Julia Sloat
President and Chief Financial Officer at American Electric Power
Oh my goodness, Nick. Thank you. Thank you. Well, yes, all heart and all in. Absolutely, absolutely. So thanks, everyone, for joining us today. I know you have a real busy morning with multiple companies reporting. So we'll try to be as efficient as possible. But I'm going to walk us through the third quarter and year-to-date results, share some updates on our service territory load and economy and finish with commentary on credit metrics and liquidity, as well as some thoughts on our guidance, financial targets and recap our commitments to stakeholders. So I'm going to start on Slide eight which shows the comparison of GAAP to operating earnings. GAAP earnings for the third quarter were $1.33 per share compared to $1.59 per share in 2021. GAAP earnings through September were $3.76 per share compared to $3.90 per share in 2021.
For the quarter, I'd like to mention two reconciling items. First, there's a write-off of a Virginia regulatory asset associated with previously closed coal plants. This is a result of the Virginia Supreme Court opinion that affirmed the company's original write-down of those plants in 2019 and allowed APCo to increase its Virginia rates on a going-forward basis. The other reconciling item that I'd like to mention related to the sale of Kentucky Power. You'll recall that we announced on September 30, that we'd entered into an amendment to the stock purchase agreement with Liberty that among other items resulted in a reduced purchase price. We've reflected the additional loss on the expected sale of Kentucky Power and Kentucky Transco as a nonoperating cost. There's a detailed reconciliation of GAAP to operating earnings on Pages 16 and 17 of the presentation today.
Let's walk through our quarterly operating earnings performance by segment on Slide nine. Operating earnings for the third quarter totaled $1.62 per share compared to $1.43 per share in 2021. Operating earnings for the vertically integrated utilities were $0.97 per share, up $0.10. Favorable drivers included rate changes across multiple jurisdictions, the impact of the Virginia Supreme Court ruling related to our APCo triennial review, which you'll see on the waterfall today is a $0.06 catch-up of the 2017 through 2019 under earnings, a positive weather on our Western jurisdictions and increased transmission revenue.
These items were somewhat offset by an increase in depreciation, lower normalized load and increased income taxes. Just as a reminder on O&M and depreciation, as I mentioned on last quarter's call and included in our 2022 guidance details, because of a change in accounting related to the Rockport Unit two lease at I&M, we're seeing approximately $0.05 of favorable O&M offset by $0.05 of unfavorable depreciation in each quarter of 2022, but no consequential earnings impact. I'll talk a little bit more on load performance, but I'll get to that here in a minute, so bear with me. The Transmission and Distribution Utilities segment earned $0.32 per share, up $0.01 compared to last year.
Favorable drivers in this segment included rate changes and positive weather in Texas and Ohio and increased transmission revenue. Offsetting these favorable items were unfavorable O&M, depreciation and income taxes. The AEP Transmission Holdco segment contributed $0.33 per share, flat compared to last year. Favorable investment growth of $0.02 was somewhat offset by unfavorable income taxes. Generation and Marketing produced $0.14 per share, up $0.10 from last year. The positive variance is primarily due to higher retail margins, increased renewable wind production, higher market prices impacting generation margins and favorable income taxes.
Finally, Corporate and Other was down $0.02 per share driven by unfavorable interest expense, mainly as a result of the increase in short-term debt rates and increased O&M partially offset by reduced investment losses. The reduced investment losses are largely related to ChargePoint losses that we had in the third quarter of 2021 that have reversed this year. I'll note that we exited our position in ChargePoint during the third quarter so aside from the year-over-year comparison, we will not have any new volatility in this particular aspect of Corporate and Other -- the Corporate and Other segment relating to our direct ownership of ChargePoint shares since the position has been liquidated.
So let's go to Slide 10, and I'll talk about our year-to-date operating earnings performance. Year-to-date operating earnings totaled $4.04 per share compared to $3.76 per share in 2021. Operating earnings for vertically integrated utilities were $2.15 per share, up $0.28. Similar to the quarter, favorable drivers included rate changes across multiple jurisdictions, the resolution of the APCo triennial, positive weather in our western jurisdictions, increased transmission revenue and favorable normalized retail load. These items were somewhat offset by increased depreciation and lower off-system sales.
Once again, the change in accounting around the Rockport Unit two lease results in $0.17 of favorable O&M offset by $0.17 of unfavorable depreciation. The Transmission and Distribution Utilities segment earned $0.95 per share, up $0.10 compared to last year. Favorable drivers in this segment included rate changes in Texas and Ohio, favorable weather and increased normalized retail load and transmission revenue. Offsetting these favorable items were unfavorable O&M, property taxes and depreciation. The AEP Transmission Holdco segment contributed $0.95 per share, down $0.07 per share compared to last year. Favorable investment growth of $0.06 was more than offset by an unfavorable true-up of $0.07 and increased income taxes. As I mentioned last quarter, this is entirely consistent with our guidance. Our 2022 guidance had this segment down by $0.08 year-over-year as a result of the investment growth being more than offset by the annual true-up that occurred last quarter and some unfavorable comparisons on the tax and financing side.
Generation and Marketing produced $0.34 per share, up $0.14 from last year. The positive variance is primarily due to the sale of renewable development sites, improved retail margins, increased wholesale margins and land sales in the generation segment. Finally, Corporate and Other was down $0.17 per share, driven by lower investment gains, unfavorable interest and increased O&M. The lower investment gains are largely related to ChargePoint gains that we had in 2021 that reversed this year.
Turning to Slide 11. Let me provide an update on our normalized load performance for the quarter. Overall, AEP service territory has maintained significant momentum through the first three quarters of the year despite increasing headwinds impacting the macro economy. Starting in the lower right corner, normalized retail sales increased by 2.6% in the third quarter compared to last year. Once again, every operating company experienced positive year-over-year growth for the quarter. Furthermore, the growth in the commercial and industrial sales this quarter more than offset the modest decline in residential sales. For the year-to-date comparison, AEP's normalized retail sales increased by 3.1%, with growth spread across all major retail classes and operating companies.
In fact, we're on pace to experience the strongest year for load growth since the mid-1990s. And that's on top of the recovery year we had last year when the load increased by 2.1%. Moving to the upper left corner, normalized residential sales decreased by 0.8% in the third quarter but remained up 0.3% through September compared to last year. For the quarter, residential accounts increased by 0.4%, but this was offset by a 1.2% decline in weather-normalized usage. This is not surprising when you consider that last year, many of our customers were receiving extra income from the fiscal stimulus that is not happening in 2022. While the results were mixed by operating company, the strongest residential growth for the quarter was at SWEPCO.
Moving right, weather normalized commercial sales increased by 3.4% for the quarter and were up 3.8% for the year-to-date comparison. The growth in commercial sales was spread across nearly every operating company and eight of our top 10 commercial sectors. The fastest-growing commercial sector is data centers, where loads up 33% compared to last year for the quarter and for the year-to-date comparisons. Finally, focusing on the lower left corner, you'll see that the industrial sales posted another strong quarter, up 6% for the quarter and up 5.5% for the year-to-date comparison to last year. Industrial sales were up at nearly every operating company in most of our largest sectors.
We continued to experience double-digit growth in a number of key industries this quarter, including chemicals, manufacturing and oil and gas extraction. We also saw robust growth in primary metals manufacturing, pipeline transportation, paper manufacturing and coal mining. To summarize, the AEP service territory has maintained significant momentum through the first nine months of the year despite the challenging headwinds of inflation, higher interest rates, supply chain disruptions and the labor shortage. We know the Federal Reserve's approach to address inflation is designed to slow down the economy, which will eventually work its way through our footprint.
However, I'd like to remind you that there are things that we've done and will continue to do to help mitigate the impact of slowing economic conditions in our service territory. Specifically, we're talking about our economic development efforts. So turning to Slide 12. I want to highlight how our commitment to economic development is helping to sustain load growth even in the face of challenging economic conditions. The chart on this slide illustrates why this strategy is so important to us. The blue bars on this chart show the growth in gross regional product or GRP, for the AEP service territory over the past year. So you can see that it has been slowing over the period. In fact, for the third quarter, growth in AEP's GRP was essentially flat. However, the green bars here show that our industrial sales growth over the same period.
You'll notice that they've maintained their strength, even improving 6% without the help from GRP. How does this happen? That's because of our consistent and disciplined approach to economic development over the years. A lot of the growth in industrial load that we're seeing today is a consequence of economic development projects from previous years that are coming online this year. Examples include a large steel plant and an LNG processing facility that are now online in the AEP Texas service territory, a new chemicals plant that is now operating in Tennessee or a paper plant that is now producing in Oklahoma. And these are just a few of the many examples that we could mention.
But the key takeaway here is that AEP's commitment to economic development is what is allowing us to be on track to post our strongest year for load growth in decades despite an economy that is beginning to slow down. Another key point to remember is that you cannot turn it on or off like a light switch. Economic development projects take time to materialize. And the results that we see here today are largely the result of activities that occurred years ago. By making this a key component of our strategy, AEP is helping to mitigate the impact of economic downturns on our customers, our communities and our investors. And AEP's economic development team has a proven track record of helping bring these new customers to our service territory with an emphasis on jobs and load.
In fact, the AEP service territory has added over 106,000 jobs this year. So let's move on to Slide 13 to discuss the company's capitalization and liquidity position. We're doing well in this regard. On a GAAP basis, our debt-to-capital ratio held constant from the prior quarter at 61.4%. Taking a look at the left upper quadrant on this page, you'll see our FFO to debt metric stands at 14.5% on both the Moody's and a GAAP basis, which is an increase of 1.1% and 1.2%, respectively, the prior quarter. The primary reason for the increase is attributed to the completion of the PSO securitization efforts, which increased cash from operations.
As we stated on our last earnings call, we anticipated trending toward our FFO debt -- FFO to debt targeted range of 14% to 15% as the year progressed, and we currently sit comfortably within that range. You can see our liquidity [Indecipherable] in the lower left quadrant on the slide, our five-year $4 billion bank revolver and our two-year $1 billion revolving credit facility to support our liquidity position, which remains strong at $3.6 billion. On the qualified pension front, while our funding status decreased 0.3% during the quarter, it remains comfortably strong at 105.3%. Negative returns on the risk seeking and fixed income assets during the quarter were primary drivers of the funded status decrease.
However, rising interest rates cause plan liability to decrease, which provided a favorable offset to the negative asset returns. So we're in a good place in terms of funding. Let's go to Slide 14. So I can do a quick recap of today's message. The third quarter continues to provide a solid foundation for the rest of 2022 and allowed us -- at our recent Analyst Day, in narrow and raise our operating earnings guidance range to $4.97 to $5.07 with a midpoint of $5.02. As you know, AEP offers steady and predictable growth driven by our low-risk regulated business, robust electric infrastructure investment pipeline and our proven track record of managing cost pressures over time while growing our rate base.
This, along with the updated 2022 load forecast we provided at our October four Analyst Day and the Virginia Supreme Court ruling related to APCo's 2017 to 2019 triennial review, position us to navigate headwinds, remaining this year that you would expect, such as continued inflation, interest rates, weather risks, etc., which is why we maintained a $0.10 range when we recently lifted and tightened our 2022 guidance range.
We continue to be committed to our long-term growth rate of 6% to 7%, continued dividend growth and a strong balance sheet while we are derisking the company, focusing on the customer and actively managing the portfolio. So we really do appreciate your time and attention today. I know you guys are super busy with the all the earnings calls. So with that, I'm going to kick it over to the operator, so we can hear what's on your mind and take your questions.
