Welcome to the second quarter 2018 earnings conference call. My name is Adrian, and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we'll conduct a question and answer session. During the question and answer session, if you have a question, please press star then one on your touch-tone phone. Please note this conference is being recorded. I'll now turn the call over to Lauren Pendergraft. Lauren Pendergraft, you may begin.
Thank you, Adrian. Good morning, everyone, and welcome to Avista's second quarter 2018 earnings conference call. Our earnings and our second quarter 10-Q were released pre-market this morning, and they are both available on our website at avistacorp.com. Joining me this morning are Avista Corp. Chairman of the Board and CEO, Scott Morris, our hockey-loving Senior Vice President and CFO, Mark Thies, Avista Corp. President, Dennis Vermillion, Vice President and Chief Customer Officer, Kevin Christie, and Vice President and Controller, Ryan Krasselt. I would like to remind everyone that some of the statements that will be made today are forward-looking statements that involve assumptions, risks, and uncertainties, which are subject to change.
For reference of the various factors which would cause actual results to differ materially from those discussed in today's call, please refer to our 10-K for 2017 and 10-Q for the second quarter of 2018, which are available on our website. To begin this presentation, I would like to recap the financial results presented in today's press release. Our consolidated earnings for the second quarter of 2018 were $0.39 per diluted share, compared to $0.34 for the second quarter of 2017. For the year-to-date, consolidated earnings were $1.22 per diluted share for 2018 compared to $1.30 last year. Now I'll turn the discussion over to Scott.
Thank you, Lauren, and good morning. To start off, I would like to provide an update on the Hydro One transaction. On July 11, 2018, Hydro One announced that they entered into an agreement with the province of Ontario for the purpose of the orderly replacement of the board of directors of Hydro One and Hydro One Inc., and the retirement of Hydro One's Chief Executive Officer effective July 11, 2018. Hydro One has committed to completing the transition process to a new board of directors by August 15, 2018. The new board of directors will then be responsible for appointing a new Chief Executive Officer. As a result of the leadership changes at Hydro One, the Washington and Oregon commissions have requested additional regulatory process in the merger proceedings. This has extended the timelines for a decision in their respective proceedings to mid-December 2018.
The Idaho Commission postponed a technical hearing in its merger proceeding, pending further information regarding the status of the Hydro One leadership team. We have made significant progress in the Hydro One transaction, and we're continuing to work through the approval processes. Hydro One and Avista Corp. are fully committed to working with the commissions, their staff, and other parties to receive the required approvals, and we anticipate the transaction closing during the fourth quarter of 2018. With regards to earnings, for the first half of 2018, we had consolidated earnings above our expectations, primarily from Avista Utilities. Avista Utilities earnings benefited from lower than expected resource costs and higher customer growth. AEL&P continue to have a good year with second quarter earnings that were slightly above our expectations.
We are confirming our 2018 earnings guidance with a consolidated range of $1.90 to $2.10 per diluted share, excluding acquisition and regulatory commitment costs associated with the acquisition. Mark will provide further details during his commentary, and I'll turn it over to Mark right now.
Thank you, Scott. Good morning, everyone. Like Lauren said, I am hockey loving, and the schedule just came out. In a little over two months, the puck drops for the regular season, and the first home game for my beloved Chicago Blackhawks is the Toronto Maple Leafs, interestingly enough. If any of my new friends from Toronto want to come down and watch a game, they should give me a call. For the second quarter of 2018, Avista Utilities contributed $0.37 per diluted share, compared to $0.34 in 2017. On a year-to-date basis, Avista Utilities contributed $1.21, a slight decrease from $1.24 last year. The increase in earnings for the second quarter was primarily due to general rate increases, higher customer growth, and lower than anticipated rate refunds related to Tax Reform, partially offset by increased operating and maintenance expense, interest expense, and depreciation expense.
The decrease in earnings for the year was primarily due to increased operating and maintenance expense, interest expense, and depreciation, partially offset by general rate increases and again, higher customer growth. We continue to be committed to investing the necessary capital in our utility infrastructure, and we expect Avista Utilities capital expenditures to total about $405 million in 2018. With respect to liquidity, during the second quarter, we issued $375 million of first mortgage bonds, and the total proceeds were used to repay a maturing long-term debt, repay the outstanding balance under our committed line of credit, and for other general corporate purposes. We don't expect any further long-term debt issuances in 2018. We do expect to issue up to $110 million of equity in 2018 in order to fund planned capital expenditures, maintain an appropriate capital structure, and for other general purposes.
The $110 million of equity may come through the sale of shares through our sales agency agreements or an equity contribution from Hydro One after the consummation of the transaction, or from a combination of those sources. Our equity estimate has increased from the $85 million last quarter, and that's primarily due to the change in the procedural schedule that Scott mentioned with respect to the Hydro One transaction. Due to the extended timeline, a fourth quarter common stock dividend could be declared by the Avista board of directors, which would necessitate additional funding. As Scott mentioned earlier, we're confirming our 2018 guidance for consolidated earnings to be in the range of $1.90 to $2.10 per diluted share, excluding acquisition costs.
We expect acquisition costs to be in the range of $1.50 to $1.60 per diluted share, and that's an increase from our previous estimate of $0.80 to $0.85 last quarter, primarily due to the new commitments from the regulatory merger settlement agreements that we had not included in our last guidance. We expect Avista Utilities to contribute in the range of $1.89 to $2.03 per diluted share, excluding acquisition costs, and the midpoint of our guidance does not include any expense or benefit under the EARM. Our current expectation for the EARM is to be in the benefit position in the 90% customer, 10% company sharing band, which is expected to add approximately $0.07 per diluted share. Our outlook for Avista Utilities assumes, among other variables, normal precipitation, temperature, and hydroelectric generation for the remainder of the year.
For AEL&P, we continue to expect them to contribute in the range of $0.10 to $0.14 per share, and their outlook also assumes, among other variables, normal precipitation and hydroelectric generation for the remainder of the year. We expect our other businesses to be between a loss of $0.09 and $0.07 per diluted share, which includes costs associated with exploring for strategic opportunities. Our guidance generally includes only normal operating conditions and does not include unusual items such as settlement transactions or acquisitions or dispositions until the effects are known. I'll now turn the call back over to Lauren.
Thanks, Mark. Adrian, can we open up the call for questions now?
Thank you. We'll now begin the question and answer session. If you have a question, please press star then one on your touch-tone phone. If you wish to be removed from the queue, please press the pound sign or the hash key. If you're using a speakerphone, you may need to pick up the handset first before pressing the numbers. Once again, if you have an audio question, please press star then one on your touch-tone phone. Our first question comes from Paul Ridzon from KeyBanc. Please go ahead.
Morning, guys. How are you?
Hi, Paul. Good morning, Paul.
One thing stuck out in your earnings walk is it $0.09 from lower taxes. Then you mentioned that the refund was less than anticipated. Could you just give some more flavor on that?
From the perspective, we had filed with the commissions a rate refund, in their final order, they ordered an amount that we had to refund, it was less than what we had anticipated. We did pick up some additional earnings with respect to that. The $0.09 also includes the change in Tax Reform in and of itself, that's different. Up in gross margin, we have a negative, and that's largely due to the impacts of Tax Reform on revenues as included up there, the offset is down in the tax line. Those numbers actually offset within the tax line and gross margin. What we do have is a slight increase in gross margin, and some of that's due to lower refunds to customers based on the orders from our commissions in Washington and Idaho.
Can you quantify how much that is?
It was about $0.04 a share.
Going forward, that will not recur?
No, that will not recur. The Tax Reform impacts between gross margin and the revenue line will continue to recur this year. The impact of the change, which was a benefit to earnings, will not recur. It was $4 million, not $0.04, I'm sorry, Paul. Will not recur primarily due to it was just a one-time. We got our orders, we had an estimate, we corrected that estimate based on those orders. That's not going to recur. Tax Reform, the impact between revenue and gross margin and down below in the tax line will continue for the year, but that offsets.
Next year, we should look for that $0.04 benefit to drop off.
Correct. $4 million.
Got it. Okay.
$4 million.
I'm sorry.
$4 million.
Yes. Understood. Thank you very much.
Thanks, Paul.
As a reminder, to ask a question or to enter the queue, please press star then one on your touch-tone phone. We have no further questions. I'll turn the call back over to Lauren for final remark. Oh, actually, Paul just queued up again. One moment. Please go ahead.
Just kind of been watching the news. I haven't seen much. Have you seen any statements by Doug Ford about strategically where he wants to take the company?
Paul, no, we have not.
Thank you again.
Thanks, Paul.
We have no further questions. I'll turn the call back over to Lauren.
Thank you to everyone for joining us today. We certainly appreciate your interest in our company and hope you have a great day.
Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.