Hello, and welcome to Exelon's fourth quarter earnings call. My name is Gigi, and I'll be your event specialist today. All lines have been placed on mute to prevent any background noise. Please note that today's webcast is being recorded. During the presentation, we'll have a question and answer session. You can ask questions by pressing star 11 on your telephone keypad. If you would like to view the presentation in a full-screen view, click the full screen button by hovering your computer mouse cursor over the PowerPoint screen. Press the escape key on your keyboard to return to your original view. Finally, should you need technical assistance, as a best practice, we suggest you first refresh your browser. If that does not resolve the issue, please click on the help option in the upper right-hand corner of your screen for online troubleshooting.
It is now my pleasure to turn today's program over to Andy Plevin, Vicve President of Investor Relations. The floor is yours.
Thank you, Gigi. Good morning, everyone, thank you for joining our Q4 2022 earnings conference call. Leading the call today are Calvin Butler, Exelon's President and Chief Executive Officer, Jeanne Jones, Exelon's Chief Financial Officer. They're joined by other members of Exelon's senior management team, who will be available to answer your questions following our prepared remarks. We issued our earnings release this morning, along with a presentation, all of which can be found in the investor relations section of Exelon's website. The earnings release and other matters, which we will discuss during today's call, contain forward-looking statements and estimates that are subject to various risks and uncertainties. Actual results could differ from our forward-looking statements based on factors and assumptions discussed in today's material and comments made during this call.
Please refer to today's 8-K and Exelon's other SEC filings for discussions of risk factors and other factors that may cause results to differ from management's projections, forecasts, and expectations. Today's presentation also includes references to adjusted operating earnings and other non-GAAP measures. Please refer to the information contained in the appendix of our presentation in our earnings release for reconciliations between the non-GAAP measures and the nearest equivalent GAAP measures. We've scheduled 60 minutes for today's call. I'll now turn the call over to Calvin Butler, Exelon's President and CEO.
Thank you, Andy. Good morning, everyone. I'm excited to be with you for my first earnings call as CEO of Exelon, and one that concludes a very successful year for us. When I first joined ComEd in 2008, it was one of two utilities, along with PECO, under the Exelon umbrella. We recognized that we had an opportunity to take advantage of the power of the Exelon platform in a meaningful way. The company was already known for building world-class operations in the generation business, commonly known as our management model. Over the course of the next 14 years, we applied the same principles of best practice, sharing and accountability through performance measurement to our energy delivery business. We were building a standard of excellence to deliver improvements in reliability, safety, customer satisfaction and value.
I was fortunate and privileged to be part of guiding this evolution, first as the lead to ensure the Constellation merger crossed the finish line in 2012, then in my role as CEO of BGE, and eventually as CEO of Exelon Utilities and COO of Exelon. In those positions, the leadership teams and I were able to challenge our talented employees to take our utilities to the next level. We sustained and expanded our operational excellence, improved customer satisfaction, enhanced team diversity, and improved earned ROEs from mid-single digits to our 9% to 10% target, first at BGE and then at PHI. As you'll hear today, 2022 gave us a chance to showcase what we've built, an ability to execute, push continuous improvement, and achieve a balanced outcome for our customers and investors.
As proud as I am about what our team has built, I'm more excited about what lies ahead, and I want to lay out our vision of who we are and what supports our value proposition. Exelon is the premier T&D company in the industry. Our platform is stable with sound fundamentals, both operationally and financially. This platform positions us to support our jurisdictions through the multi-decade energy transition that has just started. We can do it in a manner that supports affordability and equity while driving consistent, stable growth for our shareholders, the type of performance that is a hallmark of a top-tier utility. What makes our platform unique? Well, we have an extremely diversified investment plan in size, scope, and location. We have no generation.
We have worked with our jurisdictions to operate under forward-looking rate mechanisms that provide value for our customers and predictable results for our investors. Almost Q3 of our revenues are decoupled. This leads to a very compelling risk-adjusted total return of 9%-11% built on the foundation of an unmatched platform, operational excellence, and strong partnerships with our jurisdictions and communities. The Exelon team has proven it's ready to meet the challenge of leading the nation in its energy transformation, powering a cleaner and brighter future for our customers and our communities while creating value for our shareholders. I'll now turn to slide 5 and talk about our key messages for this call. I will start by recapping the strong performance in 2022. We executed right in line with our expectations, reporting operating earnings results of $2.27 per share.
That exceeds the midpoint of guidance by $0.02 and represents 8.1% growth off of the 2021 guidance midpoint. We also had best on record operating performance at 3 of our 4 utilities. As for our rate case activity, we had 4 constructive distribution rate case outcomes, including 2 gas cases and 2 electric cases. We'll look to continue this progress in 2023 with several important rate cases this year. In January, ComEd filed with the Illinois Commerce Commission, its first multi-year rate plan and grid plans under the framework established by the Climate and Equitable Jobs Act. The filing follows 15 stakeholder workshops, reaching more than 1,000 attendees as well as 45 stakeholder presentations. As Illinois progresses towards its decarbonization goals, ComEd is starting from an industry-leading position of strength.
In fact, in 2022, ComEd was recognized with the Outstanding System Resiliency Award for U.S. Utilities by PA Consulting, while also maintaining an average bill that is lower than those in 47 of the 50 states. Beyond the rate case, ComEd and the City of Chicago announced a proposed Chicago franchise agreement and a related energy and equity agreement. Together, these agreements grant ComEd the right to continue providing electric utility services using public ways within Chicago and creates a new nonprofit entity to advance energy and energy equity related projects. These agreements build upon the century-long partnership we have had with the city and demonstrates our alignment around key energy and sustainability goals. Pending approval by the city and Exelon board, ComEd continues to operate in the city under the prior franchise agreement.
Later this month, BGE will be filing its second multi-year plan for its electric and gas businesses, with Pepco D.C. and Pepco Maryland following later in the first half of the year. Like Illinois, Maryland's Climate Solutions Now Act has set aggressive climate and decarbonization targets, creating an environment where utility action and investment is a key priority, and for which multi-year plan frameworks are particularly well suited. Jeanne will cover the rate cases and other regulatory activity in more detail shortly. For our projected outlook, we have rolled forward our disclosures after adding a year to our guidance window. We are reaffirming our 2021-2025 target of 6%-8% annualized earnings growth, with the expectation that we will reach midpoint or better of that compounded annual growth rate.
We are also initiating an identical target for 2022 through 2026, where we expect to deliver 6%-8% annualized earnings growth over the 4-year horizon, with the same expectation that we will reach midpoint or better of that compounded annual growth rate by 2026. This is driven by the almost 8% rate base growth from 2022 through 2026, underpinned by deploying $31 billion of capital over 2023 to 2026. That's over $2 billion more than the prior 4-year period. As we balance the required progress on the energy transition with customer affordability, we continue to challenge ourselves to deliver maximum customer value at the lowest cost possible.
We continue to expect some variability in our growth rate from year to year due to our regulatory calendar. We have maintained the transparency provided in the Q3 around our path to achieving our transparency commitment. For 2023, we are initiating our projected operating earnings guidance at $2.30-$2.42 per share, with a midpoint that implies 5% growth off the midpoint of our 2022 guidance. Being slightly below the annualized earnings growth range is in line with the direction we provided on our third quarter call. We do expect 2023 to be the exception. All other years are expected to grow within the range of 6%-8%, if not above it. We remain confident in the earnings power of our business.
We expect an annualized dividend of $1.44 per share in 2023, reflecting approximately 7% growth off of our $1.35 dividend per share in 2022. Jeanne will cover more of the specifics of our financial outlook. Moving to slide 6, I want to spend a moment recognizing last year's accomplishments, demonstrating the type of stable, predictable performance that our customers and shareholders expect us to deliver. First, we completed the separation from Constellation, which by any measure was a success, and executed in less than a year after our board's decision to proceed. We did not miss a beat operationally despite this separation.
We invested more capital for the benefit of our customers than ever while achieving the highest ROE since 2019. We were able to attract and retain a talented and diverse workforce in a difficult labor market, a testament to our culture of engaged and purpose-driven employees. We didn't lose sight of the importance of supporting our communities through more than just the investments we're making in them. Our employees volunteered more than 126,000 hours and connected our customers to almost $600 million of energy assistance, an increase of over $100 million from 2021. We continued to build upon our history of workforce development, launching the Atlantic City Infrastructure Academy in the fall and graduating our first group of 26 students this month with the skills needed to succeed in careers in the energy industry.
We achieved our highest percentage spend ever, 39% or $2.8 billion of total spend with diverse suppliers. We gave $22 million to support schools and students in our markets. These programs include learning energy basics in middle schools and our Exelon Foundation STEM Academy that inspires high school girls to pursue careers in the energy field. We are doing our part to create a cleaner and brighter future for our customers, making good progress on our path to clean with 112 miles of gas pipe main replacements and 12% of our vehicle fleet now electrified. These are just a few examples of the type of work we do that has led to us being named to the Dow Jones Sustainability Index for 17 years running. Last, we delivered on our earnings commitment for the year.
Ultimately, 2022 was about establishing and beginning to prove out the value proposition the new Exelon offers. Our team executed well. Before I turn it over to Jeanne, I will review our operating performance for 2022 on slide 7, which ended as strongly as it began. I'll start with reliability. We were top decile in outage frequency performance at three of our four utilities, and we were top quartile for outage duration across all utilities. Achieving performance like this requires sustained focus and effort across our business. First and foremost, it requires our team showing up 24/7, no matter the time or the conditions. For instance, Winter Storm Elliott struck our BGE service territory on December 23rd, taking out power to 112,000 customers.
Our dedicated teams completed over 1,500 repair jobs in subzero temperatures and at times to bring just one or two customers back online to restore power completely without any injuries. It wasn't just our BGE team. The power of the platform showed up in force with ComEd, PECO, and PHI supporting the restoration efforts. On behalf of the entire leadership team, we want to thank all of our employees on the front lines of storm duty for their dedication. We would not have this track record of excellence without their commitment. Operational excellence also requires smart and prudent investment that's compensated fairly, built around alignment with our jurisdictions on shared goals and priorities. Last year, we invested $7.2 billion of capital, earning that 9.4% ROE I mentioned.
The ability to execute on this level of investment with the confidence that we're aligned with our jurisdictions is a key element of our success. We need to perform every day to maintain that trust. On safety, ComEd continues to maintain top quartile performance while we work to get our other three utilities up to our standards. Our efforts to reduce serious injuries have been successful, but we are also focused on implementing safety best practices at our utilities to avoid other incidents that have driven OSHA underperformance in 2022. For the year, BGE, ComEd, and PECO sustained top quartile customer satisfaction performance. This reflects our continued investment in technology to create a better customer experience, our top quartile reliability, and our commitment to an affordable energy transition.
Finally, gas odor response continues to be in the top decile across all 3 utilities, including with BGE completing the year with its best on record performance. We continue to accelerate the modernization and safety enhancements of the gas system while working with our customers and communities to live and work safely with gas. I will now ask Jean to review our financial update. Jean?
Thank you, Calvin. Good morning, everyone. I'll start by sharing my own excitement about closing out our first year as the new Exelon. As proud as I am of what we accomplished in 2022, I'm even more excited about our future. Our utilities serve the homes of more than 10 million customers that include our employees, our families, hospitals, schools, and businesses. These customers increasingly count on us to keep the lights on, whether it's during winter weather arriving over the holidays or as a driver is getting ready to plug in their electric vehicle at their house for the first time.
That is not a responsibility we take lightly. Taking that on while prioritizing energy equity and affordability gives me confidence we will continue to maximize value for our customers while delivering steady returns on the capital investors entrust us with. As I cover today's updates, 2022 results, upcoming rate case activity, and the roll forward of our financial disclosures, you will find that our focus on execution drives the results that customers and shareholders expect. Starting on slide 8, we delivered strong financial results in our first year as a new company. For the fourth quarter, Exelon's continuing operations earned $0.43 per share on a GAAP and non-GAAP basis.
For the full year 2022, we earned $2.08 per share on a GAAP basis and $2.27 per share on a non-GAAP basis, results that are in the upper half of our narrowed guidance range and represent 8.1% growth off the $2.10 per share midpoint of our Analyst Day guidance range for 2021. Throughout the year, we benefited from rising Treasury rates impacting ComEd's distribution ROE as well as favorable weather and storm conditions. These benefits, along with strong cost control in our core operations, helped to offset higher interest expense at corporate and the businesses, along with the one-time items of discontinued operations and the voluntary customer refund in Illinois.
That net favorability provided flexibility to reinvest back in the business and de-risk future years while ensuring we were meeting and exceeding our financial commitments. Quarter to date and year to date drivers relative to prior year are detailed in the appendix slides 32 and 33. Moving to slide 9, looking at our utility returns on a consolidated basis, we delivered within our 9%-10% targeted range with a 9.4% ROE for 2022. This is the highest our earned ROE has been since 2019 as we focused on mitigating inflationary pressures to ensure costs align with our allowed revenues. 30-year Treasury rates improved as well, supporting ComEd's distribution ROE.
Looking forward, we remain focused on earning the allowed returns at the utilities, which we expect will keep Exelon in the 9%-10% earned ROE range annually throughout the planning period, while investing to maintain reliability and keep pace with our jurisdiction's energy transitions. Turning to our outlook for 2023, we are initiating adjusted operating earnings guidance of $2.30-$2.42 per share, reflecting a midpoint that is consistent with the directional guide provided in the Q3 . Relative to the midpoint of our 2022 estimated guidance range, the 5% year-over-year earnings growth is primarily driven by the continued increase in rate base as we deploy capital for the benefit of our customers, as well as by increased revenues associated with completed rate cases.
As a reminder, expected year-over-year growth in 2023 is slightly below the 6%-8% range as PECO enters the second year with its current electric distribution rates and anticipates returning to normal weather and storm activity. 2023 also requires managing against cost increases in our multi-year plans out east as we await their first reconciliations, particularly at BGE and the end of the stay out provision at Pepco D.C. With the de-risking efforts we undertook in 2022, including initiating hedging programs for both our long and short-term debt, as well as for Exelon's exposure to the 30-year Treasury, we are confident that our projected earnings will be within the range of $2.30-$2.42 per share in 2023.
Additional detail on our earnings sensitivities reflective of our hedging activity to date is provided on slide 34 in the appendix. As you think about the shaping of 2023 quarterly earnings, I will remind you that historically, we have realized approximately 28% of full year earnings in the Q1 , consistent with seasonal weather patterns at the utilities and the general cadence of completed rate cases. On slide 11, we provide our updated outlook for utility CapEx and rate base covering 2023-2026. We plan to invest $7.2 billion in 2023 and a total of $31.3 billion over the next 4 years, an increase of $2.3 billion from the prior 4-year planning period.
Since Analyst Day disclosures for the 2023 through 2025 period, we have identified an additional $875 million of planned investments to serve our customers. Updates include refinements to ComEd's distributional capital plan, which was developed as part of the multi-year integrated grid plans filed this January. The result is that over the next four years, our rate base is expected to increase 7.9% on a compound annual growth basis to $69.6 billion. This growth adds approximately $18.3 billion to rate base from 2023 through 2026, an amount roughly equal to the size of ComEd's current rate base. With four multi-year plan rate filings planned for this year, I'd remind you that our capital forecast only reflects identified projects we expect to recover through our constructive recovery mechanisms.
The plan reflects a disciplined prioritization of potential investments to balance interests, providing reliable service to our customers and progress on our jurisdiction's energy goals while also maintaining affordability. Our plan remains free of any large speculative projects. In fact, the largest transmission and distribution project in our plan remains the $300 million multi-year Erdman to Summerfield transmission expansion project at BGE. This project represents only 1% of our total projected capital spend from 2023-2026, and the collective spend on the largest transmission and distribution projects at each of the 4 operating companies totals only 2.2% of our $31 billion plan. Turning to slide 12, our ability to deploy $31 billion of capital for our customers over the next 4 years at affordable rates amidst persistent inflationary pressures would not be possible without a resolute focus on managing costs.
Had our adjusted O&M costs grown in line with average annual inflation of 3.2% from 2016 through 2023, they would have increased by approximately $1 billion. Instead, we are projecting a 1.7% CAGR for the same period, eliminating over $500 million of customer rate increases that would have occurred without our intentional focus on driving efficiencies. This includes leveraging our platform of four operating companies to share best practices and drive economies of scale. It also includes investing in innovative technology and processes, such as a recent pilot to conduct vegetation management work with the help of specialized drones, reducing a two-day job for a human crew to 45 minutes of drone deployment. It also cut the material required by over 90%. We are particularly proud of keeping O&M growth low after the separation.
We committed to our customers that they would not see increased costs because of the separation, and I'm proud to say we achieved that. From renegotiating key enterprise-wide IT contracts to continually reoptimizing the organizational design for the services our utilities need, our cost discipline culture ensured that we kept that commitment while executing operationally at top-notch levels and delivering earnings in the upper half of our guidance range. In 2023, adjusted O&M at our utilities is projected to be $4.2 billion, representing a 1% or $50 million increase from 2022, a rate well below the expected inflation rate of 4% in 2023 and building on our efficiency efforts in 2022. We will continue to ensure that our business is appropriately designed to efficiently deliver services as a transmission and distribution-only energy delivery company.
This steady discipline around cost has positioned us very well. In the bottom chart, you can see Exelon's average electric rates are 23 below the top 20 metropolitan cities in the United States. Beyond cost management, other unique factors contribute to lower bills for our customers, some of which Calvin discussed, but I'd like to highlight the benefit of the carbon mitigation contracts resulting from Illinois' 2021 Climate and Equitable Jobs Act, or CEJA. Based on energy forwards as of January 31, these credits are projected to protect ComEd customers from over $3 billion of additional energy charges between 2022 and 2027. That brings me to slide 13, where I wanted to take a moment to highlight ComEd's commitment to decarbonizing the communities in Illinois in the most efficient, affordable, and equitable manner possible.
CEJA puts Illinois on a path to a 100% decarbonized energy sector by 2045. It also provides a framework for ComEd to help support the state and make the grid investments necessary to support beneficial electrification, decarbonization, and the energy transformation. In one of its first steps to meeting the challenge of a clean energy economy, ComEd filed its multiyear integrated grid plan and multiyear rate plan covering 2024 through 2027 with the Illinois Commerce Commission. The proposed investment plan includes initiatives such as 4 kV to 12 kV conversions, bus reconfigurations, overhead and underground repairs, and support for an anticipated 1 million electric vehicles by 2030. To smooth the transition for customers from the formula rate to the multiyear rate plan, ComEd has filed to defer collection of 35% of the 2024 increase until 2026.
An order is expected from the ICC no later than December 20, 2023. Turning to slide 14, as Calvin mentioned, BGE anticipates filing its second multiyear plan and first multiyear plan reconciliation with the Maryland Public Service Commission later this month. Proposed investments expected in the filing support the climate and decarbonization goals of Maryland's Climate Solutions Now Act. As an example of how we are partnering with key stakeholders in Maryland, consider the electric school bus program. The new law created a statewide electric school bus program through which BGE will be able to offer $50 million in incentives to school districts we serve to help cover the incremental costs of purchasing electric buses, with a focus on access for low-income and minority communities. Plus, BGE will also be able to call on those new electric fleets to provide grid-resilient support through vehicle-to-grid technology.
Those types of initiatives are what drive the local economic impact highlighted on the slide, including the support of over 72,000 jobs. BGE's rate plan will cover electric and gas customer rates from 2024 through 2026, inclusive of a reconciliation on 2021 and 2022 costs from its original multiyear plan filing. Additional details will be available once BGE makes its filing later this month, with a final order expected by December 2023. With Delmarva Power Delaware's ongoing electric distribution rate case and Pepco D.C. and Pepco Maryland's anticipated second multiyear plan filings, you can expect further discussion on these cases on future earnings calls.
Turning to slide 15, with $31 billion of projected capital spend driving 7.9% rate base growth, and with continued focus on earning ROEs of 9%-10%, we are projecting compounded annual earnings growth of 6%-8% through 2026 from our 2022 guidance midpoint of $2.25 per share. Maintaining our commitment to transparency from the Q3 earnings call, we have provided year-over-year drivers contributing to the expected annual growth in our earnings through 2026 on slide 16. While there is variability in the year-over-year growth over the four-year time period, the business drivers provide transparency into our commitment of 6%-8% through 2026. As you can see on the slide, after 2023, we expect to deliver each year within the 6%-8% range, if not above.
We have reaffirmed our guidance for 2021 through 2025 of 6%-8% with the expectation of being at midpoint or better. Similarly, we expect our four-year CAGR from 2022 to 2026 will be at the midpoint or better of the 6%-8% targeted growth range. We also continue to project an approximate 60% dividend payout ratio of operating earnings, with the dividend growing in line with our long-term earnings. We anticipate an annualized dividend of $1.44 per share in 2023, which is 6.7% higher than the 2022 dividend. I will now conclude with a discussion on our balance sheet on slide 17. The attributes of our fully regulated transmission and distribution platform, including forward-looking recovery mechanisms, majority decoupled rates, deconcentrated investment risk, and diversified jurisdictions, will continue to provide flexibility going forward.
Over our guidance period, we project 100 to 200 basis points of cushion on average for our consolidated corporate credit metrics above Standard & Poor's and Moody's downgrade thresholds of 12%, demonstrating our commitment to maintaining a strong balance sheet. While the U.S. Treasury Department works towards implementing the Inflation Reduction Act legislation, our plan fully incorporates the impact of the corporate alternative minimum tax, including reflecting the resulting deferred tax assets in each of the utilities rate bases, consistent with the recent rate case filings at ComEd and Delmarva Power. We have talked previously about how regulations and the inclusion of certain deductions would substantially mitigate the corporate alternative minimum tax impact. Without the ability to include certain deductions, we expect the cushion in our average credit metrics to be on the lower end of the 100 to 200 basis points range.
Our metrics would average closer to the higher end of the range over the guidance period if we were able to include those deductions. Consistent with our earnings profile, our credit metrics are expected to strengthen over time as we step into new multiyear plans and finalize the reconciliation processes. We await clarity on the corporate alternative minimum tax, we continue to maintain a disciplined approach to cost and cash management across all areas of the business, ensuring we maintain appropriate cushion above our downgrade threshold of 12%. I will close by reaffirming our financing plans at the holding company. We continue to affirm the remaining $425 million of our $1 billion equity commitment. We expect to issue this equity sometime between 2023 and 2025.
As we work with our jurisdictions and find opportunities for further investment at the utilities, we'll continue to ensure that our capital structure reflects a balanced funding strategy and a strong balance sheet consistent with the expectations of a premium transmission and distribution company. Thank you. I'll now turn the call back to Calvin for his closing remarks.
Thank you, Jeanne. Before turning it over for questions, I will end with the focus of what's ahead for 2023. Operations and safety continue to be foundational. Maintaining reliability for our customers while operating safely is non-negotiable. We'll deploy $7.2 billion of capital, ensuring we make the necessary progress to meet the reliability and technology needs of tomorrow's grid. Indeed, as many of you saw last week, the FBI announced it had interrupted a plot to damage Maryland's power grid. The need to enhance the physical and cybersecurity of the grid has never been greater. The industry has made it a priority. The partnership between the industry and the government is key to our defenses.
On behalf of our employees and our customers, we greatly appreciate the vigilance and dedication by the FBI and U.S. Attorney for the District of Maryland in protecting our nation's critical infrastructure. Thank you. Despite the urgency, investing capital efficiently will ensure we are making returns on our investments in line with those allowed by our jurisdictions, earning ROEs in the 9%-10% range. As a result, we expect to deliver on our earnings guidance for 2023, maintain our focus on a strong balance sheet, and execute on a number of rate cases this year to sustain operational and financial performance in the future. As we deliver on this plan, we will continue to focus on the value we are providing our customers.
This includes not only continuing to advocate for policies that keep the customers as top priority, but also continuing to evaluate our own business to find efficiencies as a more focused transmission and distribution-only utility. Like 2022, we have a lot we want to accomplish in 2023, but we again expect to be successful because that's what we do. We know that's what you expect from the premier transmission and distribution company, one that's deploying $31 billion of capital for our customers with rate-based growth and ROEs resulting in 6%-8% earnings and dividend growth and a to-total shareholder return of 9%-11%. As always, thank you for your time and support, we'll now take your questions.
Thank you. If you would like to ask a question, simply press star one one on your telephone keypad. One moment for our first question. Our first question comes from the line of Nick Campanella from Credit Suisse.
Hey, team.
Morning, Nick.
Thanks for taking my question here. Good morning. Morning. You know, I think in your prepared remarks, you said, you're gonna include the CAMT as a deferred tax asset. Can you give us more color on, you know, what's informing your position on regulatory treatment here? Then separately, it sounds like the CAMT is not included in the FFO to debt metrics when you're, you know, you're at the bottom of the 13-14, but where did you kind of shake out in 2022? Thanks.
Sure, Nick. Thank you. I'll start, and then as always, turn to Jeanne because her team is leading this effort with Treasury through the efforts of Rob with EEI. As we continue to assume that the CAMT is implemented in a way that does not allow for repairs treatment, resulting in incremental cash taxes. As Jeanne talked about, we have fully incorporated into our guidance, including recording each utility CAMT on its balance sheet and as part of its rate base, and the implied impact will move around as taxable income and book income change. That doesn't mean that we're not continuing to work with Treasury to get those that repairs language because we believe that is the best thing for our customers.
In addition to that, Nick, as we've talked about, we have already taken that challenge and offset it within our earnings, but we have pushed it down into the utilities where the income is earned and it'll move around. I'll let Jeanne clarify or provide any additional information.
Yeah. No, I think that's well said. As Calvin said, we're still working on the tax repairs deduction. Without, you know, specific language in the regulations, we continue to assume the higher cash tax burden. You do by having the deferred tax asset at the operating companies, you do earn on that and rate base. That provides a little bit of sort of offset over time as that rate base builds. All of the cash taxes are included in our forward-looking guidance from both an EPS and a credit metric perspective. We continue to reaffirm the 6%-8% on the EPS side. As it relates to the balance sheet, we are, you know, still expecting to be at that 13%-14%.
With the inclusion of the higher cash taxes or said another way, without the repairs deduction, we expect to be closer to that 13%. If we are able to include the tax repairs deduction, we'd be at the higher end of that 13%-14%. We'll continue to work with Treasury on that, and we'll continue to focus on our cost management and cash management to, you know, continue to increase that cushion.
Got it. Then sorry if I missed the disclosure, but where did you kind of end the year out on your credit for 22?
Yeah. We typically don't give specific years. The rating agencies will publish that. We ended, you know, the year above our downgrade threshold. I think if you think about credit metrics, the way we look at it and the way the agencies do is over a three, four-year time period because of the different moves in cash from a regulatory perspective. I'll give you a couple examples. You know, while we've benefited from the higher ROEs that ComEd on the earnings side, we can recognize that the cash collections on that come through the reconciliation. For example, in 2022, right, we had the higher earned ROEs. We won't collect that until 2024. It's important for us to look at it on an average basis so that you capture those timing differences.
The other aspect I'll mention is, as I talked about, in my prepared remarks, ComEd elected, to defer some of the rate increase in 2024 to 2026. Again, looking on it over that time period is important because without it, you're missing some of the cash timing. That's why we look at it on that average basis.
Thanks a lot for that. I guess just, you know, it's nice to see that you bumped the CapEx program higher and you're not changing your kind of total equity needs in a five-year window here. Just of that remaining $425 equity, you know, you guys did a block for the first piece. Is it your intention to kind of dribble out the remaining here via an ATM or otherwise? Any comments on that?
Yeah. We want to retain the flexibility just given, you know, varying market conditions, but we do still have our billion-dollar ATM, so we can leverage that as needed to dribble it in as you suggest.
Really appreciate it. Thank you.
Thank you, Nick.
Thank you. One moment for our next question. Our next question comes from the line of Steve Fleishman from Wolfe Research.
yeah, good morning. thanks for all the-.
Steve.
Good morning. Good morning, Calvin. Jeanne, thanks for all the clarifications, on, guidances. Don't have to ask all sorts of midpoint or median or other type questions this time.
Had to go there, Steve.
Just on slide 16, I guess the one thing that's interesting is just for PECO in the 23 kind of second year of a rate year, it's a down versus 22, but in 26 second year, it's kind of more flattish or yellow arrow. Is that just that PECO had this return to normal weather and storms and other stuff that is an issue 23 versus 22 and that's pretty much it, but, like, otherwise-
You're right on.
This would be kind of the normal course.
Yeah, you're right on point, Steve. That's exactly the reasoning for it.
Okay. Okay. just, on Illinois, could you give us maybe some sense of when we're gonna get information on the process, on the, you know, recommendations and other stuff on the multi-year kind of timing?
Yes. I do have with me Gil Quiniones, CEO of ComEd, to really walk you through that process. I'm gonna turn to Gil to kind of walk you through the timing of how things are gonna unfold. Gil?
Hi, Steve. There is a tentative schedule set. In May, we expect the testimony of the intervenors to be submitted. In August, evidentiary hearings will commence. Again, after that, all the way to the required schedule is for the ICC, our regulators, to make their final determination before December 20th of this year.
That caps the calendar, Steve. Any additional questions on that?
Well, just because this is first time, is it likely that this would go through a fully litigated process or should we think there might be opportunities to settle these cases?
No, I would anticipate on this would be fully litigated, Steve, because, you know, as we talked about in my comments, it's been a very engaged stakeholder process. If I was the commission in this, I would make sure that we have a forum for everyone to be heard, and we wouldn't rush to the final outcome because this will put Illinois on a path to decarbonize like no other state except for maybe California. It's in a very aggressive approach, and the legislation is comprehensive. ComEd being the largest utility in the state, I think they need to make sure that all voices are heard and the stakeholders are engaged throughout.
Great. Thank you.
Thank you.
Thanks, Steve.
Thank you. One moment for our next question. Our next question comes in the line of David Arcaro from Morgan Stanley. Your line is now open.
Oh, hi, good morning.
Good morning, David.
Thank you for taking my question. Morning. maybe just a quick follow-up on.
Good morning.
On the PECO-related question. I was just wondering, you know, so you've got the one year in 2023 below the low end, but really back in the 6% to 8% or above thereafter. I was just wondering maybe more broadly or structurally, like, is the business now manageable within that 6% to 8% annual growth level year to year, even through some of the lumpier rate cases as you look forward?
No. As I understand the question, David, PECO is a very well-run utility and operating at a high level. Because they have taken the option on the three-year forward-looking test year process, it is one that the regulatory agency understands, one with the company has deemed it is the best value for our customers. Although they have the option to file an additional alternative rate mechanism, we've stuck with this course. We are also looking at, to your point, how can we balance the earnings over the course of the three years where it's more linear in process? The teams continue to work on that. We continue to look at other options, but have chosen to stay the course of where we are at the present time.
Mike Innocenzo, the CEO of PECO, is here with us right now. Mike, would you have anything to add with that?
No. Again, I would echo the fact that in Pennsylvania, we do have the ability for alternative rate structure. We've continued to review this annually and believe that it's the current course has been the best for a balance between the shareholders and fair rate for our customers.
David, I think the, you know, tapping off of that, on PECO, I would look to slide 16. There is the second year of PECO in 23, but to your point, beyond 23, we expect to be within or above the range. You know, while you have PECO in 23, there's a couple other factors impacting 23 that don't carry forward. Unlike, you know, our assumption that PECO continues on this three-year rate case cycle, there's a couple other things that are unique to 23 that I'll just highlight. One is, as we've talked about, we're not yet through the reconciliation processes in Maryland and D.C. for their first multi-year plans. Once we get through that, the alignment between rate base and growth and earnings growth is strengthened. That's number one.
The second is in 2023, we have the D.C. stay out provision, so they're still on 2022 rates. As we get out of that and move towards 2024, you're gonna have new rate cases, new multi-year plans for 2024, 2025, 2026 starting in 2024. That starts again to strengthen the earnings power there. On top of that, ComEd's moving to its multi-year plan. As you go through 2024, you start to see, again, three of our four operating companies on multi-year plans with reconciliations, strengthening that alignment between rate base growth and earnings growth. You've got PECO with that variability that Calvin and Mike touched on. That's why as you look forward, 2023 is a little bit different than 2024, 2025, 2026, and I think slide 16 really helps lay that out.
Great. Thanks for that.
Did I answer your question, David?
Yeah. Oh, absolutely.
Good.
I was just wondering on the maybe just a quick other topic on the Chicago franchise agreement. I was wondering if you could just speak to the financial implications of the proposal that you've put forth and your thoughts on the prospects to get that approved and when that could go into place. Thanks.
Absolutely. A couple of things. As we've been highlighting to you in our previous earnings call, we understood and have a clear understanding of what the city of Chicago was striving for. I think the proposal that ComEd has presented in partnership with the mayor outlines the goals of decarbonization, equity, and workforce development. Within that, ComEd, over the course of the last couple of years as they've been negotiating this and putting this in place, understood the dollars in which they would do and what we would commit to as a company, Exelon, ComEd, and the like, and shareholder commitment to this effort because we value the partnership. What has been outlined from the mayor really is essence of all of that in terms of funding.
Gil, as I mentioned, is here to talk about some of the details, but what we have laid out is that this process goes to the rules committee this month, with the city, and from there it will go to a committee of jurisdiction. We're confident that as they begin to do an analysis of what we're proposing. It will meet the aspirations of the city and achieve those goals overall. On the financials, I'm gonna turn it over to Gil to kind of walk you through what that is.
Yes. For the Chicago franchise agreement, there are actually two agreements. There's the franchise agreement and the energy and equity agreement. As Calvin mentioned, our goal was to align our proposal to Chicago's Climate Action Plan and the state's Climate and Equitable Jobs Act, and we achieved those goals. In terms of the financials, it is a 15-year agreement with an option to extend for another 5 years. The first 15 years, we have proposed to commit $100 million in shareholder dollars and if extended, another $20 million.
All of that's baked into the guidance that we've provided.
Correct.
Okay, understood. Great. Thanks so much.
Thank you, Dave.
Thank you. One moment for our next question. Our next question comes from the line of James Kennedy from Guggenheim Securities.
Hey, guys. Good morning. Congrats on the update.
Good day.
Thanks for coming.
Good morning.
I guess just kind of keeping on the topic of Illinois, how are you thinking about the backdrop for transition at the commission this year, given there's a vacancy, there's some expired terms and some other overhangs on several of the seats at the moment?
Yeah. No, James, great question. I'll be honest with you. When we look at our interactions and engagement with regulatory bodies, we anticipate turnover. That is exactly why, although we have regular conversations about the process and what we're proposing, our real engagement happens with our stakeholders. The stakeholders are customers, residential, commercial, and industrial, as I outlined in terms of ComEd's even filing. I think there were over 45 stakeholder meetings, presentations and over 1,000 different people attended these. Although the commission turnover is something that we deal with in all of our jurisdictions, if we're doing this right, and I think we are, we're meeting the policy expectations of each of our jurisdictions, aligning our filings with those policies and engaging stakeholders at the grassroots level. The commission turnover should not be that big of a deal.
That's how we approach it in not only Illinois, but in each of our jurisdictions.
Gotcha. Gotcha. Just on the expense side, 2022, just in O&M, looked like it came in a little bit higher than the prior plan. I guess, what were the drivers there, and how should we think about the future cost inflation embedded in the drivers and assumptions you guys laid out on slide 16 to that? Thanks.
Yep. Yeah, great question. You're right. For 2021 to 2022, we did see a little bit higher O&M. We had projected at Analyst Day to be up around $100 million year-over-year due to certain IT investments and other infrastructure cybersecurity work that was occurring in this year. In addition to that, there were a couple other items at the end of this year or that impacted 2022. First was we have some one-time costs associated with the implementation of the Climate and Equitable Jobs Act at ComEd. That's reflective there.
In addition to that, as I mentioned in the prepared remarks, we did some de-risking this year, so we took advantage of the opportunity from some of the tailwinds related to the ComEd ROE and favorable weather conditions to get some work done this year, including, you know, corrective maintenance and veg management, but also some customer assistance and community support initiatives. All in all, that sort of gets you to the higher O&M for 2022. Then you asked about how to think about it going forward. I think that, you know, our goal is to keep O&M as low as possible. You can see 2022 to 2023 is only a 1% increase, and our long-term CAGR since 2016 has been about 1.7. Our goal is to keep that as low as possible.
Perfect. Thanks, guys. I appreciate it.
Thank you.
Thank you. One moment for our next question. Our next question comes from the line of Durgesh Chopra from Evercore ISI.
Hey, good morning, team. Thank you for taking my question. Jeanne, just a quick clarification.
Good morning.
Good morning, Calvin. Jeanne, just a quick clarification on the $875 million in CapEx, which is sort of in the, I guess, in the 2023 to or the prior four years, is that all in Illinois? Is that Illinois distribution?
Yeah, no, there was some also at BGE on the transmission side. I think, you know, while ComEd updated for its multi-year plan, there was also some added investment at BGE as well.
Got it. Most of it is in Illinois, and that is included in your, you know, the multi-year rate filing.
That's correct.
Okay, thanks. Then just I think this is back to you, but I appreciate this is gonna be difficult, but, you know, pretty sizable increase in CapEx. That is great to see. The equity didn't move. Can you share any thoughts as we think about sort of when you update your CapEx plan for future years, how should we think about equity needs? I'm thinking sort of 2027 and beyond. Are those gonna be modest given that, you know, you're kind of trending upwards in your FFO to debt metrics?
Yeah. I think, as you saw in the, in the waterfall of the latest, you know, sort of financing of the investment plan, our internal cash flows continue to strengthen as we step into new multi-year plans. You know, we have the roll-off of the one-time opening balance sheet adjustment in 2022. As our rate base grows and depreciation, we collect that and reinvest it back in the business. As you think about, you know, so for that period, right, we've reaffirmed the $4.25.
To the extent additional capital is required to help our energy, our jurisdictions with their energy transformation, you can expect us to fund it in a balanced way with a keen focus on our commitment to 6% to 8%, as well as the balance sheet cushion that we talk about 100 to 200 basis points.
That's helpful. Thank you very much.
Thank you.
Thank you. I would now like to turn the conference back to Calvin Butler, Exelon's President and CEO, for closing remarks.
Thank you, Gigi. Let me first begin by saying thank you to each of you for joining the call and the partnership that you've shown and demonstrated to Jeanne and I over the last several months. It's been really appreciated. To our employees, thank you for all the hard work and dedication that you demonstrated in 2022. We look forward to engaging with all of you throughout 2023. With that concludes this call. Have a great day.
Thanks to all our participants for joining us today. This concludes our presentation. You may now disconnect. Have a good day.