Greetings and welcome to Ameren Corporation's second quarter earnings conference call. At this time, all participants are on a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to turn the conference over to your host, Megan McPhail, Manager of Investor Relations. Thank you. You may begin.
Thank you and good morning. On the call with me today are Marty Lyons, our President and Chief Executive Officer and Michael Moehn, our Executive Vice President and Chief Financial Officer, as well as other members of the Ameren management team joining us remotely. Marty and Michael will discuss our earnings results and guidance, as well as provide a business update. Then we will open the call for questions. Before we begin, let me cover a few administrative details. This call contains time-sensitive data that is accurate only as of the date of today's live broadcast and redistribution of this broadcast is prohibited. To assist with our call this morning, we have posted a presentation on the amereninvestors.com homepage that will be referenced by our speakers.
As noted on page 2 of the presentation, comments made during this conference call may contain statements that are commonly referred to as forward-looking statements. Such statements include those about future expectations, beliefs, plans, projections, strategies, targets, estimates, objectives, events, conditions and financial performance. We caution you that various factors could cause actual results to differ materially from those anticipated. For additional information concerning these factors, please read the forward-looking statements section in our news release we issued yesterday and the forward-looking statements and risk factors sections in our filings with SEC. Lastly, all per-share earnings amounts discussed during today's presentation, including earnings guidance, are presented on a diluted basis unless otherwise noted. Now here's Marty, who will start on page 4.
Thanks, Megan. Good morning, everyone and thank you for joining us. We had a solid quarter and we're excited to share an update today on a number of recent developments. As always, our team continues to work hard to execute our strategic plan across all of our business segments, allowing us to deliver significant value to our customers and shareholders. Yesterday, we announced second quarter 2022 earnings of $0.80 per share, compared to earnings of $0.80 per share in the second quarter of 2021. The year-over-year results reflected increased infrastructure investments across all our business segments that will drive significant long-term benefits for our customers. The key drivers of our second quarter results are outlined on this slide.
I am pleased to report that we remain on track to deliver solid earnings growth in 2022 and are reaffirming our 2022 earnings guidance range of $3.95 per share-$4.15 per share. Michael will discuss our second quarter earnings, 2022 earnings guidance and other related items in more detail later. Moving to slide 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-based growth plans, which are supported by constructive regulatory frameworks. You can see on the right side of this page, we continue to strategically invest significant capital in each of our business segments in order to maintain safe and reliable operations as we transition to a cleaner energy grid. Regarding regulatory matters, earlier this week, Ameren Missouri filed an electric rate review with the Missouri Public Service Commission, requesting a $316 million annual revenue increase. This request reflects significant modernization upgrades to the electric grid for system reliability, resiliency and safety, as well as investments to support the transition to cleaner energy for the benefit of our customers and local communities.
In our Illinois Electric business, we recently requested a $84 million revenue increase in our required annual electric distribution rate filing. Again, key drivers for this rate increase include significant investments to enhance the grid for our customers and communities, which will deliver long-term benefits. Michael will cover these in more detail a bit later and we will provide updates on these proceedings as they develop later this year. As we invest to build a safer, stronger, smarter and cleaner energy grid for our customers, we also continue to work diligently to manage our costs, leverage our investments and optimize our performance. Moving now to page seven and the second pillar of our strategy, enhancing regulatory frameworks and advocating for responsible energy and economic policies.
Without question, energy policy at the federal and state levels and constructive regulatory frameworks that incentivize meaningful and needed infrastructure investments have never been more important as we look to reliably and securely transition to a cleaner energy future as affordably as possible. As you know, late last week it was announced that Senators Schumer and Manchin reached agreement on proposed legislation that would, among other things, extend significant incentives for clean energy development and deployment. Given the clean energy transition underway in Illinois and Missouri, as highlighted by our recent change to the Ameren Missouri Integrated Resource Plan filed with the Missouri PSC in June and our goal of reaching net zero carbon emissions by 2045, we are very excited about the potential benefits of this legislation.
Specifically, the credits proposed for wind, solar, storage, nuclear, carbon capture utilization and storage or CCUS and hydrogen will align very well with the significant investments proposed in the Missouri IRP. Importantly, the benefits of these tax incentives will ultimately lower the cost of the clean energy transition for our customers in Missouri and Illinois over time. These potential tax credits, when coupled with the significant clean energy funding made available through the Infrastructure Investment and Jobs Act passed earlier this year, will drive significant long-term benefits for our customers, communities and the country. I will also note that the proposed legislation includes a minimum corporate income tax for public companies with pre-tax book earnings above $1 billion.
At the state level, as part of Ameren Missouri's Smart Energy Plan, a multi-year effort to strengthen the grid, our customers are benefiting from stronger poles, more resilient power lines, smart equipment, including modern substations and upgraded circuits to better withstand severe weather events and restore power more quickly. As we mentioned on our first quarter earnings call, Missouri Senate Bill 745, which enhances and extends the Smart Energy Plan, passed earlier this year with strong majority support in the General Assembly. The bill was later signed by Governor Parson. We believe extending Missouri's 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 and while creating significant economic development and jobs in the state.
Moving to page 8 for Illinois legislative matters, we continue to make progress working towards the implementation of the Energy Transition Act enacted last year, including the performance metrics required by the legislation. Ameren Illinois has proposed eight performance metrics, each worth 3 basis points of incentives for a total of 24 basis points of symmetric equity return upside or downside potential. The ICC staff is mostly aligned with Ameren Illinois on the performance metrics and has proposed a range of 20-24 total basis points of increased or decreased return opportunities. We expect a final order from the ICC by late September in the performance metrics docket. We look forward to the ICC's order and filing our first multi-year rate plan next year, as we believe this legislation will support important energy grid investments and deliver value to customers.
Turning to page nine for an update on our plan to accelerate the retirement of the Rush Island Energy Center. Last month, in response to our notification to MISO of our intention to retire the Energy Center, MISO issued its final Attachment Y report designating the generating units at the Rush Island Energy Center as system support resources. MISO also concluded that certain mitigation measures, including transmission upgrades, should occur to ensure reliability before the Energy Center is retired. Those transmission upgrade projects have been approved by the MISO and we have started the design and procurement process associated with the upgrades, which we expect to complete by late 2025. In the interim, until Rush Island can be retired, Ameren Missouri has proposed limiting operations at the Energy Center.
The district court is under no obligation or deadline to issue a rule modifying its remedy order to reflect the MISO SSR designation or proposed interim operating parameters. The original 31 March 2024 compliance date remains in effect unless extended by the court. We expect a decision in the near term. Turning now to page 10 for an update on changes to our 2020 Ameren Missouri Integrated Resource Plan, which we filed in June. Our IRP is a 20-year energy plan created to ensure reliability for our customers for years to come. I'm excited to share with you that these changes to the plan accelerate our clean energy additions, reduce carbon emissions even further in the short term and accelerate the company's net zero carbon emissions goal by five years.
Specifically, the plan targets a 60% reduction in carbon emissions below 2005 levels by 2030 and an 85% reduction by 2040. By 2045, our goal is to achieve net zero carbon emissions across all of Ameren. The new goals include both scope one and scope two emissions, including other greenhouse gas emissions of methane, nitrous oxide and sulfur hexafluoride. We plan to achieve these goals by making significant investments in renewable energy, including 2,800 megawatts of renewable energy by 2030, representing an investment opportunity of $4.3 billion. This is an increase of $1 billion from our 2022 or excuse me, our 2020 IRP. By 2040, in total, the plan includes 4,700 megawatts of renewable generation for a total investment opportunity of $7.5 billion.
The plan also includes 1,200 megawatts of gas combined cycle generation by 2031. An investment opportunity of $1.7 billion, which will allow us to safely and reliably advance the net retirement timeline of our fossil generation, including the accelerated retirement of the Rush Island Energy Center. Further, the plan includes 800 megawatts of battery storage by 2040, representing an investment opportunity of $650 million. We expect to add 1,200 megawatts of a clean dispatchable resource by 2042 and to also seek an extension of the operating license of our carbon-free Callaway Nuclear Energy Center beyond the current expiration date of 2044. These changes to the 2020 IRP will drive our ability to meet customers' rising needs and expectations for reliable, affordable and clean energy sources.
Achieving these goals is dependent upon a variety of factors, including cost-effective advancements in innovative clean energy technologies and constructive federal and state energy and economic policies. We have issued a request for proposal to solicit solar and wind projects that will allow us to take the next steps and deliver the best value for our customers. One thing is clear, our IRP includes significant incremental investment opportunities and we're very excited as we continue to execute our clean energy transition plan. Turning now to page 11. Speaking of executing our clean energy transition plan, in July, we filed certificates of convenience and necessity or CCNs, with the Missouri Public Service Commission for two solar project acquisitions. Boomtown, a 150-megawatt solar energy center located in Southern Illinois, is expected to be in service by the fourth quarter of 2024.
Huck Finn, a 200-MW solar energy center located in eastern Missouri, would be Ameren's largest solar project to date, generating more than 25 times the amount of energy of Missouri's largest existing solar facility. This solar project is also expected to be in service by the fourth quarter of 2024. While the Missouri PSC is under no deadline to issue an order on the CCN filings, we expect decisions by March and April 2023 for the 200-MW and the 150-MW facilities, respectively. Looking ahead, we expect to announce further agreements for the acquisition of renewables between now and the first half of 2023. Turning to page 12 and the third pillar of our strategy, creating and capitalizing on opportunities for investment for the benefit of our customers, shareholders and the environment.
This page provides an update on the MISO long-range transmission planning process. As we have discussed with you in the past, MISO completed a study outlining a 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, as well as electrification of the transportation sector, among other things. In July, MISO approved Tranche One, a set of projects located in MISO North, which it estimated to cost more than $10 billion. Of these projects, approximately $1.8 billion represent projects in our service territory that have been assigned to Ameren. We expect to refine the scope, cost estimates and timeline for these projects over the remainder of this year.
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. We are well-positioned to compete for and successfully execute on these projects, given the location of the projects and our expertise constructing large regional transmission projects. Later this month, MISO is expected to post a schedule outlining the RFP process for competitive bidding, with the first RFP expected to be issued by late September. The competitive bidding process is expected to take 12-24 months. For the projects assigned to Ameren, we expect the capital expenditures to begin in 2025, with the completion dates expected near the end of this decade.
MISO has also begun work on three additional tranches and has 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 13. 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 stronger, smarter and cleaner.
We have updated the investment opportunities to reflect the additional renewable and combined cycle generation included in the change to the IRP filed in June. We now expect over $48 billion of investment opportunities over the next decade. 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 14. We're focused on delivering a sustainable energy futures for our customers, communities and our country. This slide 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 our goal of net zero carbon emissions by 2045 and is also consistent with the objectives of the Paris Agreement in limiting global temperature rise to 1.5 degrees Celsius. We also remain focused on supporting our communities, including our very robust supplier diversity program. 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 a 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 all of our ESG-related reports at amereninvestors.com. Turning to page 15.
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 five-year growth plan, which included our expectation of a 6%-8% compound annual earnings growth rate from 2022 through 2026. This earnings growth is primarily driven by strong rate-based 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 within a payout ratio range of 55%-70%. We expect to deliver strong long-term earnings and dividend growth, which result 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. Finally, turning to page 16. I would like to take the opportunity to congratulate Richard Mark on his retirement and extend my gratitude for his many contributions made to Ameren and our communities. Richard served in several leadership positions during his 20-year career at Ameren and was influential in the advancement of the electric and natural gas distribution grids throughout Southern and Central Illinois, including installing advanced technologies, improving reliability and creating thousands of jobs, in addition to his strong community engagement. Thank you, Richard and I wish you well in your retirement. I would also like to introduce to you Ameren Illinois' new president, Lenny Singh.
Lenny brings more than 30 years of utility experience serving in both electric and natural gas operations, most recently as Senior Vice President of Consolidated Edison Company of New York. Over the course of his career, Lenny has focused on operational excellence and value creation, prioritizing safety, customer satisfaction, continuous improvement, action and accountability. I look forward to working with Lenny as he builds on Ameren Illinois' success as we work to safely, reliably and securely drive the clean energy transition in the state of Illinois. Again, thank you all for joining us today and I will now turn the call over to Michael.
Thanks, Marty and good morning, everyone. Yesterday, we reported second quarter 2022 earnings of $0.80 per share compared to $0.80 per share for the year ago quarter. Slide 18 summarizes key drivers impacting earnings at each segment. I'd like to take a moment to highlight a few key variances for the quarter. Earnings in Ameren Missouri, our largest segment, benefited from higher electric retail sales, driven by warmer early summer temperatures during the quarter compared to near normal temperatures in the year ago period and higher electric rates. The positive factors impacting earnings in Ameren Missouri were more than offset by, among other things, higher operations and maintenance expenses. The higher O&M reflected unfavorable market returns in 2022 on company-owned life insurance investments compared to favorable market returns in the year ago period.
In addition, the higher O&M expenses were driven by the absence of refined coal credits in 2022, which had been a benefit to our coal-fired energy centers in 2021 and prior years and the increased transmission and distribution expenses, including storm costs. The reduction in refined coal credits was anticipated and reflected in the new electric service rates effective earlier this year. In fact, year-to-date O&M costs, excluding COLI, are largely in line with what we expected when we provided guidance in February. We remain focused on disciplined cost management for the second half of the year. Before moving on, I'll touch on sales trends for Ameren Missouri and Ameren Illinois Electric Distribution year-to-date. Weather-normalized kilowatt-hour sales to Missouri residential and commercial customers increased about 0.5% and 1.5% respectively, while weather-normalized kilowatt-hour sales to Missouri industrial customers decreased about 0.5%.
Weather-normalized kilowatt-hour sales to Illinois residential and commercial customers increased about 1.5% year-to-date. Weather-normalized kilowatt-hour sales to Illinois industrial customers increased about 0.5%. Recall that changes in electric sales in Illinois, no matter the cause, do not affect our earnings since we have full revenue decoupling. Turning to page 19, I would now like to briefly touch on key drivers impacting our 2022 earnings guidance. We've delivered solid earnings in the first half of 2022 and are well-positioned to finish the year strong. As Marty stated, we continue to expect 2022 diluted earnings to be in the range of $3.95-$4.15 per share. Select earnings considerations for the balance of the year are listed on this page and are supplemental to the key drivers and assumptions discussed on our earnings call in February.
As we reflect on our earnings for the full year results, the benefits we've seen from weather during the first half of the year and from the higher expected 30-year Treasury rates are offset in part by unfavorable market returns on company-owned life insurance, as well as higher than expected short-term and long-term borrowing rates. I encourage you to take these into consideration as you develop your expectations for the third quarter and full year earnings results. Turning now to page 20 for an update on regulatory matters, starting with Ameren Missouri. Earlier this week, we filed for a $316 million electric revenue increase with the Missouri Public Service Commission. The request includes a 10.2% return equity, a 51.9% equity ratio and a 31 December 2022 estimated rate base of $11.6 billion.
Drivers of the requested increase are investments out on their Smart Energy Plan, including increased cost of capital and depreciation expense, as well as increased net fuel expense due to reduced off-system sales driven by expected reduced operations at Rush Island. As Marty noted earlier, customers are benefiting from investments made under the Smart Energy Plan to strengthen the grid, including infrastructure upgrades bolstering reliability and resiliency, installation of smart meters and an improvement in reliability of up to 40% on circuits with new smart technology upgrades. We expect a Missouri PSC decision by June 2023 and new rates to be effective by 1 July 2023. We look forward to working with all key stakeholders on this request. Moving to page 21, in Ameren Illinois regulatory matters.
In April, we made our required annual electric distribution rate update filing. Under Illinois performance-based ratemaking, these annual rate updates systematically adjust cash flows over time for changes in cost of service and true up any prior period over or under recovery of such cost. In late June, the ICC staff recommended a $60 million base rate increase compared to our updated request of an $84 million base rate increase. The $24 million variance is primarily driven by a difference in the common equity ratio, as we proposed 54% compared to the ICC staff's recommended 50%. For perspective, the order received from the ICC last December included a common equity ratio of 51%. An ICC decision is expected in December, with new rates expected to be effective in January 2023.
On page 22, we provide a financing update. We continue to feel very good about our financial position. On 1 April , Ameren Missouri issued $525 million of 3.9% green first mortgage bonds due 2052. Proceeds of the offering are used to fund capital expenditures and refinance short-term debt. In order to maintain a strong balance sheet while we fund our robust infrastructure plan consistent with the guidance in February, this year we expect to issue approximately $300 million of common equity under our at the market equity program. We have fulfilled all of our 22 equity needs through the forward sales agreement entered into as 1 April and we expect to issue 3.4 million common shares by the end of this year upon settlement.
Further, as of 12 July approximately 225 of the $300 million of equity outlined in 2023 has been sold forward under that program. Finally, turning to page 23. We have had a solid first half and we expect to deliver strong earnings growth in 2022 as we continue to successfully execute our strategy. Today, we've outlined significant and exciting investment opportunities over the back half of our current capital plan and beyond that are not reflected in our 2022 to 2026 capital plan. Consistent with our approach in the past, we will step back and take a comprehensive look at our investment opportunities and provide our five-year capital plan for 2023 through 2027 during our year-end conference call in February.
As we look to the longer term, we continue to expect strong earnings per share growth driven by robust rate-based growth and disciplined cost management. Further, we believe this growth will compare favorably with the growth of our regulated utility peers. The bottom line is that we are well-positioned to continue executing our current plan. Ameren shares continue to offer investors an attractive dividend. In total, we have an attractive total shareholder return story that compares very favorably to our peers. That concludes our prepared remarks. We now invite your questions.
Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question comes from Shar Pourreza with Guggenheim Partners. Please proceed with your question.
Hey, good morning, Marty.
Morning, Shar. How are you today?
Not too bad, not too bad.
Very good.
Friday. Very good. Marty, let me ask, just thank you for the visibility, obviously on the Tranche One opportunities but just a two-part question here. What's your, I guess, confidence level on the competitive slice? Or how should we be thinking about maybe your ability to capture that? Is there a technical or cost of capital facet to your advantage? And then does this, how does this sort of interact with your prior CapEx and sort of rate base guide? I mean, some of the projects do break ground in 2025, so could these be accretive to your 6%-8%? Thanks.
Yeah, you bet, Shar. Good questions. You're right, I hope you have a good Friday and a good weekend. Back to your questions. You know, in terms of the competitive projects coming out of Tranche One, as we highlighted, you know, a little over $700 million of those. As we mentioned in our prepared remarks that we do believe we're well-positioned to compete for and successfully execute those. I think the bottom line is that we believe we're really well-positioned to efficiently build, operate and maintain those assets over time. You know, the projects that are competitive are within our footprint. They're places where we have strong relationships with local communities, you know, regulators, suppliers, contractors, et cetera.
You know, we've been operating in this area for many years, so we, you know, we know the land, we know the environmental conditions and issues. You know, I'd tell you too, that we've been working, you know, for several years now. As you know, we've developed billions of dollars' worth of transmission projects and we've been working over time with suppliers and contractors to really bring down the cost of construction. You know, because these projects, these competitive projects are contiguous with other assets that we own and operate, we think we're really well-positioned to operate and maintain these assets, you know, at a low cost over time. You know, those are some of the reasons that, you know, we believe at the end of the day, we're well-positioned to compete and execute on those projects.
You know, we look forward to, you know, participating in that competitive process over time. You know and then your second question really got to some of the incremental, you know, capital into our plan. I'll let Michael comment on that. You're right, in terms of the $1.8 billion worth of projects that were assigned to us, we do again expect to begin those in 2025. You know, those cash flows in capital expenditures to be incurred over between 2025 and the end of the decade. You know, Michael, any, you know, comments in terms of the added CapEx?
Yeah. Hey. Good morning, Shar. You know, i think Marty said it well. You know, in terms of the capital plan itself, Shar and we've talked about this, I mean, I think that, you know, it's great to start getting some clarity here around these different projects. As Marty said, you know, I think some of this could even benefit the five-year plan. As you know, as we have indicated, you know, we're gonna step back and what we typically do with our cadence is, you know, we'll update all of this, you know, in the February timeframe. My sense is, you know, this has got the ability to be, you know, accretive to our five-year capital plan, as well as just additive to, you know, to the overall runway, as we talk about the growth story.
I think as we y ou know, if you kind of remember, if you reflect back on the $48 billion that we have there now, you know, that number used to be 40. We captured about $5 billion associated with transmission projects. You know, that was broadly to try to look at these LRTP projects over the next 10 years. I think we got it in there. Now it's a matter of where it, you know, just ends up by year, if that makes sense.
It does.
Yeah [crosstalk] you know, Shar. Sorry. I'm sorry.
Yeah. Shar, this is Marty. I think Michael, you know, touched on a good thing. You know, as we started the year, you know, we looked ahead to Q2 and, you know, we noted that there were gonna be some important updates in Q2 and I think that's exactly what came through. You know, in terms of the integrated resource plan in Missouri, you know, that indicated about $2.7 billion of incremental spend between now and 2031. Then as Michael said, the LRTP adding, you know, another, you know, $1.8 billion of expenditures that we have assigned to us, as well as this potential for $700 million of additional competitive projects. You know, as Michael said, you know, all those things, you know, gave us confidence to add that $8 billion to, you know, to that, long-term capital expenditure outlook.
Perfect. Perfect. Just, I know you just, Marty, touched on it a little bit on just the Inflation Reduction Act. I mean, obviously, Sinema proposed some changes. I think we go to a vote on Saturday. Can you just touch a little bit on the tax side? I mean, some of the utilities have talked about a technical fix with the 50% AMT. Are you and sort of EEI lobbying against it? Could you get a carve-out? If there is an enactment of that AMT, how do we sort of think about the cash flows and rate-based growth impact and the recovery timing? Thanks.
Well, Shar, there was, there's a lot there and as you noted, you know, even based on the reports this morning, you know, there seems to be some moving pieces as it relates to the corporate minimum tax. Let me just say this overall about the legislation. You know, we're excited about the potential tax credits in the legislation, especially the wind and the solar, given the 4,700 megawatts of renewables that we looked at in Missouri by 2040 based on our integrated resource plan. So, you know, that's all pretty exciting. Even net of CMT impact, you know, we think the legislation's good for Ameren, for our customers in both Missouri and Illinois because it really, you know, should lower the cost of the clean energy transition in both states.
You know, that's not even mentioning some of the other positives in there, whether it's the credits for nuclear storage, CCUS, hydrogen, you know, things we talked about on the call, all of which align with our, you know, long-term resource plan. You know, that's all really good. You know, other things you're aware of, you know, things like the PTC for solar is a positive versus the prior ITC and transferability provisions, which are, you know, things that, you know, we really think could, you know, help us to pass the value associated with some of these tax credits to our customers more swiftly. Like I said, net, you know, we think that, you know, the legislation overall is good and will help facilitate a lower cost transition to this, clean energy.
You know, as it relates to the CMT, you know, it is applicable to us, given that we have pre-tax book income of greater than $1 billion. Probably premature to, you know, speculate on exactly what that impact would be given, as you mentioned, some of the moving pieces that aren't even, you know, really clear to us at this particular time. At the end of the day, we do think, you know, based on what we have seen, we do believe that the, you know, cash flow impacts would be manageable and as would and Michael can comment on this better but also the, you know, the impacts on credit metrics and credit ratings. You know, that's, I guess, where we stand on things, Shar. Hopefully, I answered all of your questions.
Michael, you have anything to add?
Yeah. I mean, Marty, I think you know at a high level you gave it good justice there. I mean, I think overall, we do see it as being manageable. There are a lot of moving pieces here. I think that's why we're trying to stay away from the specifics. You know, as we look at it and model it out, we do think, as Marty said, both from a cash flow as well as any sort of impact, you know, Shar, on our FFO to debt metrics, that it definitely is something that's manageable. I think the important thing to remember is just the net benefit to customers, you know, just from an overall credit standpoint, certainly on the Missouri side, as you think about this clean energy transition that we're about to go through.
Fantastic, guys. Listen, have a great weekend. Appreciate the disclosures.
You too, Shar.
Our next question comes from Jeremy Tonet with JP Morgan. Please proceed with your question.
Hi. Good morning.
Morning, Jeremy.
Just wanted to round out the MISO Tranche One conversation a little bit more. Would Ameren entertain the notion of pursuing competitive processes beyond the $700 million identified or is that the extent of what you would consider? Also, we've heard about there being kind of some incremental upside to these projects, maybe 10%-15% of CapEx additionally for kind of ancillary components to these projects. Just wondering if you had any thoughts along those lines.
Yeah. Jeremy, good questions. You know, you certainly will look to compete for these $700 million. You know, if there are other projects that are competitive, you know, certainly we'll take a look at those as well. We're not limited to these. But of course, as you know, in many of the surrounding states, you know, you have entities with rights of first refusal. You know, look, you know, we feel good about the ones that have been assigned to us. I can't emphasize that enough. This $1.8 billion, we feel, you know, great about and we'll go after these $700 million. If we see other opportunities, we'll certainly look to compete in those as well. You know, I wouldn't speculate right now, Jeremy, in terms of any incremental investment beyond these.
You know, these are the estimates that really came from MISO. As you know, we indicated in our call prepared remarks, you know, we'll certainly be looking to next steps as you know, really work on more refined design, procurement, you know, the regulatory approvals, et cetera and give updates on you know, what we think the overall value of these projects are, perhaps when we get around to February and update our overall plans. For now, we think these are the best estimates to be able to provide.
Got it. That's helpful. Thanks. Then just as it relates to Rush Island here, if you could provide any incremental thoughts with regards to transmission upgrade opportunity here. Could you provide any estimates on what these upgrades could look like? I know it's bigger than a breadbox but trying to kind of scope out what that might look like.
Yeah, good question. Look, we, you know, we again gave a pretty good update in our prepared remarks on Rush Island. You know, we did indicate that design and procurement's underway with respect to the upgrade projects that MISO had approved. I mean, I think our best estimate today and this is a bit of a broad range, probably in the, you know, $100 million-$150 million range. But like I said, we'll be able to refine that further as we go through the design and procurement activities.
Got it. That's very helpful. I'll leave it there. Thanks.
Thanks, Jeremy.
Our next question is from Julien Dumoulin-Smith with Bank of America. Please proceed with your question.
Hey, good morning team. Thanks for the time and the opportunity. I hope you guys are well.
Hey, Julien. Hope you're well, also.
Thank you. Thank you, sir. Maybe I wanna come back to the Rush Island situation. I know you mentioned 2025 here, for instance, on retirement here. I wanna talk about these other CSAPR regulations and NOx and just try to understand how that lines up. I know that there's some proposals out there for 2026 and you know, obviously you've got a couple other plants, Labadie and Sioux. How do you see this playing out? Because obviously you know, there's EPA regs in sort of the hypothetical ether and then there's sort of reality of them lining up against your portfolio in a pretty meaningful way.
I just wanna understand sort of the specifics as to, I mean obviously the subject of litigation but how do you see this playing out more specifically for your portfolio and as you see to try to balance things?
Yeah. You know, so as it relates to the CSAPR rules, you know, look, it's something we're, you know, not only monitoring but engaging with, you know, EPA in terms of providing comment. You know, of course, you know, Meramec is retiring this year. Rush Island is, as you mentioned, looks like it's gonna retire in the 2024-2025 timeframe. Again, we don't expect the, you know, transmission investments to be fully completed till 2025. You know, as we noted, we have proposed some limited operations, between now and then, between now and when the plant would ultimately retire, you know, all subject to the court's ruling in terms of, operating parameters as well as the ultimate closure date. You know, certainly gonna significantly reduce NOx emissions as we ramp down towards closure of that facility.
You know, I think the focus really becomes, Julien, then on, you know, NOx controls at Labadie and Sioux. I would, you know, remind you there that, you know, we've made significant investments over time in terms of NOx controls and, you know, we're more than complying with all the, you know, the current standards that are out there. You know, with respect to the proposed additional rules, you know, I think we'll wait to comment on specifically what the impacts will be at Labadie and Sioux over time, until we get the, you know, final rules which we expect to come out next March.
I will tell you that, you know, what we'll be doing and we are, we're analyzing strategies for compliance and, you know, making sure that, you know, we get the, you know, full benefit of the controls that we do have in place today at Labadie and Sioux.
Yeah. Understood. Excellent. Thank you. Then if I can, just jumping in on the inflation conversation. Obviously, you filed your latest iteration of a rate case. But how are you seeing sort of cost inflation manifest itself across your portfolio? And how do you think about balancing that, you know, given the test year embedded in the current rate case and any of the levers you might have?
Hey, yeah. Thanks, Julien. This is Michael. You know, look, inflation, certainly we're in a little different environment today. I mean, I think as we've talked historically and, you know, we've showed you a couple of times, even had a slide, I think, that went through 2016 through 2021 and, you know, our overall operating costs were down about 3%. We remain focused on it. You referenced, you know, this Missouri rate review that we just filed here. I would tell you that, you know, that's really predicated on a lot of capital investment, you know, within the Smart Energy Plan. We outlined, I think, the benefits that customers are getting associated with those investments.
Obviously, it's also being impacted by what we just talked about with respect to Rush Island and the net fuel costs in operating that plant, you know, in a more limited fashion as well. When you really cut through what's going on in that case, it's really not about O&M costs, which I think is a testament to what this team has been doing in terms of just looking for ways to continue to hold down costs wherever possible. You know, in the present environment, I think we're managing well through it. You know, as we noted on the call, we had, you know, some O&M was up but it was really driven by some one-time things between the COLI performance as well as some storm costs.
When you cut through it certainly lines up with what our expectations were on the February timeframe we released guidance.
Got it. Just prospectively here, just if I can push a little bit further. Obviously, you've done a good job, sort of to date, if you will. If you look prospectively, whether that's related to, you know, the cadence of labor relations negotiations, et cetera, I mean, do you see what kind of trajectory, you know, in inflation are you seeing sort of in real time, you know, more prospectively here, if you can comment a little bit more?
Yeah, sure. You know, look, I do. Yeah, absolutely. You know, look, I'll keep my comments consistent with where we've been in the past. As you know, Marty and I and the rest of the team are very focused on these costs and doing all that we can to control what we can control. You know, look, we aspire to keep these O&M costs, I think we've said this before, that you know, really flat over the five-year horizon, if at all possible. It's obviously a bit more challenging in this environment. Again, as we look to our capital plan, we look to the investments that we're making in automation and digital and smart meters. I mean, we're using all of those things to increase productivity, lower costs where we can.
We're gonna stay focused on it and just do absolutely all that we can because we know, again, you know, what it means to our customers. We understand, you know, we talked about this from a capital perspective. You know, for every dollar of O&M we reduce, you know, we can spend equivalent $7 of capital. It is certainly top of mind and a continuous, everyday focus here.
Excellent. Thank you, team. Have a good weekend. Speak soon.
Thank you. You too, Julien.
Our next question is from Paul Patterson with Glenrock Associates. Please proceed with your question.
Hey, good morning.
Morning, Paul.
Just on Rush Island, just sort of technically speaking, I mean, if the courts don't completely go your way, the plant has to shut down. What would actually happen or do we have an idea about what would happen?
Yeah. I guess I don't want to speculate that on, you know, Paul. I think that, you know, it's a, you know, obviously a process that we're still working through with the, you know, with the court and the court proceedings. We laid out for you on, you know, slide 9 the facts as they stand today and, you know, certainly wouldn't speculate if we get to that, you know, that crossroads. I would point you on slide 9. You know, we said that, you know, with respect to the court, 31 the March 2024 compliance date remains in effect unless extended by the court. The court's got that ability and, you know, certainly don't want to speculate as to what the court will or won't do and, you know, we'll let these proceedings play out.
Okay. Fair enough. I don't wanna push that, I guess. It's all hypothetical, I guess, to a certain degree. With respect to wind curtailments that we've been seeing in the area, I was wondering if you could tell us what you've been seeing, not just in Ameren but you know, the greater Ameren neighborhood, so to speak, as well as how Tranche One and other sort of activity occurring, like I guess Grain Belt is talking about a 25%, I think, increase among other things. As you know, there are a lot of moving pieces, I guess, is the way to put it, right?
I'm just sort of wondering what if you could just sort of comment about what you're seeing there in terms of additions of generation, the plants, the traditional plants shutting down and transmission, what you see sort of the current situation with wind curtailments, just generically speaking in your general region and what Tranche One and other things might do with respect to the issue.
Yeah. You know, Paul, I guess I don't have a specific comment on, you know, wind curtailments and something we can follow up with you on. You know, that said, you know, what I have seen recently is, you know, a map of these Tranche One projects overlaid against, you know, where we're seeing congestion across MISO. I will tell you there's tremendous alignment there, meaning, you know, these planned projects in Tranche One, you know, really align well with where we're seeing congestion across the footprint, really promise to alleviate some of that congestion. I think that's why, if you go back a year or so ago, you know, Warner made a comment about these being, oh, I forget the word he used but, you know, kind of no-brainer projects or something like that and no regrets projects.
I think what he really meant by those is that, you know, whether we proceed towards, you know, Future 1 , 2 or 3 in MISO, you know, these projects are very foundational, no matter, you know, where you go. They're needed today to address some of the congestion that we're already seeing within the MISO footprint. You know, as I look ahead to Tranche Two, three and four, you know, especially based on what we're seeing coming out of this IRA legislation, you know, I think is really gonna push us, you know, beyond that Future 1 , you know, to more of like a closer to a Future 2 kind of outlook.
My sense is that some of that'll end up getting baked into the extent of the projects that are approved in future tranches, including Tranche Two, which is, you know, still expected to be approved by late next year. You know, again, don't have a specific comment on your question about what we're seeing currently but you know, to your question about these transmission projects and the need to alleviate you know, congestion issues we're seeing, absolutely they align very well.
Okay. Awesome. Thanks so much and have a great weekend.
You too.
As a reminder, if you'd like to ask a question, please press star one on your telephone keypad. One moment, please, while we poll for questions. Our next question comes from Anthony Crowdell with Mizuho. Please proceed with your question.
Hey, good morning, Mike. Good morning, Marty. Thanks for taking my questions.
You bet. Good morning.
I guess first, on the Missouri rate filing, just as I think about, you filed in 2021, you're filing again in 2022, we have the PISA legislation passed. Now that you maybe have more clarity on the forward-looking CapEx plan, what kind of frequency of rate filings are you expecting in Missouri for the next, you know, two to three years?
Yeah, you know, Anthony, we haven't actually said. I mean, you're right. We've been on kind of a two-year cycle here at this point. Look, I mean, we obviously wanna continue to stretch these out as much as we possibly can. You know, just given the pace that we've been on from a capital standpoint, you know, two years has been sort of what the required pace has needed to be. I think the only other thing to just keep in mind is that, you know, we are required to file every four years just because of the fuel adjustment clause. Otherwise, you know, we do wanna try to stretch them out as long as we can.
Great. Then I guess last, this may be harder or may not even be a great question. If I think about the Future 1 projects that the company will bid on, do the incumbent utilities or you know, you guys operate in that jurisdiction. It seems that maybe your the incumbent utilities are more likely to submit a proposal for a more robust, like, infrastructure because it's in your jurisdiction. You're looking at having that asset you know, be active for 50 years, 60 years or something like that, whereas a competitor coming in there may just meet the bare minimum of a design spec and it makes it a more, you know, affordable and wins the competitive process. Is that possible or it's the design specs are the same for everyone?
You know, I really think, you know, MISO is going to do their best to make sure that, you know, there are very clear, you know, scope and, you know, design and construction, expectations and attributes such that, you know, you can really get apples to apples comparisons in these bids. I gave a fairly extensive answer to a question earlier. At the end of the day, I just wanna reinforce, I mean, we really do believe that we're well-positioned to efficiently build, operate and maintain these assets over time. It is our expectation that, you know, there'll be every effort made to ensure there's apples to apples comparisons.
Great. Thanks so much and have a wonderful weekend.
You too.
Thanks. Same thing.
Our next question is from Neil Kalton with Wells Fargo Securities. Please proceed with your question.
Hi, guys. How are you?
Good.
Morning, Neil. Good morning.
Yeah. I know it's not your project, Grain Belt Express, though. There's been some recent developments. The capacity, as Paul mentioned, is going up on the project. I would imagine IRA probably has some positive implications for the economics and prospects. I would love your latest thoughts on that project, if you will.
Hey, Neil. Yeah, it's Marty. Absolutely. You know, you know, we laid out in this updated integrated resource plan, you know, some pretty significant ambitions in terms of addition of renewables. You know, we're talking about, you know, 2,800 megawatts through 2030, 4,300 megawatts by 2035. You know, we've filed a couple of CCNs related to that, as you know, the Boomtown project, Huck Finn project, a couple of projects we outlined on this call. There's a long way to go in terms of the addition of renewables. We, you know, have issued a request for proposal and, you know, are evaluating the best options for our customers.
You know, as we've discussed with you and others over time, you know, Grain Belt remains a project that is of interest primarily because of the opportunity to bring wind energy from, you know, the west, you know, the Kansas region, for example, into Missouri for the benefit of our Missouri customers. In fact, in our integrated resource plan had highlighted, you know, the potential to utilize that line to bring in as much as 1,000 megawatts of wind energy. You know, it is something that we continue to evaluate and will evaluate as we look at the opportunities for renewables that come out of this RFP.
Ultimately, as you know, we wanna make sure we pick the right projects for our customers from the standpoint of affordability and, you know, a good, you know, mix of assets to meet their needs over time.
Great. Thanks. One other question. I think in your prepared remarks you mentioned hydrogen. You sort of mentioned as part of the IRA. Just that, you know, can you elaborate a bit more on sort of how you're thinking about hydrogen? Is this sort of a nearer term opportunity or, you know, any thoughts on that as well, please?
Yeah, Neil. In our updated integrated resource plan that we filed, you know, in June, we actually added a 1,200 megawatt combined cycle plant by 2031. You know, the idea there is to get to our net zero ambitions by 2045. You know, the idea would be to construct that with an eye towards transitioning to hydrogen or hydrogen blend with carbon capture retrofit by, you know, as early as the 2040 timeframe. You know, it's with regard to, you know, that project specifically that we think about that.
Okay, great. Thank you.
Yep.
Take care.
We have reached the end of the question and answer session. I'd now like to turn the call back over to Marty Lyons for closing comments.
Great. Hey, thank you all for joining us today. You know, I hope what you heard is that we had a very strong start to 2022. We're looking to finish strong for the remainder of this year and we remain focused on continuing to deliver significant long-term value to our customers, the communities that we serve and to our shareholders. Anyway, we look forward to seeing many of you at conferences over the next couple of months and we again appreciate you joining us. Have a great day.
This concludes today's conference. You may disconnect your lines at this time and we thank you for your participation.