David Bowler
Executive Vice President & Chief Financial Officer at American Water Works
Thanks, John, and good morning, everyone. Before I get started with results, let me first say how excited I am to assume the role of CFO at American Water and continue my work with this great team. I also look forward to meeting many of you at EEI in a couple of weeks.
Turning to slide nine. Let me provide a few more details on year-to-date results. Consolidated earnings were $4.17 per share, up $0.14 per share compared to the same period in 2023 and up $0.18 per share on a weather-normalized basis. As noted, earnings in 2024 were higher by an estimated $0.07 per share as a result of weather in the second and third quarters as compared to $0.11 per share of favorable weather in the second and third quarters of 2023. Excluding the impacts of weather, revenues increased by $0.84 per share, driven primarily by general rate case outcomes in 2023 and thus far in 2024.
And looking at operating costs, O&M was higher by $0.19 per share, driven primarily by employee-related costs and other increases to support growth in the business as we expected. Production costs related to fuel, power and chemicals were also slightly higher compared to this period in 2023. Next, general taxes, which are comprised of property and gross receipts taxes were higher by $0.06 per share with the increase in property tax tied to the level of capital investment and higher gross receipts tax driven by higher revenue, primarily in New Jersey.
Depreciation increased $0.21 per share and long-term financing costs increased $0.28 per share both as expected in support of our investment growth. The higher long-term financing cost includes interest on the $1 billion convertible note issuance from last June, the $1.4 billion senior note issuance in this February as well as $0.07 of dilution from last year's equity issuance.
And finally, we had $0.07 per share of additional interest income from the February 2024 amendment of the seller note related to the sale of Homeowner Services. As we've stated, we will continue to break this out quarterly so investors can track the ongoing growth of American Water from its core regulated strategy without this additional interest income. I will also note in the appendix, you will find details on the third quarter EPS, which has many of the same drivers as the year-to-date results.
On slide 10, I will review the latest regulatory activity in our states. First, on completed cases. We received an order from the New Jersey Commission in September approving without modification, our settlement agreement of an additional $80 million in annualized revenues that was effective September 15. The commission again approved an allowed return on equity of 9.6% and an equity layer of 55%. New Jersey continues to be a constructive state that is supportive of investment to serve our customers well.
Turning to active cases. You can see we have general rate cases in progress in seven jurisdictions. These cases are centered around the capital investments we have made and will continue to make in these states. In Missouri, we originally filed a rate case with a proposal for a full future test year, which the commission declined to accept at this time.
However, the commission provided an allowance for discrete adjustments that recognize investments through May 2025. While not the ruling we wanted in this case, we are encouraged by the conversations we've had with the commission and are continuing to work on a legislative path for a future test year in Missouri. Otherwise, our case in Missouri is progressing as expected.
In Illinois, we received a proposed decision from the administrative law judge on October 24, recommending a 9.84% return on equity and a 49% equity layer. A final order in this case is expected no later than December 17 with new rates implemented January 1, 2025.
In Virginia, on September 20, we filed a black box settlement with the Virginia Commission, which agreed to a $15 million annualized increase in revenues compared to our ask of $20 million. The settlement stipulation also specified a return on equity of 9.7%, which matches the current allowed return and a capital structure with an equity component of 45.67%, which compares to the current approved cap structure of 40.73%. The settlement remains subject to commission review and approval.
In California, we expect the final rate case decision on December 5 with new rates retroactive to January 1, 2024. As a reminder, we reached a partial settlement agreement in November 2023 with the CPUC's Public Advocates Office that would address our revenue requirement request but did not address rate design or certain other matters, including a request for continuation of a revenue stabilization mechanism.
Decoupling is a critical tool for conservation efforts in California as it supports reliability and protection of water supply, which will help shape the future economic and environmental health of the communities we serve there. Once we receive the order later this year, we will determine whether we need to pursue further recourse in the state related to decoupling.
On slide 11, we provide some considerations regarding our outlook for 2025 results and our newly established EPS guidance range of $5.65 to $5.75 per share. First, as you would expect, our growth will be driven by the returns on the capital invested to serve our customers. Cheryl will walk you through how our capital investment has grown and the specifics of the plan included in this update.
As we talked about previously, 2024 is year three of our accelerated capital plan following the 2021 HOS sale. So we see that ramp-up partially reflected in earnings in 2025, both from base rate cases and infrastructure mechanisms. Recent regulated acquisitions that are being incorporated into active or just completed rate cases will also drive growth next year.
Also critical to our growth strategy is our ability to prudently manage the operating cost it takes to serve our customers. While we continue to have a strong culture of operating efficiencies and cost management, we do expect O&M increases in 2025 from higher production costs, including purchased water, fuel and power, annual wage increases as well as additional costs to serve our customers from recent acquisitions.
The focus on operating cost efficiencies goes to the heart of the customer affordability construct we want to protect, which is closely aligned with the interest of regulators and ultimately investors in managing affordability of customer bills. The increases in general taxes, depreciation and long-term financing are driven by the continued capital investments in the system.
And while I'm not called out on this slide, I'd like to note that our Military Services group still adds incrementally to our earnings growth expectation as shown in our growth outlook. MSG's great work on 18 military installations it serves, has built trust and resulted in the US government allocating additional funds for improvement projects, driving increased revenues.
Turning to slide 12. I will provide a look at our balance sheet and liquidity profile before closing with our five-year financing plan update. Our total debt-to-capital ratio as of September 30, net of the $127 million of cash on hand remains at 56%, which is well within our target of less than 60%. Our expected dividend payout ratio for 2024 of 58% is also within our target range of 55% to 60%.
I want to affirm that investors can expect our company to continue to be focused on these targets over the long-term. With our continued focus on maintaining a strong balance sheet, we also remain confident that we will have access to capital for the foreseeable future. In fact, we just extended the maturity of our revolving credit facility, which has a capacity of $2.75 billion by one year to October 2029.
Our diversified banking relationships with some of the largest and strongest banks in the world, coupled with our fully regulated business model and strong credit ratings gives us great confidence around our liquidity. In addition, our laddered approach to long-term debt financing over the years has been very important in environments like the current one in managing cash flows and minimizing interest rate risk, which contributes to managing customer affordability and our short duration between general rate cases driven by our investment allows us to minimize the lag we may experience related to recovery of financing costs.
From this position of balance sheet strength, let's turn to slide 13 for a review of our five-year financing plan that will fund the increased capital plan. In our prior five-year plan covering 2024 to 2028, we expected a total of $1 billion of equity financing in the middle of that plan. That amount and timing remains unchanged. Our updated financing plan now covering 2025 to 2029 includes an estimated total of $2.5 billion of external equity issuances with the additional $1.5 billion expected near the end of the plan and all, of course, subject to market conditions.
The level and timing of anticipated external equity is tied very simply to our need to fund growth and maintain our strong financial position. Investors should expect equity financing to occur routinely as determined by our investment program, rate case cycle and is appropriate to maintain our strong balance sheet and credit metrics.
Since we are already in alignment with our targets for debt to cap and dividend payout, we have the flexibility to adjust these plans and respond to market conditions when they change for the benefit of customers and investors alike. Finally, I'll wrap up noting that our current financing plan for calendar year 2025 includes $1.5 billion to $2 billion of long-term debt financing and no equity financing.
With that, I'll turn it over to Cheryl to talk more about our five-year capital plan, our recent acquisition activity and outlook and affordability. Cheryl?
