meeting. And there's plenty more work to be done to address aging infrastructure and make the grid stronger and smarter while supporting the clean energy transition, making it truly an exciting time to be in the utility industry.
Of course, every utility's ability to invest must be supported by constructive regulation, which brings me back to our regulatory developments in the fourth quarter. The state of Illinois has ambitious energy transition goals, goals which we continue to work collaboratively with stakeholders to support. Of course, achieving these goals will require significant sustained investment in the state's energy infrastructure in the coming decades.
In 2023, Ameren Illinois filed plans with the Illinois Commerce Commission, or ICC, to incorporate proposed investments in critical electric and natural gas infrastructure into prospective rates. Unfortunately, the ICC decisions in both the electric and natural gas rate reviews late last year were disappointing, reducing cash flows available for investment and delaying needed investments in energy infrastructure.
We will continue working with stakeholders on a path forward to approval of an electric grid investment plan, revised revenue requirements incorporating ongoing and prospective investments and an improved overall regulatory environment. We must work to build a stronger understanding that consistent, constructive regulatory environments are required to attract investment, support energy infrastructure development, economic expansion and jobs. Michael will cover the electric multiyear rate plan and the natural gas orders in more detail in a moment.
Moving to Ameren Missouri. In November, Ameren Missouri filed a petition with the Missouri PSC seeking approval to securitize the unrecovered investment in and costs associated with the planned fall 2024 retirement of our Rush Island Energy Center. The securitization is expected to result in significant savings for our customers when compared with cost recovery under traditional rate making. We, of course, recognize the importance of keeping our customers' bills as low as possible while investing to improve service, which leads me to the third pillar of our strategy, optimizing operating performance.
In 2023, our operations and maintenance expenses declined by 4% year over year. We automated and streamlined many of our finance, supply chain and customer service and workforce processes. And we continue to drive new efficiencies in our field work through deployment of smart meters, work management systems and distribution automation. Notably, our Missouri customer rates have only increased 1.8% compounded annually since the smart energy plan legislation took effect in April 2017, with our Missouri residential customer rates consistently remaining 25% or more below the Midwest average.
For our shareholders, yesterday, we announced 2023 earnings of $4.38 per share compared to earnings of $4.14 per share in 2022. The result was above the midpoint of our original earnings per share guidance range of $4.35 per share. On a weather-normalized basis, 2023 earnings results represent a 10% increase year over year.
Turning to Page 8. Here, you can see we have delivered consistent superior value to our shareholders for the past decade. Since 2013, our weather-normalized core earnings per share have risen at an approximate 7.8% compound annual growth rate, while our annual dividends paid per share have increased approximately 58% over the same time period. This drove a strong total return of 173% for our shareholders from 2013 to 2023, which was significantly above our utility peer average. This track record of strong and consistent performance gives me conviction regarding our business strategy. And rest assured, we are not looking back, we are focused on the objectives ahead.
Moving to Page 9, we turn our focus to the current year. We expect 2024 to be another busy year and have hit the ground running. Notably, we will maintain our focus on strategic infrastructure investment for the benefit of our customers while working hard to reduce operating costs and improve the regulatory environments in which we operate. We expect to invest approximately $4.4 billion in electric, natural gas and transmission infrastructure to bolster safety, security, reliability, resiliency and, further, the clean energy transition in a responsible fashion. This represents an increase of 22% from the prior year. Our plan includes approximately $1 billion of investment in new generation this year with new solar facilities expected to be in service by year end. The investment plans are aligned with our regulatory outcomes and expectations associated with each of our business segments.
We also have several opportunities to enhance our regulatory and legislative environments in the year ahead. Next week, Ameren Illinois will file a rehearing testimony requesting to update 2024 through 2027 rates for 2023 year-end rate base and a base level of grid reliability investments. Then in March, Ameren Illinois will file its revised multi-year grid plan with the ICC to address the commission's findings stated in their December order. An updated rate plan will also be filed to incorporate revised investment plans. Concurrently, we are evaluating all appropriate options to better align prospective regulatory outcomes with the goal of making progress on a reliable clean energy transition in an affordable fashion. We will work with all impacted stakeholders to advocate for constructive regulatory frameworks across our Illinois businesses, which will better support the state's energy transition goals.
In Ameren Missouri, we look to obtain approval to securitize the Rush Island Energy Center and advocate for Certificates of Convenience and Necessity, or CCNs, for future renewable and dispatchable generation, consistent with the integrated resource plan filed in September. The plan calls for investment in new dispatchable energy resources, including an on-demand 800-megawatt gas simple-cycle energy center by 2027, which could be turned on as needed in a matter of minutes to ensure reliability of the energy grid during periods of peak energy demand. In January, we filed a request for the air permit for this simple-cycle plant, Castle Bluff Energy Center, to be located on the site of our retired Meramec Energy Center. Utilizing this site will keep construction costs down, bring back jobs and provide additional tax revenue for the surrounding region. We expect to file for CCN approval with the Missouri PSC later this year.
We will also continue to support the analysis and approval of potential MISO Tranche 2 transmission projects that will serve the needs of the Midwest region, improving the grid's ability to integrate renewable resources efficiently and effectively. Given the importance of dispatchable generation to reliability, we are advocating for improved Missouri regulatory treatment for generation investments, akin to the treatment afforded other investments in electric infrastructure in the state. Further, on the legislative front, in both Missouri and Illinois, we are advocating for right of first refusal legislation to support the timely construction of transmission resources needed for system reliability and efficiency and to maximize customer benefits.
Shifting our focus to operations. As we identify ways to continuously improve our business, we are focused on maintaining disciplined cost management to hold operations and maintenance expenses flat in 2024 to 2023 levels.
Moving now to Page 10. Yesterday afternoon, we announced that we expect our 2024 earnings to be in a range of $4.52 to $4.72 per share. Based on the midpoint of this range, this represents 6.2% earnings per share growth compared to the midpoint of our original 2023 guidance range of $4.35 per share. Mike will provide you with more details on our 2024 guidance a bit later.
We expect to deliver 6% to 8% compound annual earnings per share growth from 2024 through 2028 and using the midpoint of our 2024 guidance, $4.62 per share, as the base. At this time, we expect earnings growth to trend below the midpoint of our range until the outlook in Illinois improves or the impacts of other growth opportunities are realized. That being said, we continue to have an outstanding portfolio of investment opportunities across our business segments totaling more than $55 billion over the next 10 years and a strong balance sheet, which provides us potential earnings growth levers that warrant maintaining a guidance range with up to 8% growth.
Our dividend is another important element of our strong total shareholder return proposition. Earlier this month, Ameren's Board of Directors approved a quarterly dividend increase of 6.3%, resulting in an annual dividend rate of $2.68 per share. This represents the 11th consecutive year that we have raised the dividend and reflects confidence by Ameren's Board of Directors in our business outlook and management's ability to execute our strategy. Looking ahead, we expect Ameren's future dividend growth to be in line with our long-term earnings per share growth expectations and within a payout ratio range of 55% to 65%. We expect our weather-normalized dividend payout ratio in 2024 to be approximately 58%. Over the last decade, we have gradually lowered our payout ratio, which provides financial flexibility while executing our robust energy infrastructure investment plans.
Turning to Page 11. The strong long-term earnings growth I just discussed is primarily the result of rate base growth, driven by investment in energy infrastructure made strategically under constructive regulatory frameworks. Today, we are rolling forward our five-year investment plan. And as you can see, we expect to grow our rate base and an 8.2% compound annual rate for 2023 through 2028. This plan represents an increase of $2.2 billion compared to the $19.7 billion five-year plan for 2023 through 2027 that we laid out last February.
The plan includes investment in renewables and simple-cycle gas generation consistent with Ameren Missouri's Integrated Resource Plan. And because of the ICC's orders late last year, our capital plan for Ameren Illinois investments has been reduced by approximately $400 million from 2024 through 2027 compared to our prior five-year plan. We expect that this level of investment, which we expect will provide safe and adequate service, as well as meet compliance requirements under the Climate and Equitable Jobs Act, will ultimately be approved by the ICC. That said, we continue to believe that a higher level of investment, supported by a more constructive return on capital investment would be in the best interest of our customers and communities, and we will continue our advocacy. Finally, we remain focused on keeping customer bills as low as possible and improving earned returns in all of our businesses.
Moving to Page 12. As we look to the future, our five-year plan is not only focused on delivering strong results through 2028, but is also designed to position Ameren for success over the next decade and beyond. The right side of this page shows how our allocation of capital is expected to change over the next five years. Incorporating generation investment opportunities from our latest IRP, we expect our 2028 rate base to reflect our diversified approach for maintaining reliability with renewable generation and dispatchable generation representing 12% and 11% of rate base, respectively. Notably, our coal-fired generation is expected to be just 3% of rate base by the end of 2028. The bottom line is that we are taking steps today across the board to position Ameren to provide safe, reliable, affordable and cleaner energy for the long term.
Moving now to Page 13. Our investment plan released today incorporated our intentions to invest over time in significant renewable and dispatchable resources as laid out in our Ameren Missouri IRP. In 2023, we were pleased the Missouri PSC approved CCNs for the Huck Finn and Boomtown solar projects and, in doing so, indicated support for our responsible gradual transition. And I'm happy to announce that we have reached a stipulation and agreement regarding our next four solar projects totaling 550 megawatts. These projects will support our lease cost plan for meeting customers' energy needs as we systematically invest to create a diverse mix of generation resources that preserves reliability as we retire our existing coal fleet over the next 20 years. While the Missouri PSC is under no deadline to issue an order on these four project CCNs, we expect a decision in March with these projects expected to go in service between 2024 and 2026. We expect to file additional CCNs consistent with the IRP later this year.
Moving to Slide 14. As we've discussed in the past, MISO completed a study outlining a proposed roadmap of transmission projects through 2039. Detailed project planning, design work and procurement for the Tranche 1 projects assigned or awarded to Ameren is underway, and we expect construction to begin in 2026. During 2023, Ameren was awarded the first two competitive Tranche 1 projects totaling approximately $100 million. Ameren submitted the third and final Tranche 1 competitive bid in October and expects the project to be awarded by June 2024.
When awarding the competitive projects to Ameren, MISO noted our sound route design, engineering and cost containment plan and innovative approach working with stakeholders as key factors in the winning bids. This is indicative of how we plan and develop all transmission projects. We believe our collaborative, customer-centric and community respectful approach to building and maintaining low-cost projects is why we should be directly assigned these projects in the future in both Missouri and Illinois. MISO expects to approve a set of Tranche 2 long-range transmission projects in the first half of 2024, which will again address Midwest region needs.
Turning now to Page 15. Looking ahead, over the next decade, we have a robust pipeline of investment opportunities of over $55 billion that will deliver significant value to all of our stakeholders by making our energy grid stronger, smarter and cleaner. Of course, our investment opportunities will also create thousands of jobs for our local economies. Maintaining constructive energy policies that support robust investment in energy infrastructure and a transition to a cleaner future in a responsible fashion will be critical to meeting our country's energy needs and delivering on our customers' expectations.
Moving to Page 16. Disciplined cost management and a focus on customer affordability is nothing new to us here at Ameren. And we expect 2024 to be another year of disciplined cost control and value realization from continuous improvement initiatives, which Mike will provide more details on in a few minutes. Through innovation and new efficiencies, we continue to target flat operations and maintenance expenses through 2028.
Moving to Page 17. To sum up our value proposition, we remain firmly convinced that the execution of our strategy in 2024 and beyond will continue to deliver superior value to our customers, shareholders and the environment. We believe our expectation of 6% to 8% compound annual earnings growth from 2024 through 2028, driven by strong rate base growth and supported by a strong balance sheet compares favorably with our regulated utility peers. I'm confident in our ability to execute our strategy and investment plans across all four of our business segments as we have an experienced and dedicated team with a track record of execution. Further, our shares continue to offer investors an attractive dividend, and we are positioned well for future dividend growth. Simply put, we believe this results in an attractive total return opportunity for shareholders. Again, thank you all for joining us today.
And I will now turn the call over to Michael.
