Martin J. Lyons Jr.
President and Chief Executive Officer at Ameren
Thanks, Andrew. Good morning, everyone, and thank you for joining us today. Before we cover our second quarter earnings results, I would like to discuss a series of major storm events which occurred in late June and July and disrupted power to a significant number of our electric customers across Illinois and Missouri. Collectively, this was the worst month for storm events Ameren has experienced in approximately 15 years. I would like to thank our customers for their patience as we work to restore their power. I'm also grateful for and proud of the Ameren team. Importantly, our team worked hundreds of thousands of man hours in challenging conditions with no significant employee injuries. These outages emphasize why we believe continued investment in grid reliability and resiliency remains as important and necessary as ever for our customers, which brings me to Page 4. Our dedicated team will continue to execute our strategic plan across all of our business segments, which entails proactively investing in energy infrastructure to deliver safe, reliable, clean, and affordable electric and natural gas services to our customers.
And moving to Page 5. Our strategic plan, integrates our strong sustainability value proposition, balancing the four pillars of environmental stewardship, positive social impact, strong governance, and sustainable growth. Here we summarize some of the many things we are doing for our customers, communities, coworkers, and shareholders. And today, we published our updated sustainability investor presentation called Leading the Way to a Sustainable Energy Future, available at amereninvestors.com, which more fully details how we have been effectively integrating our sustainability values and practices into our corporate strategy. I encourage you to take some time to read more about our strong sustainability value proposition.
Turning to Page 6. Yesterday, we announced second-quarter 2023 earnings of $0.90 per share compared to earnings of $0.80 per share in the second quarter of 2022. The key drivers of our second quarter results are outlined on this slide. As a result of our strong execution in the first half of the year, I'm pleased to report that we remain on track to deliver within our 2023 earnings guidance range of $4.25 per share to $4.45 per share.
Moving to Page 7. On our call in February, I highlighted some of our key strategic business objectives for 2023. We continue to make great progress as a result of our team's dedication. Outlined on Page 8, are a few key accomplishments this quarter. As you can see on the right side of this page, we've invested significant capital in each of our business segments during the first half of this year, increasing spending nearly 20% compared to the year-ago period. These investments will continue to improve the reliability, resiliency, safety, and efficiency of our system as we make a clean energy transition for the benefit of our customers.
During these first six months of the year, Ameren Missouri installed over 175,000 smart meters, 147 smart switches, and 32 underground cable miles and energized eight upgraded substations. Over 75% of our Ameren Missouri electric customers now have smart meters, allowing for better understanding of energy usage and choice amongst several time-of-use rates offered. In Illinois, our customers are benefiting from over 3,700 new or reinforced electric poles and 91 new smart switches on electric distribution circuits year-to-date, and we continue to focus on replacing mechanically-coupled gas service pipes. Further, our transmission business completed a total of 117 projects in the first half of the year, including line rebuilds, new transmission circuits, transformer replacements, generator interconnections, and other upgrades to aging infrastructure, supporting the economic delivery of renewable energy resources for our customers as well as the overall resiliency of the transmission system. This includes the transmission portion of our Intelligrid program which was completed this spring.
Ameren's Intelligrid network is a safe and secure private telecommunications network which enables the full functionality of smart grid technologies, giving Ameren greater awareness of system conditions, potentially reducing outage frequencies, and durations to milliseconds instead of minutes or hours. As a result, it will reduce costs and wait times for customers. I'd like to express my appreciation for the Ameren team's dedication, hard work, and collaboration so far this year to deliver value for our customers.
Moving on to regulatory matters. In June, the Missouri Public Service Commission approved constructive settlement terms of the Ameren Missouri electric rate review, which called for a $140 million annual revenue increase. New customer rates were effective July 9, representing an increase of approximately 2% compounded annually since April 1, 2017 prior to Ameren Missouri adopting plant-in-service accounting, or PISA. PISA, which is effective through at least 2028, allows Ameren Missouri to make meaningful and timely infrastructure investments, providing significant benefits to our customers. We also continue to make progress on the clean energy transition through the addition of solar to our generation portfolio.
Moving to Ameren Illinois. Our team has been working diligently with key stakeholders in our ongoing electric distribution multi-year rate plan, or MYRP, and natural gas rate reviews. We filed rebuttal -- answer rebuttal testimony in June and July, respectively, and are encouraged by the constructive progress made to date. Michael will discuss these in more detail in a moment. In June, the Ameren Illinois beneficial electrification plan approved by the commission in March was updated to include $65 million through 2025 for programs, incentives, and rates encouraging electric vehicle adoption and infrastructure development. In legislative matters, we were supportive of the transmission efficiency and cooperation law, or House Bill 3445, which was passed by the Illinois General Assembly in May. This bill would support timely and cost-effective construction of transmission projects, which I will touch on more on the next slide.
Moving onto operational matters. We remain focused on keeping customer bills as low as possible through disciplined cost management, continuous improvement, and optimizing our operating performance as we transform our business through investment to ensure we sustainably provide safe, reliable, and cleaner energy for our customers. Finally, in early May, the Callaway Energy Center was brought back online following a brief planned maintenance outage, which was completed safely and on schedule. The next scheduled Callaway refueling and maintenance outage is planned for this fall.
Turning to Page 9. As I just mentioned, in May, the Illinois General Assembly passed House Bill 3445 or the transmission efficiency and cooperation law which, if enacted, would provide incumbent utilities, including Ameren, the right of first refusal to build MISO long-range transmission planning projects approved by year end 2024. If enacted, HB 3445 will support the clean energy transition, benefiting our Illinois customers and communities and the broader MISO region. As the local utility, we believe we are well-positioned to efficiently build, operate, and maintain these transmission assets over time. The right of first refusal allows for the construction process to begin sooner and the resulting customer benefits to be realized much quicker. Importantly, we competitively bid each component of our projects and utilized local suppliers and contractors who support the local economy. In addition, we have long-term relationships with key stakeholders in the region and work closely with landowners and communities when citing transmission lines. The bill supports the timely and cost-effective construction of the MISO long-range transmission projects, including one Tranche 1 project approved in July 2022 and Tranche 2 projects expected to be approved in the first half of 2024. The legislation was sent to the Governor for signature on June 22, who has until August 21 to sign, veto, or abstain from acting on the bill. Should the Governor abstain, the bill will automatically become law.
Turning to Page 10. As we've discussed in the past, MISO completed a study outlining a potential road map of transmission projects through 2039. Detailed project planning, design work, and procurement for the Tranche 1 projects assigned to Ameren is underway, and we expect construction to begin in 2026. MISO requests for a proposal for its estimated $700 million of Tranche 1 competitive projects have been issued. We submitted our first bid related to the Orient-Denny-Fairport in May. The remaining two bids are due in October and November of this year. The proposal and evaluation process for the competitive projects is expected to take place over the course of 2023 and into mid-2024.
Looking ahead to Tranche 2, MISO's analysis of potential projects is well underway and will continue for the remainder of the year and into next year. MISO anticipates the Tranche 2 portfolio of projects will be approved in the first half of 2024. Continued investment in transmission is needed to facilitate the transfer capability of energy across the region as more dispatchable generation retires and renewables come online.
On another matter related to MISO, an independent review was completed in July at the request of the ICC, which evaluated the benefits of Ameren Illinois' continued participation in MISO compared to the PJM Interconnection regional transmission organization. The study considered reliability, resource adequacy, resiliency, affordability, equity, environmental impact, and general health, safety and welfare of Illinois residents. In conclusion, the independent consultant determine that Ameren Illinois remaining in MISO avoids significant economic costs for the customers of Ameren Illinois and Illinois residents more broadly.
Before moving on, I'm happy to say that the Illinois Power Agency's procurement events this past May, which set energy and capacity prices from June 1, 2023 through May 31, 2024, resulted in significantly lower prices compared to last year. In fact, we expect a decline of over 25% in Ameren Illinois' Basic Generation Service rate. For customers taking power from Ameren Illinois, assuming normal weather, this could result in double-digit percentage decreases on their overall electric bill providing welcome relief for customers.
Moving now to Page 11. As laid out in our June 2022 Missouri Integrated Resource Plan, or IRP, we're taking a thoughtful and measured approach to investing in new generation as our older energy centers near retirement. In support of this transition, we were pleased with the Missouri PSC approvals of certificates of convenience and necessity, or CCNs, for the Huck Finn Solar Project in February and the Boomtown Solar Project in April. Construction of Boomtown began in July and construction of Huck Finn is expected to begin in October. In June, we filed with the Missouri PSC for four additional CCNs totaling 550 megawatts of new solar generation across our service territory. These projects support our ongoing generation transformation, which calls for adding 2,800 megawatts of renewable generation by 2030, while maintaining the reliability and affordability our customers expect. These projects will bring over 900 new construction jobs and additional tax revenues and other payments to the area. Subject to approval, these solar projects are expected to go in service between 2024 and 2026. While the Missouri PSC is under no deadline to issue an order on these CCN filings, we expect decisions in the first quarter of 2024. Ameren Missouri is in the process of finalizing its next IRP, and we look forward to filing it with the Missouri PSC by the end of September. We believe the plan filed in 2022 includes a balanced and measured approach to adding renewables over time.
As we continue the transition to a cleaner and more diverse generation portfolio, we are focused on reliability of the system, in particular in the hot summer and cold winter months. As a result, we are evaluating the need for more dispatchable energy prior to 2030, which is also consistent with MISO's view of future generation capacity needs in our region. On Page 12, we look ahead to the next decade. We have a robust pipeline of investment opportunities, totaling more than $48 billion that will deliver significant value to all of our stakeholders by making our energy grid stronger, smarter, and cleaner. Of course, our investments also create thousands of jobs for our local economies. 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 and delivering on our customers' expectations.
Turning to Page 13. In February, we updated our five-year growth plan, which included our expectation of a 6% to 8% compound annual earnings growth rate from 2023 through 2027. This earnings growth is primarily driven by our strong compound annual rate base growth of 8.4%, supported by strategic allocation of infrastructure investment to each of our operating segments based on their constructive regulatory frameworks. Combined, we expect to deliver strong long-term earnings and dividend growth, resulting in an attractive total return that compares favorably with our regulated utility peers. I'm confident in our ability to execute our investment plans and strategies 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.
