Martin J. Lyons Jr.
President and Chief Executive Officer at Ameren
Thanks, Megan. Good morning, everyone. And thank you for joining us. I'm pleased to report that we continue to execute on our strategic plan across each of our business segments, delivering significant value to our customers and shareholders, while remaining focused on safety.
At the start of the year, we laid out some key initiatives we were focused on. As I sit here today, I can confidently say that we have been able to deliver on these through strong execution of our plan.
Starting with Ameren Missouri, in February, our new Ameren Missouri electric service rates took effect as a result of our recent rate review, which was constructively settled at the end of last year.
In June, we filed a change to our integrated resource plan, accelerating our planned clean energy investments, carbon emission reduction goals and our plan to achieve net zero by 2045.
The Midcontinent Independent System Operator, or MISO, approved a portfolio of long-range transmission projects, including significant projects in our operating footprint. And in August, Senate Bill 745 was enacted in Missouri extending the constructive Smart Energy Plan legislation that became law in 2018 out through 2028 with possible extension to 2033. I am pleased to say, as a result of these developments, in 2022, we were able to increase our 10-year investment opportunity pipeline from $40 billion to $48 billion.
Further, in our Ameren Illinois Electric Distribution business, in September, the Illinois Commerce Commission, or ICC, approved constructive performance metrics, which keep us on-track to file a multiyear rate plan next January.
And finally, at the federal level, passage of the Inflation Reduction Act will support the clean-energy transition, reducing the cost of related infrastructure investments for our customers in both Missouri and Illinois.
I would like to express appreciation for all the hard work of the entire Ameren team to advance these important achievements.
Additionally, I'd like to recognize our team's strong commitment to the communities we serve. This year we named our first Chief Sustainability, Diversity and Philanthropy Officer to further optimize our ESG impact. In October, she convened more than 1,000 Ameren team members and community leaders in-person and virtually for a diversity and inclusion summit, featuring many nationally-recognized leaders and speakers. Because of actions like this, in May, Ameren was recognized for the third time as DiversityInc's Top Rated Utility and made the overall top utilities list for the 14th consecutive year.
Another example of our team's commitment to our communities is our recently concluded 2022 company-wide United Way campaign, which raised approximately $1.7 million, funds which will go a long way towards supporting approximately 50 United Way organizations in our service territory. This is in addition to the nearly $2.6 billion United Way contribution made by Ameren. Again, thank you for all you do.
Moving now to quarterly results. Yesterday, we announced third quarter 2022 earnings of $1.74 per share compared to earnings of $1.65 per share in the third quarter of 2021. The year-over-year improvement reflected increased infrastructure investments across all of our business segments that will drive significant long-term benefits for our customers.
This page highlights the key drivers of our strong performance. Due to strong execution of our strategy, we have narrowed our 2022 earnings guidance to a range of $4 to $4.15 per share. This compares to our initial guidance range of $3.95 per share to $4.15 per share. Michael will discuss our third quarter earnings, 2022 earnings guidance and other-related items in more detail.
Moving to page 5. You will find our strategic plan reiterated. We continue to invest in and operate our utilities in a manner consistent with existing regulatory frameworks, enhance regulatory frameworks and advocate for responsible energy and economic policies and create and capitalize on opportunities for investment for the benefit of our customers, shareholders and the environment.
Turning now to page 6, which highlights our commitment to the first pillar of our strategy, investing in and operating our utilities in a manner consistent with existing regulatory frameworks.
Our strong long-term earnings growth guidance is primarily driven by our infrastructure investment and rate base growth plans, which are supported by constructive regulatory frameworks.
As you can see on the right-side of this page, consistent with our plans for 2022, we are strategically investing significant capital in each of our business segments in order to maintain safe and reliable operations as we transition to a cleaner energy grid. These investments are the key drivers of our ongoing Ameren Missouri and Ameren Illinois rate reviews.
Our energy grid is smarter, stronger, more resilient, safer and more secure because of the investments we've been able to make in all four of our business segments.
At Ameren Missouri, as a result of the significant investments we've been making under the Smart Energy Plan, we estimate over 6.5 million minutes of customer outages have been avoided in 2022. As always, while we invest to build a smarter, stronger, safer and cleaner energy grid for our customers, we continue to work diligently to manage our costs, leverage our investments and optimize our performance.
Moving now to page 7 and the second pillar of our strategy, enhancing regulatory frameworks and advocating for responsible energy and economic policies. As I mentioned, the Inflation Reduction Act, or IRA, was enacted in August, which, among other things, is designed to help reduce the cost of the clean energy transition. We are very pleased with the results as it provides tax credits for wind, solar and nuclear energy centers, energy storage, carbon capture utilization and storage, and hydrogen development. The incentives in the IRA align well with our Missouri Integrated Resource Plan and our Ameren-wide goal of reaching net zero carbon emissions by 2045.
Overall, the IRA will enhance affordability of the clean energy transition for our customers in Missouri and Illinois. Michael will discuss the expected impacts of the IRA in more detail in a moment.
Before moving on, I would also like to briefly touch on the Infrastructure Investment and Jobs Act, or IIJA, that was enacted earlier this year. We are actively collaborating with stakeholders in Missouri and Illinois toward accessing benefits of the federal funding provided through this act for our customers.
In July, we announced our collaboration with local businesses and community groups, academic institutions and various companies to form the Greater St Louis and Illinois Regional Clean Hydrogen Hub Industrial Cluster. This group is collaborating on infrastructure development and innovative technology deployment needed to drive decarbonization goals and collectively achieve greenhouse gas emission reductions for the region by 2035.
The IIJA established an $8 billion competitive program with the intent to fund six to eight regional hydrogen hubs across the country and provides for an additional $8.5 billion program for development of carbon capture and storage technologies. By next spring, our regional hydrogen cluster expects to apply for funding through the program to take part in advancing this potential renewable energy source for our region.
Turning to page 8. At the state level, our customers are benefiting as a result of Ameren Missouri's Smart Energy Plan, a multiyear effort to strengthen and modernize the energy grid. As I just mentioned, Missouri Senate Bill 745 passed earlier this year and became effective in August, enhancing and extending the sunset date on the current Smart Energy Plan legislation through December 31st, 2028 with an extension through December 31st, 2033 if the utility requests and the PSC approves.
We believe extending Missouri Smart Energy Plan will continue to benefit our customers and communities as we transform the energy grid of today to build a brighter energy future for generations to come, while creating significant economic development and jobs in the state.
Moving now to page 9 and an update on the Illinois energy legislation enacted in 2021. By January 20th of 2023, we plan to file a multiyear rate plan with the ICC for electric delivery service rates effective at the beginning of 2024. In late September, the ICC approved seven performance metrics, which will result in up to 24 symmetrical basis points of potential adjustments to the allowed return on equity under the multi-year rate plan.
These performance metrics have been designed to incentivize improvement in areas such as reliability, supplier diversity, affordability and customer service as we continue to make significant investments in the State of Illinois for the benefit of our customers and communities.
Turning to page 10 and the third pillar of our strategy, creating and capitalizing on opportunities for investment for the benefit of our customers, shareholders and the environment. Here we provide an update on the MISO long-range transmission planning process.
As we have discussed with you in the past, MISO completed a study outlining the potential roadmap of transmission investments through 2039, taking into consideration the rapidly evolving generation mix that includes significant additions of renewable generation based on announced utility integrated resource plans, state mandates and goals for clean energy or carbon emission reductions, among other things.
In July, MISO approved tranche one, a set of projects located in MISO North which it estimates to cost approximately $10 billion. Approximately $1.8 billion of these projects are in our service territory and have been assigned to Ameren. Preliminary design work and project planning are already underway. Construction is expected to begin in 2025, with completion dates expected near the end of this decade.
In addition to the assigned projects, MISO approved approximately $700 million of competitive projects that cross through our Missouri service territory, which provide additional potential investment opportunities. Request for proposals for the two competitive projects in our service territory are expected to be released in December 2022 and March 2023. Once released, we expect the proposal and evaluation process to take approximately 12 months.
We are well positioned to compete for and successfully execute these projects, given their location and our expertise constructing, operating and maintaining large regional transmission projects.
MISO continues its work on future tranches and it's indicated that an initial set of tranche two projects, also located in MISO North, is expected to be approved in the second half of 2023. Projects included in tranche three are expected to be located in MISO South, with approval scheduled by the end of 2024, while projects identified in tranche four are expected to improve transfer capability between MISO North and MISO South and will be studied upon approval of tranche three.
Turning to page 11. Looking ahead over the next decade, we have a robust pipeline of investment opportunities that will deliver significant value to all of our stakeholders by making our energy grid smarter, stronger and cleaner.
As a result of the long-range transmission projects just discussed as well as the addition of renewables and combined-cycle generation included in the change to the IRP filed in June, we increased our pipeline of investment opportunities to $48 billion over the next decade. We expect to update and roll-forward our five-year capital plan on our year-end call in February, and as always, we will evaluate all of our opportunities across all business segments to ensure we maximize value for our customers and shareholders.
When determining the timing of our projects, we remain mindful of portfolio diversification in both technology and geography, workforce and supply chain capacity, and the impacts to grid reliability, while aggressively managing costs.
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 in the future and delivering on our customers' expectations.
Moving now to page 12. We are focused on delivering a sustainable energy future for our customers, communities and our country. This page summarizes our strong sustainability value proposition and focus on environmental, social, governance and sustainable growth goals.
The change to the Ameren Missouri IRP filed in June supports a 60% reduction in carbon emissions by 2030 and an 85% reduction by 2040 compared to 2005 levels and our goal of net zero carbon emissions by 2045 is consistent with the objectives of the Paris Agreement and limiting global temperature rise to 1.5 degrees Celsius. Importantly, our energy policy advocacy and investment plans align with these goals.
In terms of governance, in October, the CPA-Zicklin Index once again named Ameren one of the top three companies in the utility industry for corporate political disclosures and accountability.
We also remain focused on supporting our communities, including utilizing our very robust supplier diversity program to help ensure we execute on an equitable clean energy transition. And we remain committed to helping our customers keep their bills as low as possible through robust energy efficiency programs and energy assistance for those in need.
Lastly, our strong sustainable growth proposition remains among the best in the industry. We have a robust pipeline of future investments that will continue to modernize the grid and enable the transition to a cleaner energy future.
I encourage you to take some time to read more about our strong sustainability value proposition. You can find our ESG-related reports at amereninvestors.com.
Turning to page 13. To sum up our value proposition, we remain firmly convinced that the execution of our strategy in 2022 and beyond will deliver superior value to our customers, shareholders and the environment.
In February, we issued our current five-year growth plan, which included our expectation of a 6% to 8% compound annual growth rate -- earnings growth rate from 2022 through 2026. This earnings growth is primarily driven by strong rate base growth, supported by strategic allocation of infrastructure investment to each of our operating segments based on their constructive regulatory frameworks. We expect Ameren's future dividend growth to be in line with our long-term earnings per share growth expectations and a payout ratio range of 55% to 70%.
In February 2022, Ameren's Board of Directors last increased the quarterly dividend by $0.04 to $0.59 per share or approximately 7%. We plan to deliver strong long-term earnings and dividend growth, which results in an attractive total return that compares favorably with our regulated utility peers.
I am confident in our ability to execute our investment plan and strategy across all four of our business segments as we have an experienced and dedicated team to get it done.
Again, thank you all for joining us today. And I will now turn the call over to Michael.
