All right, I think we'll go ahead and get started doing a mic check. Can everyone hear me? All right, perfect. Okay, I want to welcome everyone in the room as well as those joining via webcast to MDU Resources Investor Day, and certainly thank you for your interest in our company. It truly is an exciting time for our company as we continue transforming our business. Before getting started, I'd like to take a few minutes to introduce our management team that's here with me today. We've got Jason Vollmer.
Jason, if you can raise your hand, our Chief Financial Officer, Jeff Thiede, our President and CEO of MDU Construction Services Group, Rob Johnson, our President and CEO of WBI Energy, Garret Senger, our Chief Utilities Officer, Anne Jones, our Chief Human Resources Officer, Peggy Link, our Chief Information Officer, Paul Sanderson, our Chief Legal Officer, Steph Siewert, our Chief Accounting Officer and Controller, and Laura Lueder, I think she's in the back, is our Manager of Communications and Public Relations, and then we have Brent Miller, our Assistant Treasurer. I'd like to thank the team for joining me here today. During the course of our presentation, we will be making certain forward-looking statements, so I'd like to draw your attention to our forward-looking statement language.
I would also like to mention that our slides will be posted to our website later today, and a recording of the webcast and Investor Day will be posted following the event. Our agenda for today will include a series of prepared remarks. I will provide an overview of MDU Resources as well as the exciting prospects for our future as a pure-play regulated company. I will then turn the presentation over to Jeff for an overview of MDU Construction Services and their compelling investment opportunity as a standalone business, followed by Jason covering the financial outlook and guidance. I will then come back up to provide closing remarks before bringing the business unit heads as well as Jason back up to the stage for Q&A.
We are asking that you hold your questions until the end, and if you are joining us via the webcast, please submit your questions via email at investor@mduresources.com, and we will add them to the queue. For those in the room, we do have lunch following the event where management will be available for additional Q&A and conversation and one-on-one discussion. We would like to begin our presentation today with a short video. In conjunction with our Investor Day, we are fortunate to be ringing the closing bell to commemorate 100 years as a company. We put together this short video in honor of that celebration. We would certainly like to thank all the employees that came before us who have shaped the company to what it is today, and we all, as a management team, take our responsibility seriously to leave our fingerprints for those that come behind us.
With that, I'd ask the video to be played.
How do a couple lumber businessmen from Wisconsin and an engineer from Chicago form a power company based in Minneapolis, yet end up serving customers on the prairie of western North Dakota and eastern Montana? It's a long story, 100 years in the making. It's how MDU Resources Group got its start on March 14, 1924, with service to a handful of farming communities on the Montana and North Dakota border. While a century seems like a long time, MDU Resources is ready to write more chapters of its evolving story. With the spin-off of Knife River in early 2023 and the pending spin-off of MDU Construction Services Group expected at the end of 2024, the story will come full circle back to the roots of a utility company.
The new look of MDU Resources will center around a utility group that serves 1.2 million customers across eight states with more than 30,000 mi of electric and natural gas transmission and distribution lines, and 648 MW of generating capacity, as well as an interstate pipeline group with 3,800 mi of pipe and 2.6 billion cu ft of daily capacity. It also owns the largest underground storage field in North America, with plans to invest $2.7 billion in regulated infrastructure over the next five years, which will drive earnings growth. The transition to a pure-play energy delivery business should grow shareholder value. Our goal remains simple: continue to grow a company that focuses on providing safe, reliable, and low-cost electric and natural gas service to our customers and the communities we serve, while staying focused on reaching emission reduction targets, and thrive for another 100 years.
So as you heard, MDU Resources has a long, rich history of evolving our company to create shareholder value. We have been doing it since our inception in 1924 while paying an uninterrupted dividend for the last 86 years. Our most recent examples of this are highlighted on this slide, with the expansion into and growth of our construction materials and construction services businesses. Our leaders and employees at those businesses scaled those businesses to be standalone capable. With the successful spin of Knife River in 2023 creating substantial value for shareholders, and the anticipated spin of construction services in late 2024, we are transforming our business to focus on a core pure-play regulated energy delivery companies. So why MDU, you might ask? We believe we have two compelling investment stories within our existing company, both supported by macroeconomic tailwinds and strong histories of performance.
Our future as a pure-play regulated business provides nearly 100% regulated business with stability of cash flow, a diversified business mix with eight states and 14 jurisdictions, supported by a strong balance sheet and a proven track record for growth, and we are just getting started. Our compelling long-term guidance and future growth are driven by numerous factors, including system replacement and expansion, and certainly electric transmission system replacement and expansion. We are in the middle of an AI revolution and an electric generation transition and will continue to drive growth at our utility and our pipeline companies. Our construction services business also provides a compelling investment story as one of the largest electrical contractors providing macroeconomic tailwinds and a strong history of performance. They are generating solid cash flow, providing continued optionality for investment back into the business, balance sheet strength, and other opportunities, all driving value for shareholders.
At MDU Resources, we have a proven track record of creating shareholder value and believe the spin later this year will continue to create value for shareholders as we focus on each business uniquely and their own growth plans. When thinking about MDU Resources today, you can see the breakdown of our contributions between regulated and construction services. From an earnings perspective, regulated represents about 55% of our 2023 earnings, and construction services 45%. When we think about our transition to pure-play, you can see the charts on the bottom show MDU Resources of the future with our utility companies representing 77% of capital and 72% of overall earnings. As we think about MDU Resources of the future and our focus on being a pure-play regulated energy delivery company, I'm very excited to announce a new framework we call CORE.
Focusing on our CORE is how we operate, grow profitably, and drive long-term shareholder value. Our path to pure-play focuses the company on its original CORE energy delivery business, where we got our start 100 years ago. CORE is about formalizing that framework our over 2,000 regulated employees have used on a daily basis. So what is CORE? CORE stands for Customers and Communities, Operational Excellence, Returns Focused, and Employee Driven. By introducing these compelling valuation creation targets, our EPS growth, rate-based growth, and a competitive dividend payout target, alongside operational performance and true commitment to our employees, CORE will ensure that we continue to provide long-term value to our shareholders, customers, and communities for years to come. So let's get into each of these components in a little more detail, starting with C, Customers and Communities.
Our ability to be successful is tied to serving our customers and communities with the best possible service at the lowest possible cost. Our goal here is to have best-in-class customer satisfaction, competitive rates, and remain community-focused. We certainly have an excellent track record on customer satisfaction, finishing in the top five of the 2023 JD Power Midsize West Region Customer Satisfaction Survey results, with Intermountain placing first, Cascade second, and MDU fourth. In fact, for the past five years, all of our utility brands have finished in the top , with the exception of one brand in 2022 finishing sixth. Our goal is to continue this trend. Regarding our customer rates, our goal is to maintain our rates below the national average, and we have certainly done that. In addition, we want to be competitive with our regional peers.
We believe we have the ability to continue to invest in our business, earn a reasonable return, and continue to keep our rates competitive. Finally, when our communities thrive, we do too. Supporting economic development and working with our community leaders as they build and grow is important to our success, and we always remember to give back through charitable giving. This is the right thing to do, and it is important to our business. We are committed to being a good corporate citizen in the communities that our employees and customers live and work. Moving on to O. O is for Operational Excellence. To be a leading regulated energy delivery company, safe, reliable, and sustainable delivery of energy is as important as serving our customers and communities well.
For us, this is demonstrated through our safety management system, which is designed to identify and reduce operational risks while focusing on achieving continuous improvement. An example of this would be our continued focus on operational controls and strategies around fire risk mitigation, including line inspections and continued investment back into our system, as well as daily assessments of weather conditions during fire season. Although MDU's electric service territory is an area with very low history of fires, we continue to evaluate areas for improvement and risk mitigation. We are fully committed to our overall safety of our system, from the executive management team to every employee. We also strive to achieve lower-than-average injuries and accidents as compared to our industry. Another component of our operational excellence is demonstrated in our responsible approach to operating costs and capital investment.
We aim to keep our costs low and improve our overall efficiency. In fact, our O&M costs per customer are lower for both electric and gas than our regional peers. For the past five years, these costs have been lower than our regional peers. We also have a very disciplined approach to capital allocation and a capital allocation philosophy that Jason will talk about later today, demonstrated through our strong balance sheet. Finally, we are focused on environmental stewardship. We have a number of emission reduction targets, and are committed to operating sustainably to protect the environment and our communities, and I will touch on some of these emission reduction targets later in my presentation. Sustainability is integrated at every step of the way, and is evident by the long-term success of our business over the last century.
We have continually evolved over the last 100 years, and we continue to innovate as we look to the future. R, Returns Focused. We are squarely focused on driving long-term shareholder value in everything we do, and we have set compelling targets for ourselves. Jason will go into these details later on our long-term guidance, but as you can see here, we are setting very compelling long-term guidance with a long-term EPS growth rate of 6%-8% and utility rate-based growth of 7%. This growth, along with no equity issuances planned until 2027, sets us apart from many of our peers. We also continue to stay focused on ROE enhancement. We have constructive regulatory relationships in all service territories that allow for adequate and timely recovery of incurred costs.
With our historic and future growth profile, regulatory lag will need to be managed through timely rate recovery, providing future earnings potential. We also have opportunities to pursue incremental growth, such as low-capital investment customer additions, including our recent data center project, as well as expansions on our existing pipeline system. To expand just a bit on our recent data center addition added in 2023, this is the single largest customer for the utility, with 180 MW of high-density data center load. The good news is we have an expansion request in the North Dakota PSC for an additional 225 MW at this same site, which is expected to house high-performance computing resources for the artificial intelligence industry. The first 100 MW of this project is expected to be online this year. Staying on R for Returns Focused, I want to talk a little bit about return to shareholders.
We are targeting a total shareholder return in the top quartile or higher of our peers, and we expect a consistent and growing dividend with a payout ratio targeted at 60%-70% of regulated earnings and growing in line with earnings growth. Finally, Employee Driven. Our people drive our success, and we need to ensure that we attract, develop, and retain top-performing workforce and have a strong culture that motivates our employees to consistently seek to deliver the best and only get better. We strive to be an employer of choice and generate a workplace culture that provides competitive total compensation packages. We seek real-time feedback from our employees and apply a continuous improvement mindset in everything we do.
We encourage our employees to be involved in the communities they live and work, and we focus on developing within and creating succession planning initiatives at multiple levels within our organization. To summarize, CORE is MDU's framework for how we will operate, grow profitably, and drive long-term shareholder value. Speaking of long-term shareholder value, we believe MDU Resources is a very compelling investment story, with a strong regulated business mix, extensive diversification, supportive regulatory environments, a solid balance sheet, and an experienced management team with a strong record of growth, as well as compelling long-term targets. I want to highlight just a few things on this slide. Nearly 100% regulated cash flow provided by our utility and pipeline provides stability and predictability. Our utility operations are diversified across eight states and 13 jurisdictions. Our pipeline operations are across five states.
25% of our total rate base is FERC regulated with minimal lag and attractive ROEs. We have a strong balance sheet at year-end 2023, debt representing 45% of our overall capital structure, with no near-term equity needs, and importantly, a solid historic track record of growth. Diving just a little deeper into our diversification, you can see highlighted on this slide our footprint for our utility group, serving 1.2 million customers across eight states through four utility brands. On the electric side of our business, we are vertically integrated with 648 megawatts of own generation and 145,000 customers across four states. On the gas side, we serve over 1 million customers across eight states. On an overall basis, you can see here on this slide that our largest states of operation are Idaho, Washington, and North Dakota.
Our pipeline business operates across five states with 3,800 mi of pipeline and 2.6 BCF per day of capacity, along with the largest storage field in North America. Their footprint overlays the Bakken, providing many strategic advantages that I will touch on later. In addition, you can see that WBI's system overlays Montana-Dakota's footprint, transporting approximately 82% of MDU's natural gas and providing MDU's customers with access to storage, which aids in commodity price stability. Demonstrating just a few examples of the strategic advantages of these two businesses continuing to operate together under the MDU Resources umbrella. When looking at our combined rate base, you can see the diversity here represented through 14 jurisdictions, as I mentioned, and eight states, with our utility representing 80% of our overall rate base. The FERC and state breakdown is also shown, with FERC representing 25% of overall rate base.
We continue to see strong growth in both state and FERC jurisdictions on a go-forward basis. Onto our strong track record of growth. We have an historic track record on both rate base and earnings growth, delivering on both fronts. Combined rate base has grown at 8% compounded annually over the last five years, with the utility growing at 7% and our pipeline at 16%. In line with rate base growth, earnings has grown 8% over that same time period, providing compelling growth relative to our peers. Our ability to deliver these results historically provides us confidence in the forecasted long-term growth I touched on earlier. Historic growth has been driven by many factors, including the rate base growth that I just mentioned, customer growth in our service territories, which trends above the national average, as well as the data center addition just this past year.
On the pipeline side, we have grown our pipeline capacity at a rate of 6.6% compounded annually over the past 5 years, with system expansions driving earnings growth. Touching on our overall landscape of rate base, I will dive a little deeper into the details, starting with our FERC rate base. On an overall basis, as mentioned, this is 25% of total rate base. On the pipeline side, 100% of our rate base is FERC regulated, with a positive 60% authorized equity layer. On the utility side, 6% of rate base is FERC regulated, represented by electric transmission assets receiving an attractive 10.52% return. As we expect this to grow with our announced part, and we expect it to grow, excuse me. Okay, I'm hoping I get through this. I'm the back half of a cold. One more drink, and I think I'll be good.
Talking about our FERC rate base at the utility, as I was saying, our FERC regulated rate base at the utility is represented by electric transmission projects that receive an attractive 10.52% return. We expect opportunities on the FERC electric transmission projects to grow in later years of the forecast. Our JETx project is one example of that. It is a MISO Tranche One project, and we continue to see potential for FERC transmission going forward as demand for energy and transmission continues to increase. These really are ideal projects with no regulatory lag and very little impact on customers as costs are spread across the entire MISO region. Okay, moving next to the state rate base and starting with electric. Try a cough drop here. I'm sorry.
Okay, our electric rate base is $1.4 billion in total on an overall basis, with the largest state being North Dakota, where current allowed returns are at 9.75%. As will be shown later, North Dakota has favorable regulatory mechanisms reducing overall lag. On the gas side of the business, overall rate base is at $1.8 billion, with Washington and Idaho representing our largest states. You will also notice on this slide a heavy regulatory schedule over the next several years, with Washington being our first multi-year filing, anticipated the end of the first quarter. Okay, I am sorry. Yeah. Okay, this slide here represents our regulatory mechanisms. I want to start with the electric side of the business.
All states, you can see, have a forward or forecasted test period with fuel clause adjustments in three of our four states, and three of our four states provide interim rate relief. As mentioned earlier, North Dakota has favorable rider mechanisms that reduce overall lag, with certain investments, including our transmission rider, a renewable rider, and a generation rider. This slide here covers the gas side of the business and the favorable regulatory mechanisms we have in place there. All states have a purchase gas cost adjustment, with all but one state providing for forward or forecasted test periods, and half of our states have weather normalization mechanisms. In addition, you can see that we have a pipeline replacement integrity tracker mechanism in Minnesota and Washington. Regulatory activity throughout all jurisdictions is covered on this slide.
Over the past three years, we have filed regulatory proceedings in 11 of our 13 jurisdictions, with plans to file three to four rate cases each year on a go-forward basis. 2024, you can see, will be a busy year as we hope to finalize the 2023 rate cases and look to file four additional cases on the gas side of the business. Now I would like to switch gears to our pipeline business. We have fundamentally enhanced the business mix of our pipeline operations through our strategic decision to exit all gathering and processing services as of 2020. Since 2009, not only have we exited these services, but we have significantly grown the transportation and storage revenue, providing for low-risk, stable returns in this business. This is also represented through the change of our revenue mix between fixed and variable.
In 2023, nearly 80% of our revenue was fixed compared to 50% in 2009. We anticipate fixed revenue will continue to increase through growth projects supported by long-term contracts and driven by customer demand. A real key positive differentiator between our pipeline and utility business is the fact that earnings at the pipeline are largely customer-driven and supported by long-term contracts, generally 10 years or longer. With the majority of the capital spent in the year the project goes in service, regulatory lag is limited, and returns are immediate, without the need for a rate case. The pipeline's primary focus is execution of customer-driven projects, which substantially or which subsequently will grow rate base. As I mentioned earlier, WBI's overlay on the Bakken provides a strategic advantage. We transport over 50% of the gas produced in the Bakken.
As you can see by the charts here, gas production is expected to continue to grow as gas-to-oil production ratios are forecasted to continue to increase. Although you can see that oil production has stayed relatively flat, gas production has grown to over 3 BCF. Gas is the byproduct here, with oil being the driver, meaning production is less sensitive to gas prices. The punchline here is simple. Forecasted natural gas growth outpaces current takeaway capacity in the Bakken, providing opportunities for our pipeline business. In terms of pipeline regulatory activity, Rob and team have successfully completed a settlement in 2023 of their FERC rate case with a very good outcome and rates effective in August of last year. In fact, they have successfully settled cases in the last several regulatory proceedings through collaborative processes with FERC and the shippers.
Finally, I would like to close out my section with a discussion around our views on sustainability. We fundamentally believe sustainability is strategy, and we have demonstrated that in action, proudly serving communities for the last 100 years. We believe sustainability is a balance of social, environmental, and financial impacts. All three need to be balanced to survive 100 years, and we have done just that. We are committed to E, S, and G. The next several slides provide details on those commitments. Starting with the environment. We are committed to safely and reliably serving our customers while doing our part to reduce overall emissions. We have set emission reduction targets at each of our segments.
You can see on this slide at the electric utility, our target to reduce GHG emissions is a reduction of 45% by 2030, and we are well on our way with a 40% reduction to date. At our natural gas utility, we have set a goal of a 30% methane emission reduction target by 2035, and finally, at our pipeline, a 25% reduction by 2030. We have transitioned our generation fleet, increasing our overall renewable capacity to 29% of our nameplate rating. We have also increased our focus on renewable natural gas and continue to see opportunities in this area. We have been in the RNG business for quite some time with our legacy landfill in Montana. Activity in the Pacific Northwest has picked up with five interconnection agreements currently in place, as well as the construction and ownership of yet another landfill in Deschutes County.
In addition, we have five interconnection agreements in Idaho, and we continue to see additional opportunity, most notably in the Pacific Northwest. On the social side, our employees and communities are at the heart of what we do, and we stay committed to our approximate 9,000 employees while being a good corporate citizen. We seek employee feedback through engagement and stay committed to a culture of continuous improvement regarding safety. On the community side, we are active in our communities and give back where we can through volunteerism and contribution to charitable organizations, representing $2 million in 2023. We have an experienced management team. I introduced you to many of them today and a solid track record of growth with a legacy of leadership. I am certainly proud to stand beside them as we continue to transform this company.
I want to give a quick shout-out to Ann, who I introduced earlier with the most years of service at 42 years of service with our organization. And Rob and Garret, not that far behind at 41 years. But on a collective basis, this management team has 27 years of experience with the company. That is a legacy of leadership. And I am so proud to be part of this team, and I'm so proud of what we have accomplished together over the years. We are also committed to strong corporate governance aligned with shareholder interests. To name just a few, we have an annual election of all directors, a separate board chair and CEO, risk oversight by the full board and committees, and stock ownership requirements for directors and executive officers. And we certainly are proud of the diversity represented on our board.
We have a highly qualified board represented on this slide here with expertise across our industries, along with financial and cyber expertise. Each board member's credentials are mentioned on this slide. I would like to close by bringing us back to our core focus. MDU Resources provides a predictable, sustainable investment based on a history of performance with a continued commitment to customers and communities, operational excellence, solid returns demonstrated through attractive earnings and rate-based growth, and a focus on employee retention and engagement. With that, we'll take a short break before reconvening with Jeff's presentation. So I'm thinking we'll do a 10-minute break. We can all come back at around 10:45 A.M. Thanks, everybody.
All right. We're going to get started here. Welcome back. Thank you, Nicole, and good morning. I really appreciate you taking the time to join us today. I'm very excited to kick off my presentation this morning by announcing our new name. MDU Construction Services Group is now Everus Construction Group. Our new brand emphasizes the strength of our industry and the strength and identity as a company.
Everus is derived from Mount Everest, signifying the strength and the fortitude of the mountain. The combination of ever and us represents our team. We are a people-first business, and this represents the strength and dedication of our high-performance team members. The U.S. is also a nod to the strength and power of the United States as we seek to continue building America's future. This new brand helps us separate from MDU as we prepare to be spun off as a separate publicly traded company late this year. I'm going to provide a high-level overview of our business today because we intend to hold an investor and analyst event for Everus later this year. I look forward to providing you with much more detail about our financial metrics, our strategy, and growth opportunities at that future event.
While we'll have a new name and we'll become a standalone publicly traded company, we will continue to be the same outstanding business we are today. We remain one of the top 10 largest specialty construction companies in the country with a team of over 9,000 highly skilled workers at peak season across our diverse operations who completed more than 40,000 projects across the country last year. Our business operates in two segments. Electrical and mechanical includes construction and maintenance of electrical and communication wiring and infrastructure, fire suppression systems, and mechanical piping and services. If you think about the Las Vegas Strip, our operating companies have completed the inside electrical wiring and communication lines, the HVAC systems, the plumbing systems, the fire suppression systems, and the solar panel installations within and around the majority of hotels and attractions.
We also are experts in performing work within data centers, semiconductor manufacturing, healthcare, and education facilities. We also have significant success with long-term master agreements. This is what our E&M segment performs. Our transmission and distribution segment involves constructing and maintaining overhead and underground electrical, natural gas, and communication infrastructure. We also manufacture and sell or rent specialty power line construction equipment and tools. The vast majority of our T&D work is for third-party utility companies that are longstanding customers, many with whom we have worked for over multiple decades. We perform work like building power lines and other energy and communication infrastructure. We build large-scale transmission lines. We convert overhead power lines to underground lines and install gas services. A recent example of the type of project we're involved in is power line restoration and repair following the massive storms that California recently endured.
We respond to our third-party utility customers to restore essential, must-have energy and communication services for communities and businesses. Everus has had significant historical growth with record performance in six of the past seven years and a compound annual growth rate of 17% over the past five years. Our return on invested capital at the end of 2023 was 22%, demonstrating our financial discipline and strong performance. Our backlog remains very strong at near-record levels as demand stays high for the type of services we provide. We expect our growth to continue with significant project opportunities on the horizon and the ability to be more strategically focused on growing our business as a standalone company. We will accomplish this through organic growth and also strategic acquisitions. As I said earlier, we are a people-first business. Everus is not a capital-intensive business.
As you can see, CapEx has historically been below 2% of our revenue, and we expect that to continue in the future. This allows us to reinvest our cash flow directly into growing our business and ensuring that we have the highest quality team, equipment, tools, technology, and resources to pursue project opportunities. In addition, with a strong balance sheet, we'll have opportunity for strategic acquisitions to complement and support our growth strategy. We will continue building America's future as Everus. This is a rendering of the new terminal at the Kansas City International Airport, which was a very successful project on the E&M side of our business. This project was completed safely, within budget, and on time while meeting and exceeding quality standards. I am very proud of our team dedicated to excellence on this project and thousands of others throughout our successful history of performance and growth.
As Everus, we will be focusing on our 4EVER strategy. Employees is about our team. Our greatest asset is our people, and we're committed to recruiting, engaging, training, developing, and rewarding our team members. Value is about our financial metrics. It's about creating value for our shareholders, our team members, and our other stakeholders. Execution is about how we work. We have proven time and time again that safety and productivity do go hand in hand. It's about doing every job safely, efficiently, and with integrity. It's about delivering what we say we're going to deliver. Relationships is about stakeholder satisfaction. It's about building connections with key stakeholders like our customers and our investors to know that we're at least meeting their needs. The R could also represent earning the respect from our customers and our team members and also repeat business.
I look forward to telling you more about our strategy and our financial metrics during our Everus investor and analyst event later this year. As we look forward, we see many opportunities to continue our record performance and growth. We are an essential services provider. Businesses and communities need inside electrical wiring, power line construction, and other services we provide in order to function in their daily lives. And federal, state, and local entities and private companies continue to invest in the type of infrastructure and facilities that we build. For example, regional transmission systems are congested, so demand is strong for large-scale transmission projects. Environmental threats to our power grid, such as storms and wildfires, continue to grow, so demand is strong for storm repair work and grid hardening.
Our undergrounding work experience positions us to capture more of this work going forward, which is another growth opportunity for our company. Federal funding for infrastructure projects and manufacturing reshoring also are driving opportunities for us, helping fund investments in the power grid and facilities where we perform electrical and mechanical work. Our successful track record and relationships in the semiconductor manufacturing market will also add to our performance. We also specialize in data center construction. This has been a significant growth opportunity for us as cloud computing and AI continue to escalate the demand for data storage. As a diversified business, we see minimal impact from construction cyclicality. Our strategic geographic locations and varied areas of expertise are aligned with the many growth drivers of public and private investment.
With these significant opportunities on the horizon, we will benefit from being able to focus our cash on growing our own operations exclusively. At Everus Construction Group, our operations are well-positioned to continue growing market share in our existing markets. We will also look to expand through a disciplined acquisition approach that focuses on companies that align with our forever strategy of employees, value, execution, and relationships. As one of the largest specialty construction contractors in the country, our history of proven strong growth and our future of continued strong growth opportunities will provide a distinct investment opportunity for our future shareholders. As a people-first business, our greatest asset truly is our team. Our company culture is about supporting our team members, and that's why we have an exceptional labor force. People want to work for us, and they're dedicated to doing the job safely, productively, and with integrity.
We are proud of our field professionals and our management and support teams, all who help differentiate Everus as a go-to resource and trusted partner for our customers. We are proud of the work we do, and we're excited to keep building America's future. Thank you again for your interest in Everus Construction Group. We look forward to telling you more about our financial guidance, our metrics, our drivers, our operational strategy, and our growth opportunities at an Everus investor and analyst event later this year. Now I'll turn it back over to Jason for the financial outlook. Thank you.
Thank you, and good morning, everyone. I also want to thank the New York Stock Exchange for hosting us here today in this beautiful venue. This really is a great place to be doing one of these investor days. Along with our 100th anniversary and ringing the bell later today, we celebrated 75 years of trading on the NYSE last year, so it really has been a great relationship for us. So thanks all of you for joining us here today and showing interest in MDU Resources as we look to an exciting future ahead of us. We're excited to have the opportunity to update everybody in our story of both MDU and Everus. As a reminder, the slide deck from today's presentation webcast will be posted on our website later today for review. So 2023 was an exciting year and very successful year for MDU Resources.
We achieved record results in each of our businesses and made significant progress on our path of becoming a pure-play regulated company. We completed the spinoff of Knife River in May and continue working towards the spinoff of Everus slated for later this year. Our utility group earnings were up 17% over 2022. We had an active regulatory calendar with approved rate relief benefiting 2023. We also experienced record electric sales volumes driven in part by the addition of a data center customer in the middle of 2023, as Nicole mentioned earlier. However, we did experience a decrease in natural gas sales volumes due to warmer weather across our service territory last year. In addition, we completed significant capital investment, driving our rate-based growth over 8.5% over the prior year. Pipeline earnings increased 33% over the prior year.
Expansion projects and higher contracted volume commitments on the North Bakken expansion led to record transportation volumes at this business. That, along with higher revenue from our recently completed FERC rate case, helped drive earnings growth on a year-over-year basis. Everus posted another record year of record revenue, earnings, and EBITDA as growth and demand in the specialty contracting markets continues to be extremely strong. EBITDA increased over 15% on a year-over-year basis, and margins improved as well. As this business prepares to stand on its own as a separate publicly traded company later this year, it is well-positioned to benefit and build off this strong base. We're reaffirming our guidance consistent with what we discussed in February. As we move towards 2024, we expect earnings in the regulated energy delivery business to be in the range of $170 million-$180 million.
This reflects the benefit from rate relief and projects put into service during the year, along with customer growth. For Everus, we expect revenue in the range of $2.9 billion-$3 billion, with margins comparable to 2023, which was, again, much improved over the prior year. And EBITDA, we expect in the range of $220 million-$240 million. With over $2 billion of backlog heading into this year and continuing opportunities in this space, we feel confident in our ability to achieve these targets. We had a record year of each of our businesses in 2023, and we are forecasting another record year in 2024. All of these guidance metrics assume normal economic and operating conditions, normal weather across our service territory, and of course, we will provide updates as we go throughout the year.
As Nicole mentioned earlier, we had a very active regulatory calendar in 2024, and it certainly will be an active year again or excuse me, 2023 will be an active year in 2024. Regulatory activity continues to be a focus of our R in our core strategy. With past and continued capital investment in our business, we do experience regulatory lag. We saw significant regulatory activity in 2023 as we worked to reduce that lag and produce earnings growth. This last year, we completed rate cases in our North Dakota and Montana electric jurisdictions, as well as our Idaho gas jurisdiction. The North Dakota and Montana cases represent the largest of our electric jurisdictions, so having those finalized in 2023 had a significant impact and will impact future periods as well.
Final rates in North Dakota were effective July 1st, and final rates for Montana were effective October 1st of last year. Of course, we finalized our FERC rate case of the pipeline, with new transportation and storage rates effective August 1st. We also filed several new rate cases in 2023 requesting natural gas rate increases in North Dakota and South Dakota, as well as an electric case in South Dakota. 2024 will be an active year on the regulatory front. Capital allocation is one of the most important areas of focus for our team as we strive to create shareholder value. As Nicole mentioned in her remarks, one of our key elements of operational excellence of our core strategy is safety of our system. We prioritize investments that enhance the safety, reliability, and security of our system, along with those that support customer growth.
We also look to minimize lag where we can using tracker mechanisms or riders at our utility operations and pursuing long-term negotiated contracts in our pipeline business. We also have the ability to pursue additional growth projects with strong return profiles. Examples here are opportunities such as the recent data center expansion or the expansions of existing pipeline operations, which require minimal capital investment but can provide very compelling returns. With an eight-state operating footprint, as well as our FERC-regulated pipeline system, we have significant optionality as we think of investing capital in the future and providing shareholder growth for the long term. Putting that capital allocation philosophy to work, we plan to invest $2.8 billion into our business to drive rate-based growth over the next five years. Given the anticipated spinoff of Everus later this year, we only have planned capital investment for that business in 2024.
2025 and beyond reflects only our future pure-play regulated businesses. These are very line-of-sight capital projects supporting system safety and integrity of our electric and gas distribution systems, expansion projects such as our pipeline expansion project for Wahpeton slated for later this year, and electric transmission projects like our JETx project, which is a MISO Tranche One project Nicole mentioned earlier that we're building with a partner. This project alone is a $220 million investment. That's just our share with excellent return profiles and does not require a rate case to begin receiving a return. JETx is slated for construction in the later years of our capital investment plan shown here. So you can see a slight increase in 2027 certainly being one of those time periods. I would also note on this slide that we see a little bit of a pullback in 2028.
That is not something to be concerned about other than looking at planning on a go-forward basis, and certainly we will expect to see other projects that will start to fill in there as we get closer to that time period. As we head into this next growth phase, it's important to note that our balance sheet is very strong. At the end of 2023, our debt-to-total capitalization ratio was 45%, as Nicole mentioned earlier. In general, our commissions allow us to earn around a 50% equity layer in most jurisdictions. For our FERC pipeline business, the FERC allows a 60% equity layer, enhancing our return potential on a long-term basis there. We target strong investment-grade credit ratings and have good relationships and dialogue with both rating agencies that cover our business.
As we look forward, we see our FFO to Debt remains above 15% throughout the forecasted period, which again is an important point as we think about where ratings land in our business. As we look at our $2.8 billion capital program over the next five years, we are not expecting to issue any external equity until 2027. We may have some minor issuances under employee incentive programs but are not expecting any meaningful equity offerings in the near term. As we look forward at the electric business, we're excited about the growth opportunities we see ahead of us. We expect rate base to grow around 7% annually over the next five years as we execute on our capital investment plans. Customer growth will continue in the 1%-2% range annually as well.
In addition to the data center customer that came online in mid-2023, we are seeking approval of a second electric service agreement for a new data center expected online later this year, and Nicole previewed that in her comments a few minutes ago. Our Heskett Unit Four, which we originally expected online in 2023, experienced performance issues during initial testing late last year. The unit is undergoing modification, and we currently expect it to be online in the second quarter of 2024. While we hope to have this operational last year, we do not expect any material impacts to our 2024 guidance as a result of the delay. Our pipeline business continues to see benefit from both the expansion projects placed into service in 2023 and the FERC rate case for which rates were effective August 1st of last year.
This business grows through customer demand from both producers looking to get their product to market and end-use customers looking for additional transportation capacity. The current transportation capacity of our system is approximately 2.8 billion cu ft per day, and with several additional projects slated for completion in 2024, we see continued growth for this business going into the future. We're excited about the future of Everus Construction Group. We announced the name change today, Jeff, so thanks for sharing that with us. We remain on track to complete the spinoff of Everus in late 2024, as previously announced. With strong backlog heading into 2024 and continued strong demand for the services this business provides, we feel now is the right time for Everus to thrive as a separate public company.
Industry tailwinds such as the IIJA, the CHIPS Act, and the general trends of electrification of the economy, technology investment, and the reshoring of manufacturing in the U.S. provide $ billions of investment potential in the electrical, mechanical, transportation, and utility infrastructure markets, all of which Everus serves and has excellent experience in. As we celebrate 100 years and look forward, we are well-positioned for long-term growth. As a result, we are reframing our long-term guidance outlook for our future as a pure-play regulated company. Our utility, which grows earnings through capital investment, expects to grow rate base at 7% annually. Customer growth should stay consistent at about 1%-2%. At our pipeline business, earnings are driven by customer demand.
This may take the form of large capital projects like our North Bakken and our Wappington expansion projects, or it may take the form of lower capital but high return profile investments. We continue to see EPS growth over the long term at a 6%-8% rate, which Nicole previewed earlier, and that's growing off our record 2023 performance. We have strong visibility into our forward growth outlook, and we're confident we can achieve this 6%-8% over the long term as we excuse me, and we expect a consistent and growing dividend with a payout ratio of 60%-70% of regulated earnings, growing at a rate in line with our earnings growth. Our payout ratio is currently at the lower end of that range.
I think if you look back at 2023's results, we'd probably be right at the bottom end of that 60% range. So from that perspective, I think that gives us just adds to the ability to reliably continue to grow this dividend in the future. As part of our core strategy, the combination of strong EPS growth and a growing dividend will go a long way to help us achieve our goal of targeting top quartile shareholder returns. And we plan to accomplish all this with no equity planned until 2027 due to the strength of our balance sheet. As Nicole started the presentation today, we asked, "Why MDU Resources?" With strong growth, no near-term equity dilution, and a consistent dividend policy, we truly believe that MDU can be a compelling investment now and into the future.
Our strategy of focusing on our core will allow us to better hone in on the strengths of our business that will drive shareholder value as we begin our next 100 years. With that, I'd like to invite our President and CEO, Nicole Kivisto, up for some closing remarks. Nicole?
All right. I want to close just where we started today. As our video so eloquently said, MDU Resources has a long story, 100 years in the making. I am honored to be standing here before you today to tell our story. We spent the first 100 years building and assembling a high-quality portfolio of assets with durable and growing earnings. In late 2022, our board and management team took action to unlock value with the belief that pure-play companies would unlock the most value for our shareholders. Knife River Spin was the first step in that process and has generated significant value for shareholders. We now stand ready to spin Everus with a target date, the end of 2024. It truly is yet another exciting time in our company history with two compelling investment opportunities.
The time is right for Everus to stand on its own with a solid foundation of growth, competitive posturing, and industry tailwinds to support future growth. And with the successful spin of Everus, our path to pure-play will focus the company on its original core energy delivery business where we got our start 100 years ago. MDU has a long, rich history of creating value, and we believe compelling long-term guidance, differentiated growth, targets that set us apart for the next 100 years. And with that, I'd now like to invite Jason, Jeff, Rob, and Garret to the stage to join me for Q&A.
They will come forward with the mic. Maybe I should repeat what I said. Laura and Brent have microphones, so if you have a question, just raise your hand, and we'll take those questions. Again, those on the webcast can submit their questions via investor@mduresources.com. Okay. Go ahead.
Yeah. Thanks, Nicole. Start off in terms of.
A rebranded name? Yeah. For the people in the audience. Yeah. So just in terms of the growth outlook, you highlighted the 15%+ EBITDA growth for the construction business. How much of that is organic versus inorganic? And then in terms of the comments around data center contribution there, how material is that within the $230 million EBITDA for 2024? And do you have any view around the outlook for contribution for that segment going forward?
Yeah. Most of the growth is organic. The last couple of acquisitions that we've had was 2020 in February and then September 2019. Those companies are contributing, and they've been a positive part of our growth. As far as mission-critical data center work, we look at that in our commercial. We report that in our commercial part of our financials. It has grown to be one of our largest markets. But as a diversified company, we have strong contribution also on our T&D side. In addition to that, our semiconductor manufacturing. These types of services and experiences that we have really align us for and give us some good tailwinds going forward.
And then in terms of your guidance on the utility front, rate-based growth is in line with earnings growth in your guidance. What are factors that allow you to maintain that going forward, and would you expect that relationship to continue given some of the increase in CapEx in 2027 that you highlighted and some of the other puts and takes in your outlook?
Yeah. Garret, do you want to take it, or I can kind of kick off the conversation? I think you're alluding to rate-based growth and earnings growth being kind of lined up as we look to the future. When we look historically at that, as we mentioned in the presentation, historic growth, rate-based, and earnings growth has kind of lined up. There's a couple of factors that play there. We've got the JETx project, as we mentioned, in the latter part of the time horizon on a capital basis.
But as we think about our overall five-year forecast, certainly system expansion and growth, customer growth, as I mentioned, on the electric side of our business, certainly transmission replacement and some grid hardening as we think about, and Garret can comment on a couple of projects we have in Wyoming related to kind of grid hardening on our electric transmission side. So we see it throughout. Gas pipeline replacement is another key driver as we move forward. And then, as we mentioned, to grow earnings off of that investment is going to take a significant amount of regulatory activity as well. So we think about closing that gap on regulatory leg, as Jason mentioned in his comments.
In your earlier remark, you highlighted maybe the incremental data center opportunity and the 25% load growth last year. Given the regulatory mechanisms in your service territory, how material is that from an earnings contribution standpoint? Are there any maybe changes in terms of the regulatory benefits of the incremental load that you see going forward?
Yeah. Go ahead, Garret, if you want to comment on the data center. Yep.
Certainly, as Nicole had mentioned, we are in front of the commission right now in North Dakota for the second tranche of that and the 100 MW we want to get in place this year. Hopefully, that'll be approved here in the next month or so. In regards to the data center, big contributor to earnings is low capital investment, as Nicole had mentioned.
Maybe just to provide a little perspective on that, the first branch in 2023 that went in in our 10-K, we would have talked about the revenue adder from that addition. I think it was around $3.5 million. Now, that wouldn't have been a full-year effect. As we think about the regulatory treatment on that project, we did have a sharing mechanism on the margin as it relates to that specific agreement. Then in the state of North Dakota, we do have a sharing arrangement over 10% ROE. Just to provide you a little more context.
Yeah. Over 10%, then we share 70% with the customer. So we're, in North Dakota, allowed 9.75 and then to begin sharing at 10%.
In terms of data center, maybe just one thing to provide a little more detail on the context of opportunity on a go-forward basis. One of the things that we see in our area is a little bit unique as we think about our utility relative to others across the nation is we are in a territory that's kind of ripe here. Our costs are very the rates to our customers are very competitive. The weather in our area is also conducive for data center expansion. And we do have areas like the one we currently are serving the data center on our system where we have congestion, transmission congestion on the system where we can bring generation then to market, ease that transmission congestion, and that generation is running.
There are pockets within our system where we believe we have continued ability to expand in terms of data centers going forward.
Hey, Nicole.
Yeah.
Can you just talk about your thoughts on consolidation in the utility space?
Yeah. So as we think about ourselves, Chris, I think that's maybe more of what you're talking about is how does that relate to MDU specifically. We have grown through acquisition within our utility companies in the past, obviously, with Great Plains, Cascade, and Intermountain being added to our portfolio over time. What I would say is, just like we have done historically, we will continue to monitor opportunities to grow outside of our existing territory. But it has to make sense for shareholders, customers, and employees. So we'll continue to keep our eyes open for that, but got to hit all those marks.
Now that you'll be a core 100% regulated business, there are some transition opportunities out there. Do you intend to stay a pure regulated entity?
As we move forward, first of all, I like your shout-out to core. So thank you. You picked up on our core theme, Chris. That was good. Well done. Do we expect to stick to our regulated portfolio on a go-forward basis? In the near term, that would be our focus. Yes.
Okay. Jeff, on page 48, you had that slide CapEx to revenue proportions. There's some variability there. Is some of that related to just timing, or is that lease versus own choices? And will you give us some guidance at the Investor Day on sort of what your lease versus own philosophy is?
Yeah. We think that we're going to still continue to look at our lease versus own on a transaction-by-transaction occurrence. We look at what's available in the marketplace. We use our purchasing power and take a look at whether it's large-scale heavy iron or buildings and facilities. Those will influence our decisions going forward, referencing the EBITDA number, of course. But we always want to do the right thing in the near term, but also looking forward to be able to expand our facilities and infrastructure to be able to fuel our growth. We added a new facility in the Kansas City area for one of our line companies, bought the land, got the building. We own that. And that has positioned us incredibly well for growth in the T&D space out of that territory.
Okay. And one more for Jason. The 6%-8% growth range, given that you don't have any near-term equity, what puts you into that upper range? And is that a function of things like you pointed out the 2028 CapEx, things like maybe tranche two, MISO projects, or whatever? Is that what puts you into the upper end of your guidance range?
Yeah. So the 6%-8% is a long-term outlook. So we're looking at over a multi-year period, typically a five-year forecasting period that we look at. So that's inclusive of we mentioned during our remarks today, we don't have any equity issuance planned until 2027. That would be inclusive of any equity we have planned during that five-year time frame as well, would keep us in that 6%-8% range. We don't currently have any tranche two projects identified in there. From our perspective, we're just seeing some of that new information come out here recently from MISO. But I think that's probably outside of our footprint, generally speaking, from a utility perspective. Certainly, could have some impacts for Jeff's business on a go-forward basis, but not inside of there. So we're looking just at the line of sight projects we have ahead of us, Chris.
The tranche one project in the later part of that certainly has an impact as we see that. And again, that is a project that we, once we're constructed and online, we're earning AFUDC on that throughout the construction period and then also getting that into our earnings stream without having to go back and file any rate cases at that point. So minimal lag.
Hi. Tanner James with Bank of America. On the utility, can you provide some insight into how you're approaching the path forward with your coal fleet? What are the conversations you're having with co-owners of the Coyote plant regarding its future? And then how do you think about the threshold of potential compliance spend relative to the remaining life of the assets and how that might compare to a new base load or peaker-plus wind or solar generation, etc.?
Go ahead, Garret, if you want to talk about it or you want me to.
You want to talk about the partners?
Okay. Yeah.
I can kick it off, and Garret will provide additional details. So as a reminder to the audience, the remaining coal fleet that we have is all co-owned. So we have retired all of our 100% owned coal facilities through our past retirements at Lewis and Clark as well as Heskett. So the remaining facilities are co-owned, which means we need to work with partners as we make these decisions going forward. You bring up Coyote specifically, and I'm assuming you're alluding to the regional haze regulation that's pending out there. We are working with our partners, continuing to have conversation there. In terms of what investment threshold would meet, would basically yield us to a decision that says we're better served by building something new, retiring this unit, we will continue to look at that as we discover what that amount is. Right now, it is still in process.
The North Dakota DEQ has advanced a no-controls option, and that is still being worked through in the EPA realm and arena. More to follow on that. How we think about those facilities, though, is we continue to look at reliability, cost competitiveness, and then environment. Again, as I mentioned earlier, this sustainability conversation has to balance all of those things. Right now, those are 24/7 resources for us. They are still cost competitive. But to the extent that we have an investment decision we need to make that renders one of those to not be did not look as good for our customers, we would then have to make that decision at that time in conjunction, though, with our partners in that unit. So Garret, I don't know if you'd add anything else to that conversation.
Just that we're in the process of developing our current IRP, our Integrated Resource Plan, as well and taking all those things into consideration.
Great. Thanks. Is there any coal-related spend outside of normal maintenance contemplated in the current CapEx plan?
No. Yep.
Great. Thank you.
Brent or Laura, any questions from those on the webcast?
Yeah. We have two that probably haven't been covered yet. So the first one related to Bakken growth. Outside of your capital plan, do you see more growth opportunities in the Bakken?
Rob, do you want to take that one? Yep.
Yeah. The short answer is yes. We do see additional growth opportunities in the Bakken, both from a new project perspective as well as expanding our existing infrastructure. Our North Bakken expansion project that Jason mentioned in his remarks went into service a couple of years ago. When we built that project, we upsized the pipe. It's difficult; it gets more difficult to put pipe in the ground. So when you do it, you've got to do it right the first time. So we have the ability to expand that, about triple the flows on that, from 245,000 a day to over 600,000 a day, 600,000 decatherms a day with really minimal capital spend to do that. And that goes back to one of the key points that Jason mentioned, that at the pipeline, just because we aren't spending capital doesn't mean we're not growing earnings.
So we have a lot of opportunities from an expansion perspective as well as new projects. And I would just like to expand. Nicole's slide on the Bakken, we're at about 3.4 BCF a day. The North Dakota Pipeline Authority has projected that to go to 6 BCF a day. That gas needs to move somewhere. So not only is it providing us opportunities to move that production, but with that kind of growth in gas in the Bakken, due to it being an oil play, they can't flare it. It needs to go to market. So what we're seeing is lower gas prices, arguably some of the lowest gas prices in North America, which supports industrial growth and etc. So beyond just Bakken takeaway projects, we're also looking at a number of industrial projects that are really because of the Bakken growth.
All right. And then the last one from the webcast was in regard to renewables: is there upside opportunity at your services business?
Absolutely. We've got a great track record in the Pacific Northwest, mostly in the Southwest. We've recently, over the last year or two, picked up some solar renewable projects in the Midwest. It's on our radar. We've got tremendous experience, and we're looking for more opportunities in renewable space with our experience and our people. I think we're going to continue to see growth, and that will continue going forward.
Hi. Randall , Citi. Just one follow-up. In terms of the ROE under-earning in some of your service territories, as you go into a more aggressive regulatory calendar, where do you see the biggest opportunity to reduce that lag and under-earning to achieve your allowed ROEs?
The biggest opportunity right now will be in Washington because we're scheduled to file a case here by the end of the month. That'll be the biggest opportunity. We also plan, as Nicole alluded to, cases in Montana Gas, Wyoming Gas, and possibly in Oregon as well this year. We'll be closing the gap there and finalizing the outstanding cases we have as well.
For Washington, is there a certain regulatory mechanism that you're looking to help achieve that longer-term goal?
What will help in Washington is that we're filing a multi-year case. So we'll be filing a case that will cover or expand not only the 2023, but the 2024 and 2025 years as well. So that'll help to close that regulatory gap in Washington.
Yeah. Although they have a historic test period, which I noted, which is they're one of the only states that have that, they do have the multi-year opportunity, which allows you to really recover rates on a per-year basis. So to Garret's point, that will certainly aid in that regulatory lag.
Nicole, does MDU plan on retaining an interest in Everus when it's spun off?
Yeah. I'll yield that one over to Jason as we talk about how we plan to stand them up from a financial perspective. So go ahead, Jason.
Yeah. Thanks, George. Great question. We certainly did that with the Knife River transaction. As everyone here probably remembers, we retained a 10% stake in that business. And that was really a result of the time of the year when we spun out Knife River, and they had really gotten heavily into their construction season, but early into the construction season, so mobilized a lot of working capital but hadn't really seen the revenue results from that yet. So that was financed at the MDU Resources Group. Knife River got the benefit of that cash flow coming back later. So we retained a stake to just balance the capital structures from both businesses. That's an option we're certainly looking at here with the services business as well as we look to spin off Everus later this year. We'll update that as we get closer to the spinoff date.
But we really have a pretty good playbook in place, I think, with the Knife River spin that we'll continue to follow and make amendments as we need to as we get closer to the spin date. So it hasn't been determined yet at this point, but will certainly be something that we consider as we move closer to the spin.
Very good. Jeff, are there any supply chain problems that you have or envision?
Still have supply chain challenges out there, but I think they've leveled off. We have long lead equipment, generators, pumps, 46 weeks, 52 weeks, 60 weeks. But I think by being involved early on our projects, we get selected for not just our financial performance but also our team and our ability to cooperate and collaborate with the design teams and general contractors. So we're able to create long lead equipment lists, and then we're able to track and then incorporate that into the overall project schedule. So it's gotten better, but the lead times are still very long for the equipment that we procure and the equipment that our utility customers provide for us to install.
All right. If no further questions, again, thank everybody for joining us here today. Really appreciate the attendance. We do have lunch here served as well for folks that are attending in person and would be happy to take questions after the event as well. But thank you all, and have a great rest of the day.
Appreciate it. Thank you.