Hello everyone, and welcome to UGI Corporation's December 2021 Investor Day. We are delighted that you could join us for today's event. My name is Tameka Morris, and I am the Director of Investor Relations at UGI. Joining me today are several members of our senior leadership team. Roger Perreault, President and CEO, Ted Jastremski, CFO, and Bob Beard, Executive Vice President of Natural Gas, Global Engineering and Construction, and Procurement. Today's presentation is based on the theme Sustainable Value Creation, and we'll begin with a strategic overview from Roger before going into the business update and the financial overview. After the prepared remarks, we will take a short five-minute break before moving into the Q&A portion of the event. Please submit your questions using the Q&A chat function on the webcast at any point during the presentation.
Before I turn it over to Roger, I would like to point out that today's presentation contains forward-looking statements that management believes to be reasonable as of November 23rd, 2021. We will also be describing our business using certain non-GAAP financial measures. For more information on both of these topics, please read our annual report on Form 10-K for the FY ended September 30th, 2021. With that, I'll turn over the presentation to Roger.
Thank you, Tameka. Good day, everyone, and we appreciate the time that you took to join us today. We're excited to share with you more information about our long-term outlook. I'll kick off with an overview of our strategic plan and key growth drivers before handing it over to Bob, who'll discuss our natural gas business. Ted will then discuss the global LPG business and our continuous improvement journey that we have embarked on before I return to discuss renewables, one of our key growth drivers. Next, Ted will provide a financial overview before we wrap up the day. We look forward to addressing your questions at the end of the presentation, but please feel free to submit them as we go through the materials. Now, I'd like to start with providing you some background on who we are.
When UGI started in 1882, we were originally focused on distributing fuel gas for lighting and heating in Philadelphia. Today, 139 years later, we provide a range of energy solutions to more than 3 million customers in the U.S. and Europe. Energy solutions that are safe, reliable, affordable, and environmentally responsible. This strong legacy has been built through discipline, innovation, and foresight, being at the forefront of evolution in the energy sector, actively participating in shaping the path of our industry, and providing customers with environmentally responsible energy solutions. Those same values that we deployed over the almost 140 years of operation are still present today. As we share our strategy and outlook, we are excited about the growth, opportunities ahead of us that will secure another 140 years and more for UGI.
In our last Investor Day, we outlined the three prongs of our strategy. First, at the core, we are providing reliable earnings growth. We are laser-focused on providing reliable earnings growth to our shareholders, delivering on our long-term financial commitments that we have been in place for over 20 years, and those are the commitments to provide 6%-10% EPS growth and 4% dividend growth. Second, investing in renewables as we continue to lower our carbon footprint and help our customers to do the same. UGI has the assets, skills, and competencies to bring innovative solutions to our customers that will meet their needs for affordable energy. Solutions that are available when they need it and help improve the environment. The third component is rebalance.
We intend to rebalance our portfolio towards a more even distribution between natural gas plus renewables and LPG in order to support reliable earnings growth. Throughout this presentation, we will share with you how we plan to execute this strategy over the next four FYs , discuss what differentiates UGI and positions us well for continued growth and success to continue creating value for our shareholders. Why is UGI a compelling investment opportunity? Over the past 10 years, we have delivered an EPS growth rate at almost the midpoint of our target and a dividend growth rate of 7.2%. We have been paying dividends for over 137 consecutive years and increasing dividends every year for the past 34 years. We have a rate-based growth rate of over 11% that is above the average for most utilities companies in the country.
Our business has a long track record of excellent cash generation capabilities with roughly $1.5 billion of cash flow from operations in fiscal 2021. This allows us to finance the sound investments that we've made and are projecting in the coming years. We have a proven track record of executing against our strategy, being disciplined in our capital deployment approach, and doing the right thing for our customers, employees, shareholders, and the communities we serve. That also means doing the right thing from an environmental, social, and governance perspective. That brings us to an important time in our history. Our world is now at a pivotal point. Our global economy is demanding environmentally responsible and affordable energy solutions to meet growing consumption needs. This demand can only be met by a range of energy solutions, including natural gas and LPG, which are also safe and reliable.
Built on a strong heritage of service and innovation, UGI is focused on being the premier energy distribution company of environmentally responsible energy solutions to its customers. On the slide, you see how energy demand is projected to change between 2020 and 2050. What is key is that we believe that LPG and natural gas will be needed to reliably meet energy demand needs. As you consider the state of the local economies that we operate in, the social considerations, such as affordability and the need for reliability, it is clear that natural gas, LPG, and renewables will have a key role to play. With that in mind, we are in a great position to meet customer needs while balancing environmental and social factors.
We have a diversified energy portfolio to meet the growing demand, and this includes natural gas, which is crucial to the energy transition as it provides the resiliency and reliability for on-demand energy. When you consider that a typical natural gas or LPG customer is being converted from coal or fuel oil, it is clear that natural gas and LPG are cleaner and more affordable energy solutions. Turning to compressed natural gas. This is a great alternative to diesel in the transportation sector. Without compromising efficiency, a customer is able to reduce their emissions. Of course, more renewable solutions, such as renewable natural gas, bioLPG, renewable dimethyl ether, and others, will be a part of our portfolio. Today, our team will share with you how our business will continue to create sustainable value for our shareholders.
The visual that you see on the screen will serve as a placement for our discussion. Turning to our financial outlook. Ted will share in more detail, but at a high level, we anticipate a FY 2025 EPS guidance range of $3.75-$4.25, which aligns with our 6%-10% EPS growth target. We plan to invest $5.3 billion-$5.5 billion between FY 2022 and FY 2025 in continued growth areas. Our projected rate base growth is 10%-11%, given the long runway of opportunities that we have and the constructive regulatory environment in which we operate. Before we dive into further details, I'd like to share the summary of our takeaways from today's presentation.
We will continue to be disciplined in our capital deployment and deliver reliable earnings growth while rebalancing our portfolio. The financial flexibility that we have with our strong balance sheet enables and supports the robust pipeline of investment opportunities. Our differentiated strategic assets that we will highlight today will facilitate the renewables investments and growth that we are projecting through to fiscal 2025 and beyond. Our innovative culture positions us well as the energy company of a lower carbon future, and we will continue to focus on our strategy and our ESG efforts to create sustainable value for our shareholders. Now I will pass it over to Bob.
Thanks, Roger. I'm Bob Beard, and I'll be giving you an overview of our utilities and midstream and marketing businesses, our regulated utility businesses. In Pennsylvania, we operate the second-largest gas utility in the state, while in West Virginia, we are now owners of the largest gas utility in the state. What I'd like to talk about when we talk about Pennsylvania and West Virginia is what I consider to be a constructive regulatory environment. That means that the regulators understand the value of working with the companies to find solutions that work for both the company and our customers. When we talk in a couple slides about replacement and betterment and the importance of that's really what I'm talking about. We have constructive relationships with a group of regulators who understand the business.
We finished FY 2021 with a little bit more than $3 billion in rate base, and we're asked about authorized ROEs. In Pennsylvania, we typically settle our rate cases. As a proxy for an ROE in Pennsylvania, we use the DSIC-approved ROE, which is 10.2%. In West Virginia, we have an approved ROE of 9.75%. We just finished a record year for capital expenditures with about $400 million. About 99% of our natural gas at UGI Utilities is sourced from the Marcellus Utica Shale, which is really important because that gives our customers access to locally produced, lower-cost, abundant supply. We're evaluating in Pennsylvania the opportunity to use some type of weather normalization mechanism, whether it's decoupling or something else.
We think that's important, and I think I'm hopeful that the commission will be mindful of the value of that. When we talk about weather normalization, it does really two things. First, it normalizes our customers' bills, so they don't see spikes in bills as readily when weather gets exceedingly cold. For the company, it normalizes our margin and our earnings and really shaves the high peaks and low peaks off of weather and lets us become a much more predictable stream of earnings for the company. Customer service in the utility space is always extremely important, and we're always proud with our customer service scores that we get from J.D. Power. We've finished number one or number two in the last five years. The next slide talks about our investment in rate base, and really, that's what drives the value of our utility companies.
We have a record capital spend, like I said, in 2021, and we expect to increase that spend in 2022 as the chart on the left shows. If you look where we were in 2016, somewhere below $300 million in total CapEx, to where we expect to be at the end of our plan year, you know, fast approaching $600 million, that's an appreciable growth rate. It's really important to note that in both of our utilities, we have minimal regulatory lag, which means, basically, 90% of the capital that we spend, we start to recover on in the first 12 months, and that's really important. You know, making that regulatory lag as manageable as possible, as short as possible, makes sense. On the right, we show our rate base growth CAGRs.
We expect over the plan between 22-25, FY 2022 and FY 2025, to have a rate base growth of between 10%-11%. You can see in 2016, our rate base was something shy of $2 billion, and you'll see by the end of the plan year, we'll be in excess of $4.5 billion. You see the CAGRs from FY 2016 to FY 2020 and the CAGR from FY 2020 to FY 2025. Really impressive CAGRs and a lot of work goes into this by engineers and operating people, finance teams to make sure that we're plowing this capital into the ground as efficiently and effectively as possible. I think we do a great job there. A little bit about our pipeline replacement and betterment opportunities.
In 2011, UGI Utilities in Pennsylvania committed to retire all of our cast iron by 2027 and all of our bare steel by 2041. Today, with 12,400 miles of pipeline in Pennsylvania, a full 91% of that is comprised of contemporary materials, which includes polyethylene plastic or coated cathodically protected pipe. We have very few miles remaining, 9% of our existing main in Pennsylvania, and we fully expect to meet those deadlines of retirement for cast iron and bare steel. A little bit more about the constructive regulatory environment. In Pennsylvania, we have the Distribution System Improvement Charge, which allows us to earn on capital expenditures between rate cases. That incentivizes us to spend money to upgrade our system, to make our systems more safe and more reliable.
In West Virginia, we have a very similar program called the Infrastructure Replacement and Expansion Program, very similar to the DSIC in Pennsylvania with the added benefit of our being able to include system expansion and system growth projects, which is really helpful. The bullet point that we know here is that in 2022, the Public Service Commission of West Virginia has approved $50 million spend under their IREP program. That represents about a $16 million revenue requirement, so it's a significant opportunity for us. On the right-hand side of the chart under Mountaineer Gas, you'll see that they've got about 6,200 miles of pipeline, with 74% of that being constructed of contemporary material. It means a full 26% of their system is comprised of bare steel. They have no cast iron.
We look at that 26% or roughly 1,500 miles as an opportunity for us to invest and to make improvements to the system and the priorities that we outline in the box to the lower left, really what are top of mind for us. Pipeline safety and reliability. Every time we retire an aged piece of pipe, we're improving the safety of the system. We're also improving the reliability of the system. As we saw in the recent 12 months, there were areas of the country that could not rely on their energy systems, and that caused a lot of problems. We're proud of the fact that our employees, each and every day, understand that our customers rely on us and reliability of service, again, top of mind for us.
The other thing that's extremely important to mention is that as we retire this aged infrastructure that has a tendency to leak, we're greatly reducing emissions. We continue to expand our systems into underserved or unserved territories because despite what people may think that there is a declining market for natural gas, in our service territory, we see robust growth, and I'll talk more about that in a slide or two. Finally, we're focused on operational efficiency. We owe it to our customers to deliver them energy in the safest, most reliable way, but also in as cost-effective a way as we can. Customer growth and affordability. The chart on the left shows that in 2011, we had 575,000 customers at UGI Utilities, gas customers. In 2021, we have 886,000.
That reflects the addition of Mountaineer Gas, but it also reflects the robust growth that we see organically at our utility. If you add our approximately 63,000 electric customers to that chart, you'd see that we have about 950,000 utility customers. We have 250,000 conversion prospects within 150 feet of our mains in Pennsylvania. When you think about that, you know, a quarter million potential customers exist within 150 feet of the main, the 12,400 feet of main that we have across the state. It's a great opportunity, and our sales and marketing people are constantly looking at that opportunity. As you can see on the right, we've had terrific growth.
Over the last 10 years, we've added about 15,000 customers on average annually, which is really good growth. Down below, we talk about the average electric bill versus average Pennsylvania utility gas bill. What you can see is that the electric average was three times higher than natural gas. What we see in the competing fuels, which typically for us are oil and electric, we continue to compare favorably. Other things that are driving our growth are regulatory programs that our regulatory affairs folks and our rates people have developed over the last handful of years, which are really, really creative. The Technology and Economic Development Rider, our Growth Extension Tariff. Our energy efficiency and conservation programs, whereby we're working with our customers to find ways for them to be more energy efficient. Our recently approved Main Extension Tariff.
Beyond that, within the last two months, we received approval from the Pennsylvania Public Utility Commission to start to introduce renewable natural gas into our system as part of the portfolio of supply that we acquire for our sales customers. So there's a lot happening, and the message in this slide is that we've got a very creative regulatory team who are always looking for ways to grow the business while satisfying the ever-evolving needs of our customers. I'll switch gears now to our midstream and marketing business, UGI Energy Services. Our midstream and marketing business, I think a really good business for us and one that we continue to grow. We offer a full suite of midstream services, which includes LNG peaking, pipeline capacity, storage, gathering services.
What makes us unique, and when I'm asked, "What differentiates UGI's midstream and marketing business from others?" It really is a couple things. It's our location. Where our facilities are in the Marcellus and Utica production areas. It also is our marketing experience. We market to 42,000 customer locations in 14 states. It's a business that we've been in for 25 years. We're able to move your molecule from the wellhead to the customer in a very efficient way. I think the team at Energy Services, and as we'll see in the next slide, has done an outstanding job building that business. We're firm believers that natural gas continues to play a significant role for the foreseeable future in the nation's energy marketplace. We're really happy to have the assets that we have.
We market gas on 46 gas utility systems, and we market electricity on 20 electric utility systems in 14 states, as I said. The majority of our income is fee-based, which is important. We are averse to commodity risk, and our model is to make sure that we've got back-to-back contracts. If we have a contract with a customer, we make sure that we've got a matching contract for that supply. We don't like commodity risk. We don't take commodity risk. We have scalable infrastructure. Oftentimes, I'll get the question, "Is there some capacity in your existing systems, or are they already built to capacity?" We do have additional capacity available. As producers continue to increase their production or drilling, we'll be able to service those folks. We've got a strong track record of project execution.
The idea of fee-based income is really important for me to convey. First of all, the team has done an outstanding job. As you can see in the chart on the left, we've grown margin from $137 million a year in 2011 to $373 million in 2021. A really significant increase in the business. We've done so while continuing to protect ourselves with having the majority of our margin fee-based. That means it includes things like take or pay agreements. We also have rates that include fixed fee, variable volumes, and we also have variable volumes where we've already fixed the fee. As you can see in the pie chart on the right, our fee-based income is about 87% of what we have.
Of that, fixed fee is 64%, and the remainder would be those contracts that I referenced that are fixed fee, variable volumes. We like take or pay. We like people to commit to taking or producing a certain amount of volume. It makes it easier for us to plan, build our systems, and it's certainly, from a financial standpoint, where we want to be. I mentioned the strategic midstream capabilities. LNG peaking. We have total vaporization of about 360,000 dekatherms a day and liquefaction of 22,500 dekatherms a day. The important thing about our LNG facilities for us is that, by and large, they're located on the UGI utility system, and we actually had, before we purchased Mountaineer Gas, an LNG system that feeds Mountaineer Gas in the Eastern Panhandle region.
One strategic advantage is that our LNG facilities are right on the pipelines and utilities. When you think about it, what does that mean? That means that UGI Energy Services, who's got a vast portfolio of upstream pipeline capacity, system storage, off system storage, they have all that bundle of assets that they can bring to bear and use LNG to feed the utility contracts that they're obliged to do and use their upstream contracts to arbitrage downstream markets. That flexibility in capacity management is a really important opportunity for we have. Those are opportunistic margins. They don't occur every year. They're spiky from time to time, but it's great to be in a position that when our folks recognize the opportunity, they can seize on it. Total pipeline capacity of about 4 Bcf a day, which is a significant pipeline system.
We actually own underground reservoir storage in the north central part of the state, about 15 Bcf. Commodity marketing. I mentioned this earlier. We've been in this business for 25 years. Our retention rate for customers exceeds 90%, so we know our customers. They know us, and for many of them, we're their trusted energy advisor. Strong experience in managing margins across economic cycles. Hedging strategy. As I mentioned, we have aggregated fixed price sales that are backed with fixed price supply contracts. So again, we don't take risk on commodity. Cost advantage. The fact that we're in the Marcellus Utica region means that we have access to plentiful, low-cost natural gas, and our customers at Utilities continue to see a significant benefit. Customer delivery.
We've got 12,600 customers, again, on the utility gas utility systems that I talked about earlier in 14 states, and we're in 42,000 customer locations. We have a vast footprint. When our marketing people are talking to producers, like I said before, we don't just offer them an opportunity to move their molecule from the wellhead through our pipelines to a distribution system. We also offer them the opportunity to find a home for their gas at customers. We have a broad service territory that continues to grow, it seems, every year, especially now as we lean into renewable natural gas opportunities, which we'll talk more about. With that, before I turn it over to Ted, I'd like to first tell you I look forward to any questions that you have at the end of the presentations.
I hope you see that there are a lot of opportunities that we continue to have on the natural gas and electric side of UGI, both in the utility segment and the midstream and marketing segment. With that, I'll turn it over to Ted.
Thanks, Bob, and thanks to all of you for taking time out of your busy schedules to join us today. Now I'll take a few minutes on our global LPG businesses and the strategic advantages that they provide. First, we're a leading propane distribution company in the U.S. and a leading company in Europe. Through AmeriGas in the U.S. and UGI International in Europe, we serve over 2 million customers in all 50 states and 17 European countries. We deliver over 2 billion gallons annually. We have unmatched geographic coverage, which improves our customer density and serves us well in terms of providing service to large commercial customers. We can serve customers anywhere in the United States with our vast network of assets. That's particularly attractive if you're serving nationwide customers with hundreds or thousands of locations.
We also have counter-seasonal business with our cylinder exchange offering that continues to be an area of growth. We have innovative offerings such as our home delivery service in certain cities in the U.S., Cynch, and through vending machines across Europe and the U.S. I'll come back to this point shortly, but our teams continue to focus on operational and commercial innovation in order to enhance the customer experience and drive operational efficiency. One of the significant strategic advantages that we have, given the scale of our business and our geographic diversity, is our robust supply and distribution network. What you should see from this page is that we bring a lot of assets to bear that provide great flexibility when there are constraints or disruptions. From rail, sea, pipeline, and truck terminals to a long-haul trucking fleet, we have a deep distribution network that is nimble.
These assets are very well positioned to meet demand when others are unable, whether due to hurricanes, tornadoes, wildfires, winter storms, or other disruptions. Importantly, this is also a supply and distribution network that we can leverage as we provide renewable energy solutions to our customers. This significant transportation and logistics infrastructure ensures certainty of supply, and it enables strategic propane procurement and inventory management. In addition to having a robust supply infrastructure, our LPG businesses support our ability to provide reliable earnings growth. We do this in several ways. First, through margin management that I'll discuss in more detail on the next slide, as well as with intense focus on excellence, improving processes, and enhancing the customer experience. Through this focus, we've experienced strong growth in our national accounts programs.
As I mentioned before, given our scale, we're able to differentiate ourselves in the national reach and service that we can provide. We are the only company with the scale and operating footprint to serve commercial accounts with multiple locations in the U.S. This provides a competitive advantage for AmeriGas, and we've achieved a more than 7% CAGR in volumes from national accounts over the past five years. We also have seen solid growth in cylinder exchange with a five-year volume CAGR over 6%. Through our continued efforts to improve weather resiliency, we've reduced operating expenses as a percentage of gross margin by 4.2% over the past five years. Last, as we've shared before, our LPG businesses generate a tremendous amount of cash without being very capital-intensive.
Average free cash flow over the past three years has been over $500 million per year. One of our core competencies is effective margin management. We have a long track record of managing margins through different pricing cycles. This is even more important as we go through the current volatile commodity price environment. For customers who are in fixed price arrangements, we have a robust hedging strategy designed to mitigate the commodity price risk. For other customer pricing arrangements, we work to ensure that cost is thoughtfully passed on to our customers in accordance with their contracts. Our effective margin management approach and robust hedging strategy provide the basis for reliable earnings growth despite volatility in the commodity prices. Let's now transition to continuous improvement and how it makes the company more resilient.
We continue to focus on continuous improvement in order to strengthen our resiliency, the resiliency that you've seen from us over the years, the resilience that allowed us to achieve an 11% increase in adjusted EPS in fiscal 2021 over the prior year. Back in fiscal 2019, we initiated a business transformation initiative that was designed to improve long-term operational performance by reducing costs and improving efficiency and effectiveness. We are approaching the tail end of these initiatives and are well on track to deliver permanent benefits to the business at a higher rate than initially anticipated. Starting with AmeriGas, we expect to realize $150 million in permanent annual benefits by the end of FY 2022. As of fiscal 2021, we had achieved over $121 million of these permanent benefits.
The total estimated cost associated with this initiative was approximately $220 million, a large majority of which had been incurred through fiscal 2021. Moving to UGI International, we are on track to deliver over EUR 30 million of permanent benefits by the end of FY 2022 based on a total investment of EUR 55 million. EUR 21 million of that amount was achieved as of September 30, 2021. We have discussed the permanent annual benefits that we expect by the end of 2022. Now I'll discuss some of the improvements that we've made. In process efficiency, we embarked on a process of identifying operational synergies across all 18 countries in which we operate in order to improve the customer's experience and drive operational excellence across our distribution network.
We established centers of excellence where best practices are shared to improve efficiency, and we stood up a new centralized call center in the U.S. In selling efficiency, superior customer experience is critical, and we continue to invest in that interaction with the customer. We built digital capabilities and features to provide self-service as an option for all standard transactions and scenarios, and we leveraged opportunities to communicate digitally and drive digital engagement. These easy and automated digital services reduce the need to call in to complete a transaction. Once engaged digitally, customers will return to the platform as their primary source of information and services. I'll add that in this respect, the pandemic really offered a silver lining, jump-starting the digital adoption dramatically, accomplishing in months what would normally have taken years and significant effort and incentives.
In transport efficiency, we invested in technology to achieve routing optimization as well as telemetry and scheduling programs to improve efficiencies. We're implementing state-of-the-art technology that provides process improvement, operational efficiency, and improved customer support. That same mindset of achieving operational excellence is not limited to the LPG businesses, but throughout the entire company. To that end, in fiscal 2020, we embarked on a journey to transform our support functions across the businesses. This includes IT, finance, HR, and procurement. The goal is to standardize processes while leveraging the use of best practices and efficiencies between our businesses, which will not only drive efficiency, but higher employee engagement and development. In connection with these activities, we expect to incur roughly $40 million of cost by the end of fiscal 2023, with the result of achieving more than $15 million of ongoing annualized savings.
As a business, we also centralize global LPG supply to leverage our scale. As we lean into investments in renewables, we recognize the tremendous construction, engineering, and operations experience that we have in our midstream and marketing business, skills that have allowed us to grow that business and achieve a 10-year CAGR of 11%. We have established centralized business development teams that enable us to tap into the collective expertise and capabilities of that group. Now I'll turn it over to Roger to transition to the second component of our strategy, renewables.
Thank you, Ted. Now we are moving on to renewables, the second component of our strategy. Over the past year, we've shared with you our increased focus on renewables. We firmly believe this will be a growth driver for UGI in the future. Not only does it enhance our ability to deliver reliable earnings growth, but it provides a realistic pathway to lower the carbon intensity of our existing energy solutions and enables our customers to achieve low carbon emissions. In fiscal 2021, we committed over $100 million to RNG projects in the U.S. Given our current line of sight, we expect to invest up to an additional $1.15 billion through fiscal 2025. This may include acquisitions, additional partnerships, and some organic growth. We have a dedicated renewable solutions team that is identifying opportunities in RNG, bioLPG, rDME, and other solutions.
We see some synergistic opportunities as both a producer and owner of feedstock infrastructure as well as being a significant distributor. We are very selective in our evaluation of potential opportunities as we balance the risks and rewards and target unlevered internal rates of return of 10% and above. Earlier, I shared some of the history of innovation that UGI has demonstrated over its 139 years of existence. Our sustainability journey started over 6 years ago when we began to source and market bioLPG in Northern Europe and market wind and solar power. Throughout that period, we also initiated a target to reduce fugitive methane emissions. 2020 was an instrumental year, a year where we completed the acquisition of GHI that served as a platform for growth.
GHI Energy provides a tremendous opportunity for us to create synergies where GHI Energy can serve as an offtaker from an RNG supply project. We also made a key decision in 2020 to fully divest of our interest in a coal generation facility, Conemaugh, which led to a 30% reduction in our scope one emissions. As I mentioned before, we made great progress this year by entering into several new partnerships related to RNG, bioLPG, and renewable dimethyl ether that I will discuss when we get to the next slide. We also introduced our commitment to reduce scope one greenhouse gas emissions by 55% by 2025, using 2020 as a base year, and we're pleased to make commitments to reduce total recordable injuries and accountable vehicle incidents.
In October, we were very excited to receive approval from the PA PUC for a pilot program, the first of its kind in Pennsylvania, to explore how our PA Gas Utility can incorporate renewable natural gas into its supply portfolio while assuring that we are consistent with the least cost gas supply requirement. We will continue to make investments in renewable solutions and actively explore alternate fuel sources and technologies. We are also actively working on our disclosures with the goal of aligning with the Carbon Disclosure Project, CDP, and Task Force on Climate-related Financial Disclosures, TCFD. In fiscal 2021, UGI entered into multiple partnerships and other collaborations throughout the U.S. and in Europe to advance our renewable strategy. Through the commitments we made, we will produce over 1.3 billion cubic feet of RNG by fiscal 2024.
To put that in perspective, when blended with natural gas, you could achieve carbon neutrality and serve over 80,000 households per year or remove almost 90,000 cars from the roadways. This supports the defossilization of our business, meeting our 2030 targets and progressing against the 2050 net zero targets. These arrangements allow us to further advance in being a differentiated renewables energy solutions provider. Also important, they use solutions that do not require customers to make significant investments in new appliances and infrastructure. We continue to explore other opportunities in attractive markets using different types of feedstock and renewable energy solutions where we can leverage our core strategic assets and the capabilities of our teams.
Now I'd like to walk through one of our earlier RNG partnerships in Idaho, a partnership to produce RNG from on-site dairy waste feedstock, which has a very low carbon intensity score of -200. This project is expected to come online in early calendar 2022 and produce approximately 250 million cu ft of RNG per year within a year of commencement. The RNG will be moved into the interstate market, with GHI Energy serving as the exclusive offtaker and marketer for the project. The project development team is experienced with biogas and dairy digesters, and ongoing work on the facility includes upgrades to the various systems and construction of two co-located pipelines.
In summary, we are so excited about the runway of investment opportunities for renewable energy solutions that are highly compatible with our existing infrastructure when blended, and solutions that allow us to leverage our skills and expertise. Now let me hand it over to Ted, who will take you through the financial section.
Now that you've heard about our strategy and goals for the next four years, I'll spend a few minutes discussing why we believe we will create sustainable value for our shareholders. First, UGI is a balanced growth and income investment with solid earnings growth and a conservative risk profile. We're continuing on a path to create reliable and consistent earnings growth through the disciplined capital allocation approach we follow. For over 20 years, we've been unwavering in our commitment to deliver 6%-10% EPS growth and 4% dividend growth. We have a proven track record of excellent cash generation and a strong balance sheet that provides the financial flexibility to make disciplined investments and efficiently fund the plan. Before I get into some of the specifics, let's first take a look at how we've delivered against the financial commitments that we've made to our shareholders.
First, from an EPS growth perspective, when you look at the ten-year growth rate to the midpoint of our fiscal 2022 guidance range, that is 9.7% at the top end of our long-term commitment. We have a ten-year dividend CAGR of over 7%, which is well above our target of 4% and at the top of the range when you consider utility peers. With the growth prospects ahead of us, we feel very confident in our ability to continue meeting those commitments. Our ability to generate and grow cash flow consistently year-over-year is a key differentiator, and we reliably generate positive cash flows regardless of changes in macroeconomic environment, commodity cycles, weather volatility, or government administrations.
Leveraging our current portfolio, we're able to generate significant cash flow that can be used to finance investments in renewables in the natural gas business, thereby rebalancing our portfolio and continuing to provide reliable earnings growth. On our Q4 earnings calls in November, we discussed our fiscal 2022 guidance range of $3.05-$3.25. As a company, we have made sound decisions reinvesting capital that has positioned us well to deliver on that target. We have a strong core business that provides reliable earnings growth, and our recent investments and partnerships lay a strong foundation on which we intend to build in the coming years.
Some of the growth drivers that we expect will deliver good returns in fiscal 2022 and beyond include building out our renewables portfolio, continued growth of our regulated utilities customer base in PA and West Virginia, roughly $545 million in investment in pipeline replacement and betterment in fiscal 2022. Continued growth of the LPG cylinder exchange and national account volumes are focused on continuous improvement to drive operational efficiencies throughout the business. This slide summarizes the key drivers underlying our fiscal 2022 to fiscal 2025. Over the next four years, we anticipate that adjusted earnings per share will grow by 6%-10% per year, with adjusted EPS being in the range of $3.75-$4.25 by fiscal 2025. This is a four-year CAGR of 7.8% using the midpoint of the fiscal 2025 guidance.
A primary driver for the anticipated increase in EPS through fiscal 2025 is our planned investment of over $2.3 billion in pipeline replacement and betterment in both our PA and West Virginia regulated utilities. A significant portion of these investments provide earnings and cash flows within 12 months of the investment. Our LPG business will continue to focus on operational efficiency, continuous improvement, margin management, and investment in areas of continued growth, ultimately improving the weather resiliency of our business. The third prong is related to renewables, where we plan to invest more than $1 billion while achieving attractive rates of return. What you see on this slide is the cash flow from operations that we expect to generate over the planned period.
Our outlook for strong, sustainable cash flow growth over the coming years, specifically $6 billion-$6.3 billion between FY 2022 and 2025, supports the investments that we will make and also our dividend commitment. Roughly $5.4 billion or 79% will be used for capital investments that we expect will deliver stable returns to the business. The remaining $1.4 billion will be used to meet our shareholder commitment on dividend growth while maintaining a competitive payout ratio. Further expanding on our capital investment, we will invest with discipline in order to achieve attractive returns and meet our long-term financial targets. This slide walks you through how we expect to deploy the targeted $5.3 billion-$5.5 billion of capital expenditure between FY 2022 and FY 2025.
Overall, more than 80% of the growth, M&A, and regulated capital will be invested in the natural gas business and renewables. We operate in jurisdictions that have a constructive regulatory environment and therefore support investments in natural gas to assure safety, reliability, and efficiency for our customers. Roughly 44% will be invested in our regulated utilities businesses, providing strong rate-based growth over the period. As Roger mentioned, we'll continue to lean into renewables investments targeting unlevered IRR of 10% or better. We expect that approximately 27% of our investments will be in renewables. These investments drive the organic rebalancing of our portfolio and create sustainable value for our shareholders. We completed fiscal 2021 with approximately $2.2 billion of total liquidity.
Our overall liquidity and balance sheet remains strong and leaves us well positioned and with great strategic flexibility as we move into fiscal 2022. Our leverage multiple was consistent across FY s 2020 and 2021. This was largely due to the Mountaineer acquisition that closed on September 1st and therefore had one month of EBITDA, but the full debt amount included. We expect to pay down debt to return to a targeted leverage ratio of 3x-3.5x over the next several years. We also remain committed to getting AmeriGas down to the 4x-4.25x range. With that, I'll hand it back over to Roger. Roger?
Thank you, Ted. As we conclude the prepared remarks, I want to reemphasize that our shareholder value proposition is compelling. We have a solid foundation on which to build incremental growth. This foundation, along with our robust strategy and strong pipeline of opportunities in natural gas and LPG and renewables, provide us with tremendous confidence in our ability to deliver reliable earnings growth. This is growth in line with the targets that we have shared. You should expect from us 6%-10% EPS growth and 4% dividend growth over the long term. We will remain disciplined in our capital deployment approach, explore new opportunities, and embrace continuous improvement while keeping the needs of all stakeholders in mind. This will enable reduction in our emissions, new solutions, and programs to reduce our customers' emissions.
We will also continue to take actions to promote belonging, inclusion, diversity, and equity within our company and the communities that we serve. Once again, we thank you for joining us today. We will take a five-minute break before opening it up for questions. Thank you very much.
My apologies. It appears that we had some technical difficulties. Welcome back, everyone. Now we'll move into the Q&A portion of today's session. Turning to the first question that relates to renewables, and this question goes to Roger. How would you frame the top and bottom end of the $1 billion-$1.25 billion range for renewables? Is it driven by the amount of opportunities that meet your 10%+ IRR target? Does the range include the full $500 million investment related to SHV?
Thank you for the question. Yeah, maybe a few things just to point out. We do see the opportunity to invest over $1 billion in renewables. It's driven by a few things, but there are also a couple of items I'd like to qualify. It's driven by the fact that we have a very strong pipeline of opportunities that include bioLPG, renewable dimethyl ether, landfill-based renewable natural gas, and biodigesters. When we think of each one of these projects, it also depends on the availability of feedstock, on the quality of the specific investments we're making in terms of internal rate of returns, counterparties, project execution, et cetera. So clearly, we've now been able to increase the targets, so we've been talking initially about a billion-dollar investment.
We've now slightly increased that because we're very encouraged by what we see in terms of the specific opportunities, but also with the strong pipeline that I discussed in each one of the areas that I discussed, the bioLPG, renewable dimethyl ether and the biodigesters, et cetera. Maybe just a quick word on SHV just to answer that second part of the question. Our investment of over $1 billion includes the SHV partnership that we've been talking about. A quick word on the partnership. We are still waiting for the European approval. We do expect that any time now, and upon that approval, we'll be very happy to start talking about more specifics on where we see some of those projects going.
As we've discussed in the past, we are open to other investors as well. When we talk about our $1 billion to slightly over $1 billion, we are including the SHV joint venture in that discussion.
Thank you, Roger. Continuing with renewables, how much of a role does the market for environmental credits, such as RINS and LCFS, play into your investment decision-making?
Yeah, I'll take that question as well. Yes, RINS and LCFS values are a portion of the RNG investments. Just like to highlight that we take a very conservative approach when we look at RIN valuations and LCFS valuations. And as you may be aware, these are items that are not hedgeable. We don't have any hedge instruments to be able to lock in the values of RINS and LCFS credits. As a result, we also attempt to limit any volatility through the commercial arrangements we have both on the supply side and on the demand side with our customers. Overall, we really look at each one of these specific projects with a conservative view of RIN and LCFS valuations.
Thank you. Continuing with renewables, have you considered narrowing your assumptions around IRRs for renewables as you've gotten more clarity on projects, or are you going to continue to think about the 10% as a floor and leave upside that depends on whether prices for the RINS and the LCFS credits are?
This is Ted. I'll take that question. While we have a long history in renewables, we're very early in this journey of really a focused and sizable ramp-up. I'd say at this point, it's reasonable to consider that 10% is a floor and that it, kinda like you suggested, we'll be looking at any upside on the environmental credits as upside to the financials. I think we've shared this in the past. We take a really conservative view on how we incorporate pricing for LCFSs and RINS into our financials. We're gonna continue to do that. It's reasonable to think about that as upside.
I'd also say that while the financial approach will probably stay fairly consistent, we will be learning so much more as we start to go down this journey. So there'll be this new dynamic, I think that develops as we take on more and more projects and we start to see more kinda strategic intangibles start to enter into the picture. I mean, we'll be ramping up significantly in engineering, in project management, learning more about the various feedstocks, about the sizes of the projects. As we learn those kinds of things, as we take on more and more project work, we'll be sharing those learnings and adjusting accordingly.
Okay, switching to the utilities, the next question is for Bob. Can you talk about rate base growth range for FY 2022 to 2025? I think this is fairly consistent with prior messaging and now layering Mountaineer, which with 10%-12% rate base growth. Could you expand on the upside opportunities that you see at this point that would drive the 11%+? Is it just more of the same pipeline replacement, safety, and reliability spending?
Yeah. Good morning, everyone. Thank you for the question. Yes, I would say that the trajectory that we show in the presentation is driven by what we would consider typical replacement and betterment and growth projects. What is not in there are yet undefined large projects or large expansions into new areas which we're confident we'll see, but we don't have a direct line of sight yet, so they're not in there.
Okay. Thank you. Continuing with utilities. Can you give any updated thoughts on how you're thinking about the strategic inorganic opportunities on the utility side? What is the landscape for potential opportunities that would fit your criteria?
Sure. This is Bob, and I'll take that one as well. You know, we consider operating a regulated business as a strength for UGI, and we're presented with and we review a lot of opportunities in a given year. You know, an opportunity for us has to make sense. For me and for us, the gating issue on a regulated business is probably the regulatory and legislative landscape in a given jurisdiction, which is why we're really happy to lean into West Virginia, which, you know, similar to Pennsylvania, has what we believe to be a constructive regulatory environment. You know, that's really something that weighs heavily on our thought process. Generally, you know, we like all regulated businesses.
Like I said, we believe operating regulated businesses is a strength of ours, and we vet every opportunity that comes through. Yeah, absolutely, we continue to look for inorganic growth opportunities in the utility space for sure.
Okay. Thank you. Switching to the financials, so this question is for Ted. The FY 2025 EPS guidance looks like it's based on the 2022 midpoint plus the 6%-10% growth through the interim. Based on what we've seen lately related to sustained utility rate-based growth, transformation at LPG, and now learning in the renewables with a very healthy return, would seem as if we're pointing towards the top end of our 6%-10% range. Wondering how you would frame the bottom end of the guidance, so the bottom end, which is the $3.75, and whether or not there are any plans to narrow that, the intermediate guidance.
Thanks for the question. I would say at this point, we are very comfortable with the 6%-10% guidance. We see this commitment as a long-standing one, and we take it very seriously. It's served us well for over 20 years. You're right in pointing out that renewables is a new and additional vector for us, but adding new vectors to our business is something we've been doing for years. You only have to go back 10 years or so, and the word Marcellus would not even have shown up in any of our materials, our annual reports, or even our discussions. What we've developed in the Marcellus is a fairly new business.
That was also a new trajectory 10 years ago, and now we're embarking on this very focused and sizable renewables set of investments. We're gonna learn a lot over the next couple of years as we start to go down that journey, and you can be assured that we will be reconsidering our targets and our guidance. At this point, we are extremely comfortable with providing a commitment to the 6%-10% growth rate.
Thank you. Turning to M&A, how would you think about regulated opportunities outside of natural gas, for instance, electric and water? Also, how much of a consideration is unregulated M&A, specifically in midstream and/or renewables? And are there any opportunities there, or do you see more of an opportunity just growing inorganically?
This is Bob. I'll take this one as well. On the M&A front, on the regulated side of the business, you know, we have an electric company. We're experienced in operating electric companies, so that is certainly something that we would consider our wheelhouse. Water is something that we do not currently operate, but again, it's a regulated business opportunity. We would look at it, but we would not necessarily consider water as our wheelhouse today. As I mentioned earlier, we really do consider operating regulated businesses as a strength for UGI. Absolutely, we would lean into that in our current geography, or as I mentioned before, in other geographies where we thought that the regulatory and legislative climate was favorable.
On the midstream side of the house, we also continue to see opportunities for inorganic growth as well as organic growth. I think a stat that I read just a matter of weeks ago is that the trailing 12 months as of that point was an all-time 12-month record for production out of Appalachia. When I think of that, and I couple that with the fact that we just rolled off of our third warmer than normal winter.
You know, three warmer than normal winters, yet still record production out of Appalachia is a really good sign for us. If you use our utility as kind of a gauge for that, you know, we continue to see significant growth between 12,000 and 17,000 customers a year roughly, as people still are looking for natural gas, either to increase the load that they currently have in commercial and industrial, or in the case of residential customers, you know, converting from perhaps fuel oil. We think the demand is strong, and we do see both organic and inorganic opportunities in the midstream business, and we think that the fundamentals of that business remain strong.
Maybe just one thing I'll add to what Bob just answered to more specifically address the question around renewables and other M&A. We're a company that has been very successful doing M&A over many decades. When we think of renewables or our LPG distribution businesses, M&A is part of that strategy. We certainly look at both continuing to grow organically, but certainly also contemplate M&A into that strategy, again, with the discipline that we've always exhibited. These projects, these opportunities have to make sense. We scrutinize them. We say no to a lot more opportunities than we say yes to. But when the elements line up favorably, we will execute on M&A opportunities as well.
Okay. Thank you. This question is a continuation. I know, Roger, you mentioned the next steps with the intended JV with SHV earlier, but can you also provide an update just on the outlook for rDME as well?
Yeah, happy to do so. I touched on this briefly. We still waiting for the European government to approve the joint venture. We've gone at this with a strategy that we would like approval so that we can operate in each one of the 17 European countries we currently operate in with the potential of building renewable dimethyl ether facilities. That's taken some time, but we are certainly hopeful that we'll get a positive response soon. Once we get that, we'll be in a position to talk more specifically about where we see these first projects taking place.
Thank you. Moving to the midstream side of the house. This question is for Bob. Are you seeing increased demand from producers for your midstream services? When do you expect some of those growth projects to materialize?
Okay, sure. As I mentioned, we continue to see record numbers of production out of Appalachia. Generally, producers are continuing a robust rate of production. On our system specifically, you know, we have over a dozen producing partners. As natural gas has climbed from what I would consider to be an unnatural low of maybe $1.50 a dekatherm to where it is today, what I would consider to be almost an unnatural high, different producers have taken different tacks. Some have kept powder dry, some have completed wells that were drilled and yet uncompleted, and some people are just managing to hit their minimum daily requirements. We see an array of producer activity. From a macro sense, I think, again, as I said, we're in a really good place.
I think our producers generally have very good acreage and are healthy. I personally think it just makes sense if we see sustained reasonable natural gas prices that supply and demand will follow. Then I think again the midstream business in Appalachia is one we're really happy to be in right now.
Thank you. The next question, just sticking with the natural gas side, is customer growth in West Virginia has been a drag on utilities in the past. How do you think about customer growth going forward? Could this have negative customer bill impacts as well?
When we looked at Mountaineer Gas and Mountaineer, among other companies, you know, targets that we continue to update the facts and figures on. Mountaineer, what we found is that they have not had a marketing and sales program in earnest for quite some time. One of the strengths of UGI's utility that I found when I arrived here some 13 years ago is really the ability to be creative in the regulatory environment and to formulate opportunities for the company to expand service to unserved and underserved territories. We believe that kind of cross-pollinating the expertise that we have in Pennsylvania with the strong operations that we have in West Virginia that we'll see an inflection point, and we're expecting some growth.
From a customer bill perspective, you know, certainly when we looked at West Virginia, but, you know, every day we consider bill impacts on customers, and we work to do our very best to, you know, to dampen any customer bill increase. You know, being sensitive to the fact that energy is a large component of what people pay in their monthly bills. We're mindful of that. It's something that we took into consideration when we looked into Mountaineer Gas. Again, it's something that we remain mindful of every day.
Thank you. The next question is for Ted on the financial side. In your fiscal 2022 CapEx outlook, it looks like you're budgeting a fairly sizable year-over-year increase in both of the LPG businesses. Is that related to some of your clean energy initiatives? Can you talk to the strategy there and the drivers for the increase?
Yeah, I would say, and Roger can expand on this, but I would say, there really hasn't been a change in the base capital spending on our LPG businesses. I think as you're aware, the capital needs of that business are fairly small, and so while they generate a lot of cash, much of that is then reinvested on the natural gas side of the business. We did, in fact, expect to be leaning into increases in the renewable space on the LPG business as well as on the natural gas side, and that reflects our expected investments with the SHV joint venture opportunity.
Yeah. Maybe the only thing I'll add to what Ted just highlighted. I'll answer another question that I saw come through, which is the level of investments that we're anticipating with the joint venture and more specifically, renewable dimethyl ether. What we've talked about in the past is that could be an investment as high as $500 million for our portion of that joint venture as we continue to develop it. I just wanted to bring some clarity to that point. As Ted pointed out, the increases you're seeing in capital are really related to the renewable projects that we envision.
Okay. Thank you. Next question. The trucking industry seems resistant to electric as an alternative to diesel, but somewhat receptive to LNG. Is the infrastructure in place for that industry to make that move on a national scale? And is there an identifiable cost breakpoint between diesel, CNG, and LNG that accelerates the adoption?
Yeah, this is Bob. I'll take this question. When I look at conversion of fleets away from diesel to either electric or natural gas, I look at really two components. First is the underlying commodity price. I'll give you a statistic. In November of 2020, I believe the NYMEX cost differential for 1,000 MMBTUs or basically an MCF worth of energy was $4.80 favorable to natural gas. So natural gas was $4.80 less expensive per MMBTU in 2020. In November of this year, that spread had grown to almost $12.
The underlying shift in commodity prices is important in that I do believe, as the questioner has pointed out, there's an opportunity here for natural gas to take a larger share of the vehicle market. The other component that we have to consider, though, is that of infrastructure, right? Today, interstate infrastructure is not in place to adequately serve the trucking industry. We and others are absolutely looking for opportunities to fill that gap. What we have seen, we announced last year a really big project with one of our customers in the midstate of Pennsylvania, where they're converting their fleet vehicles from diesel to natural gas. I think it's going to be the largest natural gas-fueled fleet in the country, and they're obviously leveraging that price differential.
That's a fleet that, you know, leaves from and returns to the same place every day. That I think we're better positioned to address today. The long-haul trucking industry, I think is a work in progress.
Okay. Thank you. Next question is in RNG and just the legislation. Given that certain states such as New Jersey have adopted legislation, if PA were to do the same, would that accelerate the company's push into the space?
Yeah, I'll take this one. Recently we got approval from the Pennsylvania Public Utility Commission to introduce a small portion of our purchased gas volume for our customers from RNG sources, right? That was the first time, as far as I know, that a company in Pennsylvania has been allowed to include some RNG costs in their purchased gas cost filings, which are passed through to the consumer. I think that is a really great start to have a portion of our purchased gas costs being renewables. I think what that does is it recognizes the fact that the commission is mindful of the environmental impacts and the positive impacts that RNG can have.
It also opens the door for more discussions around regulatory mechanisms that could help us and others in the state introduce more RNG into the system. Now, one thing that we have to be cautious of, and the commission is absolutely mindful of this, is it's gotta be affordable, right? The overall cost to a customer has got to remain value added. So that's something that needs to be considered as well. Our recent decision out of the commission to allow us to introduce RNG into our system as part of our PGCs, what I consider to be a great step in the right direction and certainly opens the door for future opportunities for us.
Okay. Thank you. The next question is related to rDME. Are there any significant differences in cost that could reduce margin? What type of feedstock is optimal?
Yeah, thank you for that question as well. It is early days, right? We have not built the first facility yet, but based on the modeling that we have today and what we certainly expect the first facility to look like, we're looking at an output from this facility that will be very competitive with current LPG prices. So we do not expect to see any margin contraction. If anything, the question would be more, is there a potential expansion in margin as we market these green molecules into the markets across Europe and North America? Very good question. Now, pertaining to feedstocks, these are projects that rely on landfill waste and farm waste and other waste sources.
Definitely more work to do to really decipher and understand more clearly which ones will be the most beneficial. Our first position on this is that typical landfill waste will be the feedstock for these types of projects.
Thank you. Moving to RNG. How did the cost of RNG in Pennsylvania compare to your average purchase cost, and how did the commission address the affordability issue in their approval?
Yeah. RNG, not just in Pennsylvania, but I'm assuming everywhere, is more expensive than geologic gas. That's a given. The way the commission made sure that our customers are being made whole or actually benefiting from this is that there is now a sharing mechanism so that revenue that the utility gets from moving this renewable natural gas is shared back with the customer. It's a win-win. It's a win for the environmental situation because we're taking landfill gas into a distribution system, and it's a win for the customer because there's a sharing mechanism that you know will be credited against our purchased gas costs, and customers will see that in their bills.
Thank you. That takes us to the end of our Q&A portion. Now I'll turn the call back over to Roger for his closing remarks.
Thank you, Tameka. Thank all of you for joining us today. We really appreciate you taking the time from your busy schedules to listen to our Investor Day. We look forward to updating you at our next earnings call. With that, I'd like to wish everybody happy holidays. Thank you.