Garrick J. Rochow
President and Chief Executive Officer of CMS Energy Corporation and Consumers Energy Company at CMS Energy
Thanks, Sri, and thank you, everyone, for joining us today. It's great to be with you, and we thank you for your continued interest and support. I'm going to start today with the end in mind, strong quarter and a great first half of the year, giving us confidence as we target the high end of the guidance range. Rejji will walk through the details of the quarter, and I'll share what the strong results mean for 2021 earnings. Needless to say, I'm very pleased. An important gene sale of EnerBank at 3 times book value, moving from noncore to the core business with a strong focus on regulated utility growth. The sale of the bank provides for greater financial flexibility, eliminating planned equity issuance from 2022 to 2024. And in the end, Reggie will share how we have reduced our equity issuance need for 2021 in today's remarks. Furthermore, with the filing of our integrated resource plan, you can see the path for more than $1 billion into the utility, again, without equity issuance.
Not only is there visibility to that investment, that's certainly in the time line for review. I'm excited about this IRP. It's a remarkable plan. Many have set net zero goals. We have industry-leading net zero goals and this IRP provides a path and is an important proof point in our commitment. We are leading the clean energy transformation. It starts with our investment thesis. This simple but intentional approach has stood the test of time and continues to be our approach going forward. It is grounded in a balanced commitment to all our stakeholders and enables us to continue to deliver on our financial objectives. With the sale of EnerBank and the plan to exit coal by 2025, our investment thesis gets even simpler. But now it's also cleaner and leaner.
We continue to mature and strengthen our lean operating system, the CE Way, which delivers value by reducing cost and improving quality, ensuring affordability for our customers, and our thesis is further strengthened by Michigan's supportive regulatory construct. All of this supports our long-term adjusted EPS growth of 6% to 8%, and combined with our dividend, provides a premium total shareholder return of 9% to 11%. All of this remains solidly grounded in our commitment to the triple bottom line of people, planet and profit.
As I mentioned, our integrated resource plan provides the proof points to our investment thesis, our net zero commitments and highlights our commitment to the triple bottom line by accelerating our decarbonization efforts, making us one of the first utility in the nation to exit coal or increasing our renewable build-out, adding about eight gigawatts of solar by 2040, two gigawatts from the previous plan. Furthermore, this plan ensures reliability, a critical attribute as we place more intermittent resources on the grid. The purchase of over two gigawatts of existing natural gas generation allows us to exit coal and dramatically reduces our carbon footprint. Existing natural gas generation is key. And like we've done historically with the purchases of our Zeeland and Jackson generating stations.
This is a sweet spot for us where we reduce permitting, construction and start-up risk. It is also thoughtful and that is not a 40- to 50-year commitment that you would get with a new asset, which we believe is important, as we transition to net zero carbon. And, yes, on other hand, our plan is affordable for our customers. It will generate $650 million of savings, essentially paying for our transition to clean energy. This is truly a remarkable plan. It is carefully considered and data-driven. We've analyzed hundreds of scenarios with different sensitivities and our plan was thoughtfully developed with extensive stakeholder engagement. I couldn't be more proud of this plan and especially the team that put it together. We've done our homework, and I'm confident it is the best plan for our customers, our coworkers, for great state of Michigan, of course, you, our investors to hit the triple bottom line.
The Integrated Resource Plan is a key element of Michigan's strong regulatory construct, which is known across the industry as one of the best. It is a result of legislation designed to ensure a primary recovery of the necessary investments to advance safe and reliable energy in our state. Michigan's forward-looking test years and the three-year pre-approval structure of the IRP process is visibility on our future growth. It enables us and the commission to align on long-term generation planning and provide greater certainty as we invest in our clean energy transformation. We anticipate an initial order for the IRP from the commission in April and a final order in June of next year. The visibility provided by Michigan's regulatory construct enables us to grow our capital plan to make the needed investments on our system.
On Slide six, you can see that our five-year capital plan has grown every year. Our current five-year plan, which we'll update on our year-end call includes $13.2 billion of needed customer investment. It does not contain the upside in our IRP. The IRP provides a clear line of sight to the timing and composition of an incremental $1.3 billion of opportunity. And as I shared on the previous slide, the regulatory construct provides timely approval of future capital expenditures. I really like this path forward. And beyond our IRP, there is plenty of opportunity for our five-year capital plan to grow given the customer investment opportunities we have in our 10-year plan.
Our backlog of needing investments is as vast as our system, which serves nearly seven million people in all 68 counties of Michigan's Lower Peninsula. We see industry-leading growth continuing well into the future. So where does that put us today? As I stated in my opening remarks, we had a strong quarter and a great first half of the year. The bank sale and now the IRP filing provide important context for our future growth and positioning of the business. Let me share my confidence. For 2021, we are focused on delivering adjusted earnings from continuing operations of $2.61 to $2.65 per share, and we expect to deliver toward the high end of that range. For 2022, we are reaffirming our adjusted full year guidance of $2.85 to $2.87 per share. Given the strong performance we are seeing this year, the reduced financing needs next year and continued investments in the utility, there is upward momentum as we move forward. Now many of you have asked about the dividend. We are reaffirming again no change to the $1.74 dividend for 2021.
As we move forward, we are committed to growing the dividend in line with earnings with a target payout ratio of about 60%. While we are not going to provide 2022 dividend guidance on this call, I want to be very clear, we are committed to growing the dividend in 2022. It's what you expect, it's what you own it, and it is big part of our value. I will offer this. Our target payout ratio does not need to be achieved immediately, it will happen naturally, as we grow our earning. Finally, I want to touch on long-term growth rate, which is 6% to 8%. This has not changed. It's driven by the capital investment needs of our system, our customers' affordability and the need for a healthy balance sheet to fund those investments. Historically, we've grown at 7%. But as we redeploy the proceeds from the bank, we will deliver toward the high end through 2025. I'll also remind you that we tend to rebase higher off of actuals. We have historically either met or exceeded our guidance. All in, a strong quarter, positioned well for 2021 with upward momentum and with EnerBank and the IRP, it all comes together nicely positioned for the long term. With that, I'll turn the call over to Rejji to discuss the details of our quarterly and year-to-date earnings. Rejji?