Robert J. Durian
Executive Vice President and Chief Financial Officer at Alliant Energy
Thanks, John. Good morning, everyone. Yesterday, we announced 2022 GAAP earnings of $2.73 per share compared to $2.63 per share in 2021. On an adjusted basis, which excluded the impacts of temperatures and non-recurring adjustments, our earnings per share increased 6% from 2021. Looking year-over-year, the increase in 2022 was driven by higher earnings from capital investments at our Wisconsin utility and higher electric and gas margins. These favorable drivers were partially offset by higher financing and depreciation expenses.
Our diverse retail customer base supported the higher electric and gas margins in 2022. Residential temperature-normalized electric sales increased by almost 1%, largely due to strong customer growth. We also saw higher-than-expected sales from commercial customers with continued recovery from COVID for several business sectors in our service territory.
These were offset by lower industrial sales, primarily due to temporary plant shutdowns at some of our larger customers. In 2022, we also saw a better than expected temperature-normalized natural gas sales enabled by solid customer growth. The 2022 results we are sharing today are result of our consistent efforts to manage through and mitigate ongoing inflationary pressures. We're extremely proud that we kept 2022 utility operating expenses in line with 2021 and we were able to manage through and offset the negative impacts on earnings from rising interest and fuel costs.
Our work in 2022 accelerated strategic initiatives that will set us up for many years to come. We invested in economic development and electrification that will enable future sales growth. We updated our resource planning to maximize Inflation Reduction Act benefits and meet the new MISO seasonal reliability requirements. And we accelerated technology and automation investments to improve efficiency. As we look to 2023, we anticipate operating and maintenance expenses will be lower than 2022, continuing our trend of flat to declining O&M to enable cost savings for our customers.
We recorded a few non-recurring adjustments in 2022. These included $0.03 per share related to the Iowa State income tax rate change, $0.02 per share related to retirement plan settlement losses at the end of 2022 and $0.02 per share related to a reserve adjustment for American Transmission Company's base ROE changes.
Turning to 2023, we are positioned for another year of consistent 5% to 7% earnings per share growth. We are affirming our 2023 earnings guidance range with a midpoint of $2.89 per share, representing a 6% increase over 2022 adjusted earnings.
Our 2023 earnings drivers include earnings on customer investments in our core utility business and our continued efforts to reduce costs to increase customer value. Higher depreciation and financing expense associated with these investments will partially offset these positive drivers. Our efforts to support customer value through making smart investments in our future support our ability to consistently deliver strong financial results.
Other key assumptions for 2023 include growing sales by approximately 0.5% led by higher sales to our commercial and industrial customers. And we estimate a consolidated effective tax rate of 1%, with substantial production tax credits generated by our large wind portfolio and growing solar portfolio helping us to maintain lower effective tax rates for the upcoming year and several more years to come. The benefits from these production tax credits are passed on to our electric customers to help them manage their bills and therefore are largely earnings neutral.
Our financing plans for 2023 include a mix of new debt supplemented with modest new common equity to finance our investments in renewable projects and to support refinancing a $400 million debt maturity in 2023. In December, we launched an At The Market or ATM program as our intended approach for raising up to $225 million of new common equity throughout 2023, which is in addition to the $25 million of common equity that we expect to raise under our DRIP finance.
And in January, we entered into an interest rate swap to help reduce the risk of rising interest rates related to a portion of our variable-rate debt. The 2023 financing plan is driven by robust capital expenditure plans and supports our objective to maintain the capital structures at our two utilities consistent with our most recent regulatory decisions.
Next, I'll highlight this year's key regulatory initiatives. Last month, we provided additional testimony and evidence to the Iowa Utilities Board in IPL's advanced rate-making proceeding. This testimony and evidence further demonstrates that IPL is taking prudent actions to meet its customers' need for capacity by advancing the Iowa-based solar and storage projects that represent cost-effective solutions compared to alternative options available in the market.
We also informed the IUB that we have identified our self-developed Creston and Weaver projects as the second 200 megawatts of solar projects in addition to the 200 megawatts of build transfer solar projects at the Duane Arnold site.
To date, we have provided all the information requested by the IUB demonstrating that these projects are in the best interest of our customers. The IUB's decision this week to pause the advance rate-making process is procedural. We are working through both the regulatory and judicial processes in parallel and following the well-defined process to move these projects forward.
Next, we expect the IUB to file a response with the District Court in early March. We are confident these projects will provide considerable customer benefits, including reliability and resiliency, and remain committed to executing these projects while we await the IUB's final ruling.
In Wisconsin, we are awaiting a decision from the PSCW on WEC Energy's purchase of a portion of our West Riverside natural gas generating facility. We are also anticipating decisions from the PSCW in 2023 on WPL's request for 274 megawatts of battery storage. A 175 megawatts of these battery projects would complement two of WPL's solar projects and 99 megawatts of the battery projects will be located by our Edgewater Generating Station to take advantage of the existing infrastructure and transmission rights at that location.
Finally, we plan on filing a normal biennial electric and gas rate review in Wisconsin for test years 2024 and 2025 in the second quarter. In those states, we are also anticipating making filings to support additional resources for growing dispatchable generation capacity needed to improve seasonal reliability and meet customer energy needs. As always, we continue to move forward proposing energy investments that support both sustainability and resiliency, keeping our customers' needs top of mind.
I will conclude with a recap of the prominent legislation enacted this past year that has set us up for a solid future financial success while providing significant customer cost benefits. Alliant Energy is a strong beneficiary of the Inflation Reduction Act, as it directly supports our strategic plans to advance cleaner energy for our customers while providing significant customer and investor benefits.
The IRA enables additional rate base opportunities while also lowering customer costs with the shift from tax equity to full ownership for our planned solar and battery projects. In our November 2022 refreshed capital expenditure plan, we incorporated the benefits of the IRA along with the changes from the MISO seasonal construct, which provides visibility to our planned 8% rate base growth through 2026.
Another key element of the IRA improves our cash flows, through the ability to transfer renewable tax credits starting with those generated in 2023. With a large portion of wind and solar projects, we anticipate that we'll be able to transfer up to approximately $150 million of 2023 tax credits. As we continue to add more solar and battery projects over the next few years, the amount of annual transferable credits will continue to grow. We expect this to positively impact our credit metrics through acceleration of cash and reduction in future external financing needs and to lower our customer costs by reducing sharing costs on tax credit carryforwards.
The IRA will provide significant benefits for our customers and investors with no notable downsides as we expect to remain exempt from the alternative minimum tax for the foreseeable future. And finally, we also expect to benefit from new state tax legislation enacted in Iowa in 2022, which is lowering state corporate tax rates, enabling us to pass millions of dollars of annual savings onto our customers in Iowa for decades into the future. We appreciate your continued support of our company and look forward to meeting with many of you in the coming months.
At this time, I'll turn the call back over to the operator to facilitate the question-and-answer session.
