Trevor Ian Mihalik
Executive Vice President & Chief Financial Officer at Sempra
Thanks, Lisa. To begin, we've had several positive developments at our operating companies. In the third quarter, SDG&E filed an application with the CPUC to assess its cost of capital for 2022 as a result of the extraordinary event of the COVID-19 pandemic. In December, the CPUC issued a scoping memo with a final decision expected later this year. Also, the CPUC authorized a memorandum account effective January 1, 2022, to track any differences in revenue requirements resulting from the interim cost of capital decision expected later this year. Additionally, the CPUC is working through the implementation of a renewable natural gas procurement standard. We're excited about this development and view it as a significant step forward in advancing the future of cleaner fuels here in California. Lastly, SoCalGas recently announced a bold new vision to develop a proposed green hydrogen infrastructure system to serve the Los Angeles Basin called Angeles Link.
As contemplated, this project would be the nation's largest green hydrogen infrastructure system and will deliver green hydrogen to the country's largest manufacturing hub to help decarbonize electric generation, industrial processes, heavy-duty trucking and other sectors that are challenging to fully electrify. Shifting to Texas. Oncor set a company record for the number of new and active requests received for transmission interconnections in 2021 demonstrating the rapid growth in Texas and continuing opportunities for Oncor to grow its system. Oncor service territory continued to grow as well, with Oncor connecting approximately 70,000 additional premises in 2021. At Sempra Infrastructure, we signed two MOUs to advance our unique capability of delivering LNG into both the Atlantic and Pacific basins. The first with Entergy that Lisa discussed earlier and the second, an MOU with CFE to jointly develop Vista Pacifico LNG as well as a new regasification project in La Paz, Baja California Sur. Additionally, Sempra Infrastructure established a new credit facility in the fourth quarter and issued its inaugural investment-grade bonds last month, all with the intention of efficiently financing its growth along with internally generated cash flows. Please turn to the next slide where I'd like to go into additional detail on an update relating to Sempra Infrastructure.
Here, the key takeaway is that we're making progress on our announced sale of an additional 10% interest in the business to ADIA. This transaction, which is subject to customary closing conditions and third-party and regulatory approvals, valued Sempra Infrastructure at an enterprise value of approximately $26.5 billion, which was $1 billion higher than the KKR transaction. We expect to use the proceeds to fund utility capital, execute share repurchases and continue supporting improvements in the balance sheet. Please turn to the next slide where I'll review the financial results. Earlier this morning, we recorded fourth quarter 2021 GAAP earnings of $604 million or $1.90 per share. This compares to fourth quarter 2020 GAAP earnings of $414 million or $1.43 per share. On an adjusted basis, fourth quarter 2021 earnings were $688 million or $2.16 per share. This compares to our fourth quarter 2020 earnings of $668 million or $2.28 per share. Full year 2021 GAAP earnings were $1.254 billion or $4.01 per share. This compares to 2020 GAAP earnings of $3.764 billion or $12.88 per share. On an adjusted basis, full year 2021 earnings were $2.637 million or $8.43 per share. This compares favorably to our previous full year 2020 adjusted earnings of $2.342 billion or $8 per share.
Please turn to the next slide. The variance in full year 2021 adjusted earnings compared to the prior year was affected by the following key items: $78 million of lower earnings due to the sales of our Peruvian and Chilean utilities in April and June of 2020, respectively. $126 million of lower earnings from a CPUC decision in 2020 that resulted in the release of regulatory liabilities at Sempra California related to prior year's forecasting differences that are not subject to tracking in the income tax expense memorandum account. This was offset by $216 million due to higher earnings from Cameron LNG JV primarily due to Phase one achieving full commercial operations in August of 2020, and asset and supply optimization primarily driven by changes in natural gas prices and higher volumes. $139 million of lower losses at Parent and Other, primarily due to the lower preferred dividends from the mandatory conversion of preferred stock and lower net interest expense. $52 million of higher CPUC base operating margin, net of operating expenses at SDG&E and SoCalGas, $44 million charge in 2020 for amounts to be refunded to customers related to the energy efficiency program at SDG&E, $37 million of higher earnings at Sempra Texas Utilities, primarily due to increased revenues from rate updates to reflect increases in invested capital and customer growth. Please turn to the next slide.
We continue to see robust opportunities to invest in our Utilities and Infrastructure businesses, resulting in a $36 billion five-year capital plan, the largest in our history. And notably, a $4 billion increase over the prior plan we announced last year. This plan is anchored by $33 billion of Utility investments, representing nearly 94% of the total capital plan. For SDG&E and SoCalGas, safety and reliability continue to be at the forefront of our planned expenditures. This is important. Our investments in California centered around the state's regulatory priorities including wildfire safety and the integrity and safety of our gas infrastructure along with technology investments. Additionally, at Oncor, the capital plan addresses the strong organic growth. For example, the population of Texas increased more than any other state in 2021, continuing the need for further investments to support this growing demand. Please turn to the next slide. These capital investments in top-tier markets in North America are driving tremendous growth in our projected rate base. In 2017, we had $14 billion of rate base at the California utilities. And through adding our interest in Oncor as well as organic growth at both our California and Texas utilities, we grew our rate base to $41 billion in 2021 and expect to grow it even further to $62 billion by 2026. Just as importantly, we expect to support this strong projected growth without issuing common equity.
Notably, over the next five years, our rate base mix is not expected to change materially with approximately 70% of total rate base dedicated to electric infrastructure, which reflects how well positioned we are to continue supporting strong trends in electrification in our core utility markets. Please turn to the next slide where I'll provide additional details on the opportunities we have to efficiently fund our growing rate base. As we think about our financing strategy, we have multiple opportunities to efficiently fund the expansive growth that we're experiencing at our utilities. Over the past few years, you've seen us rotate capital to fund utility growth while also strengthening the balance sheet, finishing 2021 in a strong position with 47% total debt to capitalization and 18% FFO to debt. Looking forward, our financial plan is underpinned by a portfolio of strong operating cash flows that are backed by regulated returns or long-term contracts. Our robust utility capital plan is further supported by cash generated from Sempra Infrastructure where projected cash distributions to Sempra, combined with the proceeds from the sales to KKR and ADIA are expected to provide over $7 billion from 2021 through 2026. Turning to the dividend. We continue to target a payout ratio of approximately 50% to 60%, which allows us to aggressively invest in utility growth while supporting the dividend.
In addition to the dividend, we see opportunistic share repurchases as a way to efficiently return capital to shareholders from time to time. We remain focused on delivering shareholder value. And through this efficient financing strategy, we expect to deliver strong EPS and dividend growth without issuing external common equity. Please turn to the next slide where I'll discuss our near-term EPS guidance ranges and projected long-term EPS growth rate. We're reaffirming our 2022 EPS guidance range of $8.10 to $8.70 per share, and we're introducing our 2023 EPS guidance range of $8.60 to $9.20 per share. The aforementioned guidance includes plans to continue returning capital to our owners in the form of $1 billion of share repurchases. This would be an addition to the $500 million of share repurchases we recently completed. Now let me talk about our longer-term growth. Our historical execution, combined with the growth opportunities in front of us, give us confidence in providing a long-term EPS growth rate of an annual average of 6% to 8% starting at the midpoint of 2022 EPS guidance through 2026. This 6% to 8% growth is driven by our five-year capital plan and continued operational excellence across our businesses. It is anchored by an 8.5% projected rate base growth at our utilities and only includes projects currently in construction at Sempra Infrastructure.
Importantly, we see opportunities to outperform this projected growth rate through incremental investments across our three platforms. A few examples would include additional spending on energy storage, wildfire mitigation, electric vehicle infrastructure and related make-ready work and pipeline safety and reliability in California, further economic growth driving transmission and distribution expansion in Texas and lastly, executing on incremental LNG and other development projects at Sempra Infrastructure that are currently outside the plan. Please turn to the next slide where I'll highlight our historical execution. This slide is a good depiction of how we've historically met or exceeded our published EPS guidance ranges and done so consistently, reflecting our long track record of disciplined capital allocation, thoughtful execution and a commitment to deliver on our financial projections. Please turn to the next slide. Let me summarize our investment proposition. We've invested time and energy in building a high-performing infrastructure company that is well positioned in some of the fastest-growing markets in North America, overlaid with a commitment to capital discipline, we have a track record of operational excellence, disciplined financial execution and dedication to consistently returning value to our shareholders in the form of dividends and opportunistic share repurchases.
Bottom line, we're excited about the future of Sempra and the critical role that our infrastructure will play in supporting future economic growth in the energy transition. Please turn to the last slide. Over the last four years, we've continued to update our portfolio with a view towards prioritizing markets with strong fundamentals and constructive regulation and simplifying our business model to improve execution and building scale, financial strength and a high-performing culture to deliver improved financial results. With the benefit of those strategic efforts, it allowed us to end 2021 in a strong position and looking forward we have three integrated platforms with improved visibility to future growth. With that, this concludes our prepared remarks. We'll now stop and take your questions.
